House of Lords
Tuesday, 12 February 2013.
Prayers—read by the Lord Bishop of Worcester.
Retail: Business Rates
My Lords, our commitment to hold business rate rises to the annual retail prices index cap means that there has been no real-terms increase in business rates since 1990. We have provided and are continuing to provide considerable support on business rates, including temporarily doubling the level of small business rate relief for another year. We have also postponed the revaluation of business premises from 2015 to 2017.
My Lords, that is a half encouraging answer from my noble friend, but is she fully aware that over 3 million people are employed in the retail trade, and that, equally importantly, at least 1 million of them are young people aged under 25? The situation on the high street in the past 12 to 14 months has been dire. Against that background, surely the time has come for Her Majesty’s Government to review the business rates, as it affects retailers and, frankly, for just one year to freeze those business rates?
My Lords, the Government are committed to doing all they can to support the high street and other businesses. As the noble Lord made clear, the employment opportunities there are dire at the moment and we want to boost them as much as we can. The high street is facing challenges such as the rise of internet shopping. That is why the Government are offering practical support such as the Portas-plus package, and, as I said, why they have doubled the small business rate relief. We have also given authorities powers to grant their own discounts, which can be used to support local businesses, including shops.
My Lords, is not the reason why the high street is in such a mess the catastrophic failure of the Government’s economic policy? What is required for the high street to get going is what is required for the whole British economy to get going: first, that the Government stop blaming their predecessor—the economy was certainly in a better state then than it is now—and, secondly, that they engage in an expansionary rather than a contractionary fiscal policy.
My Lords, the Government are dealing with the deficit left by the previous Government. I do not think the noble Lord would expect me not to get that crack in one way or another. Whoever and whatever, we have realised that the economic situation is not helping. The Question is about small businesses. We are doing all that we can to help small businesses and to encourage the development of shops and other businesses. We are also very well aware of the essential nature of boosting employment, and we are trying to do that by a number of means.
My Lords, as the noble Lord knows, business rates are set on the basis of value. That is carried out by the valuation office. We are helping small businesses in every way that we can. I am sure that noble Lords would not discount the fact that many small businesses now are not paying any rates because they have 100% relief. They can also appeal to their local authorities for a further discount.
My Lords, what is very striking about any small town in France is that there are a number of small businesses in the high street. Of course, the supermarkets are grouped outside. Has the Minister considered what lessons we might learn from the French experience?
My Lords, business generates itself, and I agree very much with what the noble Lord has said about small individual businesses. In fact, a number of those are being generated at the moment. In all high streets, there are people who are setting off in entrepreneurial ways. I do not think that is something that the Government want to deal with, but we want to ensure that, where we can, we encourage small entrepreneurs to develop their own businesses.
My Lords, the internet shopping people do in fact contribute to the rates, as they have to pay for the premises they use to store their goods and where they have their offices. As for internet shopping, well, there it is; many people take advantage of it. I am not sure that the Government can do anything about that, or would want to.
My Lords, given the importance of London to the nation’s economy as a driver of economic growth, will the Government address the situation in which more than £2 billion that London businesses pay in business rates is redistributed across the rest of the country, rather than ploughed back into economic development in London?
My Lords, I have a feeling of déjà vu about this question, which was asked when we were in opposition for exactly the same reasons. The noble Lord probably answered it. The distribution and the way the rates are set are not entirely a matter for the Government. I know that the mayor is making the representations that the noble Lord has made and which have been made for a number of years in both directions.
Does my noble friend the Minister agree with the very many who say that the greatest problem of our day is in fact the steady breakdown of community life? Does she accept that in that regard independent retailers and service providers in towns contribute a huge amount to the fabric and cohesion of their communities, which the socking great supermarkets do absolutely nothing for?
My Lords, I am not going to deny that supermarkets have a major role to play, but I accept, as I did in response to a previous question, that small entrepreneurs and small businesses in the high streets add value not only to the community but to the economy. We do not need shops that are boarded up and shut; we want small businesses to move in. There are plenty of examples of that happening both in London and in the countryside. I think I am right in saying that over 90% of the country’s economy lies on the back of small businesses.
First World War: Commemoration
My Lords, there has been significant progress in this £53 million programme of funded activity. Remembrance, youth and education will feature prominently in national events to mark the war’s first day, the Battle of the Somme and Armistice Day. Gallipoli, Jutland and Passchendaele will also be commemorated. The Government are actively developing plans with more than 20 Commonwealth and other Governments on both sides of the war for participation in their events. Community activity across the UK is also being strongly encouraged.
I compliment the Government on the manner in which they are “celebrating” this commemoration, but is the Minister aware that there are still people who say that this should be purely a celebration and not the agreed commemoration? Will he give the House an assurance today that the Government will not stray from the line of commemoration? Will there be sufficient resources for the activities that, as the Minister acknowledges, will take place in towns and villages up and down our land? Has the Heritage Lottery Fund allocated any extra finance to make those initiatives possible?
My Lords, in the extensive briefing that I have had, the word “celebration” has never featured at all. This is a moment for our nation and other nations to commemorate gallant men and women, and that is the whole focus of what the Government are seeking to lead on. On the noble Lord’s point about community projects, yes, there will be at least £6 million from the Heritage Lottery Fund for community-based projects. In addition, £9 million has already been committed to World War I-related projects across the land and there will be activities overseas as well.
My Lords, the engagements that my noble friend listed in his substantive Answer are all well remembered. However, I ask him to put before those who are arranging this event the less well remembered but almost more tragic campaign in Mesopotamia during the First World War. I declare an interest, if that is the right way of putting it, as the son of one of the small minority of survivors from the besieged garrison who survived both that campaign and the horrific treatment they received on the 1,000-mile march afterwards. Can that be put on record as a commemoration as well?
My Lords, there will be discussions with the Turkish authorities on matters such as the Mesopotamian expeditionary force and the work undertaken by men and women from India as well as from our country. If I may say so, my late father-in-law served in the Poona Horse in Mesopotamia in the second war, so I am aware of the bravery of men and women in that sector, too.
My Lords, the interesting part about HMS “Caroline”, which will be restored with a £1 million National Heritage Memorial Fund award, is that it is the last surviving warship of the Battle of Jutland. It has been berthed in Belfast since 1924, and I very much hope that it will be an important part of Northern Ireland’s, and indeed Ireland’s, commemoration of the many gallant men and women who served in that war.
My Lords, given that approximately 1.6 million women joined the workforce between 1914 and 1918 in a wide range of roles, including 950 women who were employed in munitions factories by Armistice Day, will the Minister confirm that the hugely important role that women played during the First World War will be recognised in the commemoration that he has outlined?
My Lords, the role of women will be very much part of the commemoration. It is, indeed, an integral part of the Imperial War Museum’s new First World War galleries, which will be opened next summer. The Government will mark the service and sacrifice of Edith Cavell as a symbol of the contribution made by women.
My Lords, I declare an interest as a member of the Government’s World War One centenary advisory board and as chair of the All-Party War Heritage Group. What progress has the Minister’s colleague Dr Andy Murrison made with his imaginative plans to recreate the Christmas Day truce football match between English and German troops that took place in 1914?
Is my noble friend aware that the Imperial War Museum has received letters written by those who served in the war? I had two uncles who were killed in 1916 and 1917 and who wrote wonderful letters. The Imperial War Museum has made copies of them. I hope everybody will read them.
The Imperial War Museum is in the lead. I have mentioned the £35 million that will be spent on the new galleries, but it will also be very much involved in a digital platform on the lives of those who served in the First World War and is leading an 800-organisation centenary partnership. It is doing tremendous work already.
My Lords, the waste review sets food waste as a priority, outlining the Government’s commitment to tackle it by focusing on waste prevention. The Government are working through agreements with food retailers, manufacturers and the hospitality sector to reduce food waste. We are helping households waste less and save money through WRAP’s “Love Food, Hate Waste” campaign.
I thank my noble friend for that reply and welcome the improvement in the figure, but the fact is that food waste costs the average household £640 a year, which is a total of £12 billion to the country, and shows that there is much more to be done to help the consumer prevent this waste. Does my noble friend agree that supermarkets have a significant role to play in this area? While, for example, Asda’s promotion of WRAP’s “Love food, Hate Waste” campaign and the recent announcement by Sainsbury’s that its guidance to customers will move from “freeze on day of purchase” to “freeze up to the use-by date” are also to be welcomed, there is very much more they could be doing to support and encourage consumers in this area.
My noble friend is quite right that food waste is costing households a substantial amount of money. She is also right that there is more to be done to help people, and I agree that supermarkets have a significant role to play in this area. The major food retailers have been taking action to reduce food waste through the Courtauld commitment and have helped consumers to save money and waste less through innovations such as resealable salad bags, recipe ideas for leftovers and smaller loaves of bread. WRAP has also been working with food businesses to help them make informed decisions about date labelling, which will help reduce food waste.
Does my noble friend agree that we should place greater value on the food we eat? Will the Government’s Green Food project promote eating less, but better, meat, which could improve consumer health and animal welfare, cut carbon emissions and reduce domestic food waste?
Very droll, my Lords. I can assure the noble Lord that when products such as those that I think he is referring to are tested, or are part of an ongoing investigation, they will be held securely and when ready to be released the products will be disposed of appropriately. Of course, if it is safe and appropriate for a product to go to anaerobic digestion rather than incineration or landfill, I hope it will. Needless to say, products that are not fit to be sold will not find their way back into the food chain.
My Lords, I declare an interest as chairman of Vision 20:20, which is concerned to do something about this. Is it not time that we banned this material from landfill? It is seriously dangerous to create methane. Banning it would enable us to insist upon much wider recycling of that which is wasted.
My Lords, we have committed to reviewing the case for restrictions on sending particular materials to landfill over the course of this Parliament, including looking specifically at textiles and biodegradable waste. We are focusing on collecting the evidence. Our experience from working on wood has shown us that a good understanding of the data, waste streams, markets and other issues are vital to making informed decisions. Before making proposals on restricting any particular materials, the Government will need to be content that that is the best-value way of moving material up the waste hierarchy and that the costs to businesses—and, indeed, to the public sector—are affordable.
My Lords, does the Minister accept that how we use the earth’s resources appropriately, exploit its potential and treat fellow humans are moral as well as financial issues? Does he accept that extravagant or unnecessary waste of food should challenge us to think, “Who is my neighbour?”, and to answer that question with integrity?
My Lords, is the Minister aware that in the supermarkets, the “best before” label apparently means that they are not allowed to sell it after that date. Yet there is quite a period when that food remains good, and this is a great source of waste. Many large establishments give all of that food away to homeless charities and people who come to collect. Are the Government or any of the private enterprises looking into spreading that practice so that people are not wasting food which is still good for some days?
My noble friend raises an important point. “Use by” and “best before” dates help consumers to know what is safe to eat. They are required by law. The “sell by” and “display until” dates, however, are not intended for customers and can confuse them. We have encouraged retailers to remove these from goods or to render them invisible to the human eye. Encouragingly, the WRAP retailer survey 2011 found that new labelling being rolled out by retailers including Marks & Spencer and Sainsbury’s makes it clear that consumers do not have to freeze goods on the day of purchase, but can do so any time up to the “use by” date. A number of supermarkets have also introduced new, larger, single-date label stamps on to products to help consumers make the best use of the food.
Banking: LIBOR and EURIBOR
To ask Her Majesty’s Government what plans they have to review the working of the Financial Services Authority’s executive settlement procedures in the light of discounts applied to fines levied as a result of misconduct in relation to the setting of the London Interbank Offered Rate (LIBOR) and the Euro Interbank Offered Rate (EURIBOR).
My Lords, the Financial Services Authority awards discounts for early settlement of cases involving financial penalties, as it considers early settlement to be in the public interest. The Government take the manipulation of LIBOR and EURIBOR very seriously. We accepted the weekly review recommendations on LIBOR, and are implementing them in full. Furthermore, we are ensuring that the money raised from these fines will go to specific causes which demonstrate the best of British values.
I am grateful to my noble friend for that Answer. Does he agree with me that the manipulation of these rates by some banks was a deeply cynical fraud against borrowers in times when they could least afford it, and that while the fines levied by the FSA on those responsible may be at record levels they were a small fraction of the profits made by those institutions? The fines were substantially less than those imposed by the US regulator. Due to the FSA’s executive settlement procedures, those responsible received over £100 million in discounts on the fines levied so far. Would it not be more in keeping with the way in which banks treat their own customers if the FSA was now to scrap early-settlement discounts and replace them with a system of late-settlement penalties?
My Lords, my noble friend makes an important point about the seriousness with which we are addressing this attempted manipulation of LIBOR rates. On the specific question of the penalties, the Financial Services Authority is the independent regulator. It is mandated to set all the rules on regulatory matters. That includes decisions about using early-settlement discounts as a way of managing the process. It considers it in the public interest to settle matters in cases involving financial penalties as early as possible and to provide incentives. There are many advantages in early settlement. It helps consumers to get compensation earlier than would otherwise be the case and prevents cases being contested at the regulatory decisions committee, which could cost a lot of time and money.
My Lords, does the noble Lord find it as astonishing as I do that, on an issue such as interest rates, which is obviously of great concern both nationally and internationally, nobody in the Bank of England or the Treasury had the faintest idea about what was going on with LIBOR?
My Lords, I absolutely accept the noble Lord’s observation that it is really a swingeing indictment of the financial system that a benchmark as critical as LIBOR—which is responsible for settling about $300 trillion-worth of transactions—could be manipulated in this way. Once this was uncovered, however, the Government have moved extremely swiftly, appointing Martin Wheatley, the chief executive-designate of the Financial Conduct Authority, to do a review. He came up with a 10-point plan, which has been implemented in full. The Financial Services Act was amended to make sure that LIBOR activities were brought within statutory regulation; we created a new criminal offence to ensure that it could be followed up in that way and the FSA has now been given the power to compel banks to participate in LIBOR setting.
My Lords, would my noble friend agree that the general public are somewhat bemused by the large sums of money involved in these transactions and are even more puzzled as to why there seem to be very few people who have been either prosecuted or convicted with penalties affecting the individuals concerned? Could my noble friend comment on that?
My Lords, with respect to the sanctions and penalties, I would point out that there are ongoing criminal investigations with the Serious Fraud Office. Three arrests were made at the beginning of the year, so it is clear that we are determined to follow through on picking up on criminal activity where that can be proven to have taken place.
My Lords, before asking my question, I wonder if the noble Lord could clarify part of his answer to the noble Lord, Lord Bates, where he referred to the “attempted” manipulation of LIBOR. Is he saying that the manipulation failed? Turning to the Question, when I was a member of the Regulatory Decisions Committee of the Financial Services Authority, discounts on penalties were offered for early settlement only in cases where either the firms had reported their own failings or they had offered exceptional levels of co-operation. Did either of these circumstances apply in this case to British banks prior to measures taken by the American authorities?
With respect to the noble Lord’s question on whether the attempt was successful, I think that is actually the issue. The FSA’s review found that it was unclear whether the manipulation did result in a change of rates, so that is an open question. On the degree of co-operation shown by the firms under investigation, I understand that the firms were entirely co-operative. Of course, they are all under new management and, effectively, are the new brooms trying to sweep clean. I am afraid that I cannot layer together the timing of that co-operation vis-à-vis the application of the US penalties, but I am happy to look into that and get back to the noble Lord.
My noble friend makes a good observation. Clearly, there were some gaps in the historical supervisory structure, which is why we have passed the Financial Services Act reforming entirely the regulatory apparatus around this business. Of course, the FSA is about to be replaced by a combination of the Financial Conduct Authority, the Financial Policy Committee and the Prudential Regulation Authority. We now have a new regime surrounding this arena. I share my noble friend’s concern that moving from gamekeeper to poacher needs to be managed closely.
My Lords, may I at least commend the FSA for a new penalty regime which affected misbehaviour after 6 March 2010 and finally had some serious fines behind it? However, I still recommend the US system of triple damages. Does the Minister agree that it is crucial that the Government and all politicians stand behind the regulator in fierce enforcement and tough penalties? It was the slack that we saw cut for the banks under the previous Government that demonstrated to people that government and the regulator seemed to be on the side of the banks and not the people or the taxpayers?
Hertfordshire County Council (Filming on Highways) Bill [HL]
Crime (International Co-operation) Act 2003 (Designation of Participating Countries) (England, Wales and Northern Ireland) Order 2013
Motion to Approve
Scrap Metal Dealers Bill
Public Service Pensions Bill
Relevant documents: 10th and 13th Reports from the Delegated Powers Committee.
Schedule 1 : Persons in public service: definitions
1: Schedule 1, page 23, line 6, at end insert—
“(c) the Defence Fire and Rescue Service”
My Lords, this amendment refers to the position of the Defence Fire and Rescue Service within the structure of the Bill. Noble Lords will remember that it was revealed in the discussion of the Bill in Committee—the issue had not been discussed in another place—that the Defence Fire and Rescue Service had an anomalous status relative to that of other firefighters within the UK. In particular, while other firefighters within the UK had their retirement age fixed at the age of 60, together with other uniformed services, the Defence Fire and Rescue Service at that time had a retirement age tied to the statutory retirement age. Therefore, it would be 65, rising in accordance with the pattern planned for the increase in the statutory retirement age.
My hypothesis in Committee was that this was simply a slip and a mistake and that people had just happened to miss the fact that a category of firefighters was not covered in the actual language of the Bill. I therefore expected that, once the Minister had taken the matter back—he conceded in Committee that he had not had the opportunity to consider it with any great care—the mistake would be understood and the firefighters would be included with the other uniformed services, having their retirement age fixed at 60, as is the case with the other uniformed services. However, to my considerable surprise, this has not been the case. I understand that the firefighters—and, indeed, the Ministry of Defence Police, to which I will turn in a moment—have met the Minister and that he has turned down this proposition. He has substituted for it the assurance that their pension age would be maintained at 65 and not, perhaps, go up with the statutory pension age, although his assurance was not terribly clear in the sense that it referred to a three-year differential between the statutory retirement age and that for Ministry of Defence firefighters. In due course, when it gets to 68 or 69, as we all live longer, those firefighters would see their retirement age go up—or so I presume; perhaps the Minister can clarify that later on—while that of their colleagues in the rest of their fire service would stay the same, at 60.
The Minister has one fundamental question to answer. It is an answer that not just this House but the firefighters themselves deserve. How does their job differ from that of local authority firefighters? In what way is it less onerous, when they have to work on military establishments, dealing on occasion with extremely dangerous materials, and occasionally also in war zones? How is their job less onerous? In those circumstances, why should we have this situation in which their retirement age is five years higher?
I wonder whether the Minister has taken the trouble to find out when the Defence Fire and Rescue Service members actually retire. If he did take that trouble, he would find out that the majority of them retire before the age of 60. They retire early, with a significantly reduced pension, and they have to do that because they are physically unable to keep going. A study performed by the Civilian Consultant Adviser in Occupational Medicine for the Defence Fire Risk Management Organisation not only produced data but argued that continuing beyond the age of 60 was detrimental to the long-term health of firefighters in the Ministry of Defence Fire and Rescue Service. If the noble Lord had taken the trouble to find out what was actually happening, he would have found out that firefighters in this service are forced to retire early due to their physical condition or because they are unable to pass the regular physical examinations they undergo to ensure that they can perform their duties to the required standard.
As I said in my introduction, initially I presumed that this omission was a mistake and I still think that that is the case. However, some pen-pushing bureaucrat is defending his back against men who risk their lives and health for us on a regular basis by producing the argument that if the age of retirement, which is currently 65—even though the majority retire before 60—were reduced to 60, like that of all other uniformed services, this would be the only group in the entire public service to have their retirement age lowered by the Bill. I refer the person who wrote to the Ministry of Defence firefighters to that effect to the excellent report of my noble friend Lord Hutton, in which he said:
“The current public service pensions structure was not designed for modern working patterns and has been unable to respond flexibly to changes in this area and to demographic change over the past few decades. This has led to … unequal treatment of members within the same profession”.
What we are discussing is a prime example of exactly that. Therefore, Amendment 1 seeks to incorporate the Defence Fire and Rescue Service firefighters within the overall category of firefighters to ensure that they are treated in exactly the same way as their fellows in local authority and other fire services.
Amendment 2 seeks to do the same for the Ministry of Defence Police. I ask the noble Lord to answer these questions. In what way are the tasks of the Ministry of Defence Police, who have to carry body armour and weapons at virtually all times, less onerous than those of the regular police forces? In what way are their tasks different? With respect to the police forces, we have a hint that perhaps the hypothesis that this is all a mistake is correct given that the definition of “members of a police force” in Schedule 1 states:
“In this Act ‘members of a police force’—
(a) in relation to England and Wales, includes special constables and police cadets”.
That is the only definition. It does not mention police forces that report to a police authority. It simply refers to,
“members of a police force”,
and states that that includes the cadets. It could be any police force: for example, the British Transport Police, the Ministry of Defence Police, and the nuclear protection forces.
I do not want to give the Government the opportunity to reinforce their discrimination against Ministry of Defence employees but there is a clear possibility that a discriminatory mistake is being made in this regard. It really is not sufficient, at the 11th hour, for the Minister simply to say, “Oh well, we’ll fix it at 65”, when one considers the nature of the work done by, and the considerable physical demands on, local authority firefighters and Ministry of Defence firefighters. It is important to recognise the nature of the work done and that the categories into which we would place the Ministry of Defence firefighters and police are exactly the same as those of local authority firefighters and normal police forces that report to police authorities. I beg to move.
My Lords, my name is attached to the first of these amendments and I support the second one. I do not want to add a lot to what my noble friend has said but I concur with him that at some point along the line, there has been either a mistake or an oversight. There can be very little argument but that the uniformed ranks who happen to be employed by the Ministry of Defence do a very similar and, if anything, significantly more dangerous job in certain locations than firefighters generally, and that therefore the exception to the general rule that applies to uniformed staff covered in my noble friend Lord Hutton’s report ought logically to apply to this group of workers. I cannot see a logical argument for excluding them from that exception.
My second point is that this group is in a Civil Service scheme that covers several hundred thousand people. We are dealing here with a unique workforce of 800 firefighters who serve our defence forces in the United Kingdom, in war zones and in other parts where the British Armed Forces operate abroad. They are not like the rest of the Civil Service, and nor would it be a major cost to the Civil Service scheme were this anomaly to be rectified in the Bill. In the other areas of the Bill in which I am interested as regards the local government scheme, the Minister has been pretty flexible over many aspects, which I applaud—and he will, I hope, be more flexible later this afternoon. However, I am surprised that he cannot see that this is an issue on which the Government could easily concede; it would meet with huge approval, would cost very little and would correct an anomaly that has been there for some time but does not need to be aggravated by raising the normal statutory retirement age, which the rest of the Bill does.
I ask—I plead with—the Minister, if he is not prepared to accept the amendment, to take it away again and consider it seriously, because in this respect his civil servants, whether in the Ministry of Defence or the Treasury, are not serving him well. We should have found a way through this. We should find a way this afternoon to ensure that the position of this group of workers is recognised and reflected in statute.
My Lords, perhaps I should briefly join the debate because my report has been cited by my noble friend. I echo the comments of my noble friends and support their argument. I ask your Lordships’ House to indulge me if I revisit some of the issues from my report. It talked about the uniformed services in general, not about whether you happened to be in the Civil Service scheme or any other scheme. I talked about uniformed services—firefighters, police and the Armed Forces. My report made a simple argument that the nature of their service is unique and should be reflected in the pension arrangements that we make for them.
I have to say that if, during the course of my inquiry, I had known about the unique circumstances of the MoD firefighters, I would have referred specifically to them in my report and urged the Government to show some flexibility, support and sympathy for the special role that they play within our Armed Forces. Sadly, this issue was not drawn to my attention, so I did not make any specific recommendations about the MoD firefighters or the MoD police. If I had known about it, I certainly would have done so.
I am sympathetic to the Minister’s position. I am sure that his officials have told him that enormous complexity is involved in changing the normal pensionable age for this group of workers. However, I ask the Minister to remind himself—I know what a decent and honourable person he is—of the fact that this is fundamentally a matter of fairness and of the need to approach the issue in the right way. I do not believe that there is any substantive technical reason why we cannot look again at the role of the MoD firefighters and the MoD Police. If there is a technical issue it has to be addressed on the face of the Bill, as my noble friend suggested, or in the scheme regulations or the discussions with the relevant trade unions. Surely there has to be a way of doing the right thing for these people. The MoD firefighters currently happen to be in the Civil Service pension scheme, which has a higher retirement age than the firefighters scheme or the Armed Forces scheme. It is incumbent on us to address that issue and not to use the technical arguments as an excuse for not addressing this fundamental discrepancy.
I am not familiar with the history of all this—I am sure that there is a lot of history to it—but I wish that it had been raised with me, as I would have referred to it in my final report in the way that I have suggested. However, we now have an opportunity to do the right thing for these people, and I hope that this House takes the right course.
My Lords, these amendments reflect an issue about which I know many noble Lords feel strongly. Before I address the amendments themselves, perhaps I may remind the House of the context and the background.
These forces are made up of civil servants directly employed by the Ministry of Defence. Although there are some similarities with their counterparts in the Home Office police and the local authority fire and rescue services, their terms and conditions of employment are set by the Ministry of Defence and are therefore materially different in many respects. As civil servants they benefit from provisions which are not available to their non-MoD counterparts, such as the Civil Service compensation scheme, injury benefit provisions, relocation and leave allowances. The amendments being suggested would fundamentally alter the status of these individuals and that should not be carried out lightly.
I should remind the House that, as civil servants, individuals joining these forces currently have access to the Principal Civil Service Pension Scheme. This means that since 2007 those joining these forces have had a normal pension age of 65. The amendment proposed by the noble Lord, Lord Eatwell, would reduce that pension age to 60. He has already referred to this argument, but I shall make it again. Such a reduction in pension age runs counter to the Government’s aim of managing the risks associated with increasing longevity. It would also make these workforces unique in seeing a five-year decrease in their pension age as a result of these reforms.
Furthermore, there are a number of problems associated with the specific amendments that have been proposed. First, it is not clear how the amendments proposed by the Opposition would be implemented. The institutional architecture required for these workforces to become part of the non-MoD fire and police schemes would need to be established, bringing with it additional cost. The non-MoD fire and police schemes are locally administered and early work suggests that in order to include the DFRS and MDP in these schemes, equivalents of elected police commissioners and fire authorities would need to be established for these forces. The schemes are also discussed and established through fora which the MoD forces do not participate in, and which are not designed to cater for them, such as the Police Negotiating Board.
The amendment would also split the remuneration of these individuals so that their pay and other conditions are controlled by the Ministry of Defence while their pension entitlement would be set by either the Department for Communities and Local Government or the Home Office. This will potentially place financial risks on the Ministry of Defence over which it has no control and, more importantly, would prohibit the MoD from taking a view on appropriate remuneration for these forces in the round.
However, the Government are not deaf to the concerns of the House. I have listened carefully to the arguments for providing these groups with additional protection. I have, as the noble Lord, Lord Eatwell, mentioned, also met representatives from the groups themselves to hear their concerns. One of the issues that they highlighted was that as SRA and NRA increases in the decades ahead, the disparity between their retirement age and that of their civilian counterparts would be increased and their retirement age would move towards 68. They believe that such further increases in retirement age would be unfair and unreasonable, and I agree. Therefore, I held discussions with colleagues in the Treasury and the Ministry of Defence. As a result, the Ministry of Defence pledged to look at appropriate ways in which the issue could be managed so that retirement at 65 could be maintained in the new pension schemes established by the Bill when they are implemented in 2015.
This is a sensible way for the issue to be resolved. The details of these changes should be discussed by the employer and their employees, and, for the MDP in particular, in conjunction with the consideration already under way of their wider terms and conditions. In the light of these arguments, I hope that the noble Lord will feel able to withdraw his amendment.
Well, my Lords, we got the answer that we all feared. We were told that somehow the unique position of an injustice is such that the injustice should be maintained. We were told that it was not clear how the changes could be implemented. “It’s just too jolly complicated. Our staff aren’t up to it. We haven’t got enough civil servants who can puzzle through all these problems. There is no way through”. That is ridiculous.
We were told that somehow these firefighters would have to be transferred to other pension schemes. I am afraid that that is not the case. Civil Service pension schemes are flexible and perfectly able, as currently structured, to take into account differing retirement ages.
We then heard the proposition that the differential—the unfairness—should be fixed at five years’-worth of unfairness, with the retirement age of MoD firefighters and police being kept at 65. Apparently this is not too difficult to implement. We can find a way to fix the retirement age at 65 but we cannot find a way to fix it at 60. I am afraid that the Minister has significantly reduced the credibility of his own arguments.
He also completely failed to address two fundamental points. He failed to answer the question: in what way do the working conditions of Ministry of Defence firefighters differ from those of local authority firefighters? He failed to take into consideration that the majority of MoD firefighters are forced to retire before the age of 60 because of physical and other health reasons. He also failed to take into account the point made by my noble friend Lord Hutton that this is a fundamental issue of fairness. Given that that is the position, we owe it to Ministry of Defence firefighters and police to agree this amendment. I urge noble Lords to do so and beg leave to test the opinion of the House.
Amendment 2 agreed.
Schedule 2 : Responsible authorities
3: Schedule 2, page 23, line 30, leave out from “servants” to end of line 31
My Lords, the amendments in this group bring the Bill into line with the Government’s announced policy on judicial pensions. They recognise the special constitutional position of the judiciary and have been tabled in response to the Delegated Powers Committee’s 10th report. The report identified that the Bill will move some features of judicial pensions, which are currently provided for in primary legislation, into secondary legislation. Under the amendments, the pensions of the judiciary will be separated from the Civil Service scheme, of which they were originally going to form part.
The regulations governing pensions for the judiciary will be made by the Lord Chancellor, in consultation with the Secretary of State for Scotland where this is appropriate. Scheme regulations will also require the consent of the Treasury. In addition, in order to recognise the move from a basis in primary legislation to one in secondary legislation for some elements of scheme design, scheme regulations will attract the affirmative procedure. The exception to this will be cases where the pension board for the scheme deems the regulations to have either a minor or a wholly beneficial effect. The judiciary will be represented on this board. As a final change, we have amended the Bill so that the Lord Chancellor’s role in making pension schemes for the judiciary becomes a protected function. This means that any future machinery of government changes will not change the fact that the responsibility for these pensions will remain with the Lord Chancellor.
The amendments that I have described represent a reasonable balance between the importance of recognising the judiciary as having a particular and special role within our constitution and ensuring that the Bill continues to provide a consistent and coherent framework for public service pensions. An independent judiciary is the cornerstone of any modern democracy. It must be able to carry out its role without interference from government. These wide-ranging reforms to all public service pensions, which will impact on judicial remuneration, in no way diminish that fundamental constitutional role. Judges will be as free to uphold the law, to interpret the will of Parliament and to rule against the Government of the day after these reforms as they were previously. Indeed, judges have the protection of the affirmative procedure, which means that Parliament, not government, will have the final say on any major changes.
Amendments 26 and 27 address a separate issue about some individuals who have worked for the residential property tribunal. It has emerged that some of them may be provided with pensions under the Rent Act 1977 and may not be covered by the provisions of the Bill. This amendment clarifies that these individuals should be included within the scope of the Bill. I beg to move.
Amendment 3 agreed.
4: Schedule 2, page 23, line 33, leave out sub-paragraph (2) and insert—
“1A (1) Scheme regulations for the judiciary may be made by the Lord Chancellor.
(2) Before making scheme regulations in relation to an office with a jurisdiction exercised exclusively in relation to Scotland, the Lord Chancellor must consult the Secretary of State.”
Amendment 4 agreed.
Clause 3 : Scheme regulations
5: Clause 3, page 2, line 13, leave out paragraph (b)
My Lords, the government amendments in this group concern powers, which have been previously debated at length, to amend primary legislation and to make retrospective changes. I am hopeful that both sets of amendments will be well received across the House.
The amendments on powers to amend legislation follow on in particular from the recommendations of the Delegated Powers Committee. As the Delegated Powers Committee noted, the Bill as drafted contains “unrestricted” powers to amend primary legislation. The committee did not see a justification for such a wide scope to make changes without full parliamentary scrutiny. It recommended that the powers be limited to being able to amend existing primary legislation for consequential and consistency purposes only. We have looked at this, and agree with the committee.
While the powers currently mimic those in the Superannuation Act 1972, the predecessor to this Bill, there is no evidence of the powers being used for anything beyond consequential amendments in the past. We do not envisage a scenario where wider use would be needed in the future. The amendments therefore reduce the scope in line with the Delegated Powers Committee’s recommendations. The powers can be used only for consequential changes to current Acts, including changes that are needed to achieve consistency.
I should make clear that the amendments do not remove the power to amend primary legislation completely, since such a power is essential to bridge any gaps between pre-existing primary legislation and the scheme regulations, but they significantly reduce the scope of the powers to be used in ways that the committee felt could not be justified. I hope that this strikes a balance that the House can support.
The powers to make retrospective changes were also mentioned in the Delegated Powers Committee’s report, although it did not make any specific recommendations in this case. However, we have discussed these retrospective powers in detail in your Lordships’ House on a number of occasions, and I hope we are approaching a resolution that everybody can support.
Our amendments take account of amendments tabled at earlier stages by the noble Lords, Lord Eatwell and Lord Whitty, both of whom also have amendments on the Marshalled List today. I hope they feel that we have been able to take account of their arguments as we work through the detail in this complicated but vital area. As I think we all agree, we must get this absolutely right and I hope the House will feel that our amendments achieve that.
As I have set out before, powers to make retrospective changes can be required for several reasons. Usually they are required to make minor or technical operational changes to allow the schemes to run efficiently, often for the benefit of members. They may also be used to make retrospective changes that are part of wider negotiations and which increase the likelihood of the Government and their employees reaching agreement on a package of reforms. Therefore, the Government firmly believe that such powers are necessary and should not be restricted.
However, the Government recognise that if there are insufficient protections against using these powers in an unfair way, even if we have no intention of doing so, this could damage members’ confidence in these reforms. That is why we have brought forward the new clause contained in Amendment 36 and the associated consequential amendments.
Amendment 36 implements a consent lock for any retrospective changes to pensions that have “significant adverse effects” on members. Members or their representatives would have to agree to such changes. Significance is a low but appropriate threshold—one that is on the whole favourable to members and not the responsible authority. It has already been used in the Bill and by some noble Lords in their own amendments. I note that the amendment tabled by the noble Lord, Lord Whitty, in this area refers similarly to “material” effects. If I may say so, he and I are talking about the same thing.
Indeed, our amendments mean that material or significant retrospective changes would require the consent of the members who are affected, or their representatives. Amendment 36 therefore provides an extremely strong form of protection against the unfair use of retrospective powers. It will give members who are significantly adversely affected, or their representatives, a veto on any such changes. The requirements to follow the affirmative procedure and to lay a report to Parliament will also continue to apply to safeguard wider interests, including those of the House.
The consent requirement will apply to changes that have a significant adverse effect on the pensions of all scheme members, whether active, deferred or pensioners. That means that they go further than the protections against retrospective changes in many existing schemes, including the NHS, local government and teachers’ schemes. They provide unambiguous protections for all members, not just deferred and pensioner members.
However, the consent lock will not apply to retrospective changes that have a significant adverse effect on non-pension benefits, such as injury and compensation schemes. Such benefits will continue to be protected instead by the enhanced consultation procedure of Clause 22. That clause requires consultation with a view to reaching agreement, a report to the appropriate legislature, and the affirmative procedure.
Injury and compensation schemes cover people by virtue of their particular employment, not whether they happen to be members of a public service pension scheme. The persons covered do not accrue an entitlement throughout their career in the same way as a pension, but rather receive benefits that are calculated at the point of claim. Moreover, those schemes are entirely funded by the employer with no employee contribution. We therefore think that a veto power over changes to injury and compensation schemes that might in some cases be regarded as retrospective would give disproportionate influence to members. None the less, I should make clear that reforms to current injury and compensation schemes are not contemplated by this Bill.
I therefore hope that the House will be able to support these amendments. I believe that they provide excellent reassurance to members that the retrospective powers will not, and indeed now cannot, be used in ways to which they do not consent.
I hope that the House will find it helpful if I speak to the other amendments in the group. The amendment of the noble Lord, Lord Whitty, would restrict the scope of powers to make retrospective changes such that they could make only non-material changes. As I have said, we believe that the scope of those powers should not be categorically restricted. Flexibility can be desirable—I mentioned the possibility of members consenting to significant changes if they are part of a wider negotiating package—and it is much more important that we give members a fair say in what affects them. Our amendments do that, with a veto power no less. So, in the light of our amendments, the amendment of the noble Lord, Lord Whitty, is unnecessary.
The amendments of the noble Lord, Lord Eatwell, and the noble and learned Lord, Lord Davidson, would take away the clear responsibility of the responsible authorities to make a judgment on the effect of retrospective changes. It is not entirely clear who would take a view instead, but it might well end up being the courts. The difficulty here is that these are decisions—what is significant and who is affected?—that require a clear decision in order to start the right consultative process. Someone has to take a view on the nature of the effects in good faith. In our view, the authority is best placed to do that, given that it operates the schemes and would initiate and implement any changes.
Public authorities should not be held to unrealistic standards of judgment. That is inefficient, encourages inaction or excessive litigation, and hampers their ability to deliver their public functions. Not all effects will be so clear cut as to leave no room for disagreement, so it is right to leave a small margin of safety.
If responsible authorities do not exercise their judgment reasonably, they do so at their own risk. Of course, members can always challenge the decisions of the responsible authority on this point as part of the consultation, or even in the courts. So there is no justification or incentive for the authority to act irresponsibly or without good faith. Although I can understand the reason why these amendments have been tabled, I fear that I cannot support them.
However, I hope that the House is reassured that just because there is a small element of subjectivity, that does not mean that the way is open for the responsible authority to act in an arbitrary manner. More importantly, I hope that the House will agree that the Government’s amendments on retrospection provide excellent protections to members.
The Government have listened carefully on this topic and have brought forward sensible amendments inspired by previous amendments tabled by Members on the other side of the House, and I urge noble Lords to support them.
My Lords, it may be for the convenience of the House if I refer to the amendments tabled in the name of myself and my noble and learned friend Lord Davidson, since the government amendments are substantially responses to the points that we made in Committee. I want to make it clear why we feel that the situation has, let us say, not moved on far enough.
Let me deal first with Amendments 37, 38 and 39 because they make a proper, logical story. They seek to remove from Amendment 36 the role of the authority in deciding whether an adverse effect on the pensions payable has in fact occurred. In other words, the authority has to decide whether its measures should be challenged in consultation. This is as if, in a game involving Manchester United, penalty decisions against it were to be made by Sir Alex Ferguson. I am sure that he, as a talented football manager, would then make a decision on a reasonable basis. However, with all due respect to that distinguished person, do we think that these decisions would be made in a way which was balanced? I could choose any other football manager, including Mr Wenger, who apparently never sees things that happen on football pitches.
I refer to balance because in Committee the noble Lord, Lord Newby, in setting out the criteria that he applied in these circumstances, said that he wanted to achieve a sensible balance between members’ protection and the role of the authority. It seems that while the proposed new clause in Amendment 36 provides for a significant protection for members of the scheme, it is still not balanced in that it leaves the authority with the responsibility for deciding that its own measures have had an adverse effect on those members. In those circumstances, even the most reasonable person is likely to be reluctant to feel that measures which they are taking have a negative impact upon the scheme. Our amendments simply remove the role of the authority so that the new clause would say,
“containing retrospective provision which appears … to have significant adverse effects”.
In those circumstances it seems to me that the authority, facing the responsibilities that the noble Lord referred to, and without the protection of the statute giving it the decision-making responsibility—a decision-making role or power—would take a more balanced and reasonable view. These amendments are to encourage reasonableness on behalf of the authority.
Moving backwards, our Amendments 22 and 23 refer to what is now Clause 12, which deals with the employer cost cap. The problem with this clause is in subsection (7), where it is recognised that steps to change the cost cap may result in an,
“increase or decrease of members’ benefits or contributions”.
In other words it may decrease members’ benefits so that the action of using the cost cap to encourage efficiency and efficient management of pension schemes may result in the retrospective diminution of benefits which members feel that they have accumulated.
The key question is whether Amendment 36 covers that eventuality. The eventuality that it covers is,
“where … the responsible authority proposes to make scheme regulations containing retrospective provision”.
Changing the cost cap may have retrospective consequences but does not contain retrospective provision. Much as we welcome the general intent of Amendment 36, then, it does not deal with one of the significant cases of retrospection that still deface the Bill. Amendments 22 and 23 are designed to protect the benefits of pensioners against retrospective effect, perhaps unintentional, when there is some change in the cost cap. We are delighted to see the noble Lord, Lord Sassoon, here performing duties that were formerly performed for him.
Those two amendments are necessary unless the Minister can find a way for Amendment 36 to refer not simply to regulations containing retrospective provisions but to regulations that have retrospective consequences. That would be a way, I suggest, to transform Amendment 36 from a rather imperfect structure to one that would deal with retrospection throughout the Bill.
The amendments that I and my noble and learned friend have tabled are in the spirit of Amendment 36 and indeed of the Government’s laudable attempts to remove the retrospective elements—the ones, that is, which are unnecessary and potentially harmful to members; I understand that there are technical retrospective elements that are necessary—but I feel that they have not yet managed to achieve what the whole House wishes to achieve. Our amendments would contribute to that goal.
My Lords, I should be grateful if the Minister could comment on the extent and the manner to which the Government’s amendments to the ability to make changes and to make retrospective changes affect the fundamental issue of affordability. I apologise for raising this issue yet again but it is fundamental. We start, as everyone knows, from the OBR advising that there will be a cash flow deficit of £15.4 billion by 2016-17. My related question to the Minister is: what is the Government’s estimate of the additional cash flow deficit costs of both increasing longevity and, more particularly, the new single-tier pension proposals made by the DWP? It strikes me that two separate silos have been working on this, with the Treasury in one and the DWP in the other. Precisely what the effects of the loss of employer and employee NI contributions and the ending of contracting out will be on the deficit of pay-as-you-go public sector schemes seems to some extent to be a mystery.
I think it was in Committee that the Minister advised that he felt the estimates I suggested were too high; thus I would be grateful if he would comment on what the Government’s estimates are. My revised estimates, done with the assistance of Michael Johnson, who many noble Lords will know has done significant work on the subject, are that there is an additional cash flow cost from longer longevity of the order of £2 billion per annum, and there may now be an additional £3.4 billion resulting from the loss of public sector employers’ NIC rebates with the ending of contracting out and a further £4 billion per annum as a result of public sector employees continuing to enjoy an enhanced occupational pension as if contracted out while still being entitled to further accruals under the new single-tier state pension, once it appears. In contrast, private sector employers who are contracted out will be permitted to change their scheme rules, effectively to reduce pensions paid, without trustee consent. As I have said, I cannot believe that the prospect of a potential cash flow deficit of some £24 billion per annum will be acceptable to whoever is in power at that stage, given the state of the public finances. Dare I say that it seems that not only the Opposition but the Government are ignoring the affordability issue with regard to this legislation as it passes through both Houses of Parliament?
I would be grateful for a response to the question about to what extent room for manoeuvre is being reduced by the government amendments. Secondly, what is the Government’s revised, post-OBR estimate of the total cash flow deficit cost of the arrangements under the Bill?
My Lords, as the Minister said, I have Amendments 7, 31 and 35 in this group. I should explain that for the remainder of the discussion of the Bill on Report I am likely to be seeing it through the perspective of the Local Government Pension Scheme which, in response to the noble Lord, Lord Flight, is a funded scheme, not a pay-as-you-go scheme, and, moreover, a funded scheme that has recently reached agreement between the trade unions and the LGA, sanctioned by the CLG and the Treasury, on a new cost-management structure. I therefore think the costs of any limit on retrospection in that scheme are unlikely to arise. I probably should declare that I am an honorary vice-president of the LGA and a member of the GMB, although I have no pecuniary interest in the pensions covered by the LGPS. I was also, until recently, chair of one of its schemes.
The Minister deserves considerable credit for moving significantly on this front. It is clear that what appeared to be quite an open-ended ability to amend primary and secondary legislation in the original text of the Bill has been significantly modified by the changes which he has proposed and the procedures that he has outlined, particularly in relation to Amendment 36. It would be nice if he could go a little further, particularly in respect of two points. Amendment 7 would effectively prevent retrospective changes for non-administrative reasons that had a material detriment for any members of the scheme. The reference in Amendment 36 to “significant adverse effects” sounds like a significantly higher threshold than “material detriment”. Does the Minister think there is a real distinction there? Could some quite serious detriment in effect occur without triggering Amendment 36? I would hope not, but I would like some on-the-record reassurance on that point.
My noble friend Lord Eatwell has already raised my second point. There is a “judge and jury” problem with Amendment 36 but, in general, I welcome the clause. The procedure is sensible and the associated amendments are likely to be able to deal with the situation, if anything, slightly better than the procedural amendments that I have tabled. However, there is an issue as to whether a detriment is in the eyes of one party rather than appearing to be a detriment to any objective observer. That could be a cause, in the long run, for a serious lack of trust in whether Amendment 36 and its associated amendments really meet the point.
The Minister has gone a long way, and I congratulate him on that. I do not want to appear too narky about where we are but he could still make some improvements, some of them by giving clearer assurances today both on the point about material detriment and on the unilateral definition of “appears” which seems to arise in Amendment 36. Two and a half cheers for the Minister. He could make me happier were his response to my noble friend Lord Eatwell’s points and mine to be constructive today.
My Lords, I am pleased that I am moving in the right direction, at least as far as the noble Lord, Lord Whitty, is concerned.
On the amendments of the noble Lord, Lord Eatwell, there are two differences between the Alex Ferguson situation and the one that we are discussing. First, while he could of course be relied upon to act impartially in every circumstance, he is not given that freedom. There are a referee and various other officials on the pitch, taking decisions on a second-by-second basis. There is an authority; it is just not him. The noble Lord is concerned about what happens if that authority then acts improperly or unreasonably—if, say, the referee blatantly misses a series of handballs in the penalty area. The answer is that if there is a sense that the authority is behaving improperly, it has an oversight body: the courts. The authorities cannot just make arbitrary decisions, let alone unfair ones, without acting in good faith. If they do act unreasonably, they are also acting unlawfully. It is right that the responsibility lies with them, as they operate the schemes. Somebody has to make an initial decision. The underlying implication of what the noble Lord is saying is that the authorities will act in a malevolent way to do down scheme members. I do not believe that they will, or that that is the history.
My Lords, on a point of information, in the LGPS we make a clear distinction between an employing authority and an administering authority, the latter being the equivalent of a quasi-trustee body, whereas this seems to imply the employing authority— that is, the local authority. If it were the administering authority, I think that we would be slightly more reassured.
My Lords, I simply do not know the answer to that question. I will have to write to the noble Lord. I hope that, in doing so, I will be able to reassure him.
I turn to the amendment of the noble Lord, Lord Eatwell, on the cost cap. Its operation has been extensively discussed here and I hope that noble Lords were reassured that we will not seek to use it to reduce accrued benefits. If noble Lords have not been reassured, I hope I can reassure them now by setting out the Government’s own detailed amendments on retrospective provisions and protections.
As I have stated, the new clause on retrospective protections will require that retrospective changes to pension benefits with significant adverse effects be subject to the consent of members or their representatives. This would include changes made as a result of the operation of the cost cap. I have already made clear that adjustments to benefits or contributions under the cost cap would not be retrospective. The new clause, set out in Amendment 36, also provides protections to this effect. First, there would be the procedure set out in Clause 12(6) for reaching agreement on changes that are contingent on the operation of that mechanism. Then, when scheme regulations were made to give effect to those agreed changes, those regulations would require consent for any provisions that were retrospective and had significant adverse effects on pensions.
Given this, I hope that noble Lords are convinced that Amendment 23 is not necessary either. As the noble Lord, Lord Eatwell, himself said in previous debates, this would be a belt-and-braces provision to provide further protection to members in the event that the cost cap is triggered. There is no need for this additional protection because the response to the cost cap calls for the approval of the members themselves. If that response were to involve a retrospective change with a serious adverse effect, the implementing provisions in scheme regulations would also require consent. So the belt and braces are already in the Bill, were that extremely unlikely scenario ever to happen. In these circumstances and with these reassurances, I hope noble Lords will not press their amendments.
The noble Lord, Lord Flight, asked a couple of questions about whether the changes relating to restricting retrospection would reduce the Government’s ability retrospectively to reduce provisions and thus make it easier, in his view, to get the costs under control. The problem about that from a legal point of view—leaving aside whether it is desirable in practice—is that tinkering with accrued rights falls foul of human rights legislation and the Government have made it absolutely clear that they have no intention of going down that road. On the question of figures in Michael Johnson’s report, the Government simply do not recognise them. The House should be reassured that the costings for these reforms and the single tier have been fully worked through. If, at some stage in the future, the schemes appear unfinanceable, we have the cost cap; that is the whole purpose of having a cost cap. If his worse fears were borne out—and, as I say, we do not recognise the figures that Michael Johnson has produced—
I thank the Minister for giving way. He says that the Treasury does not recognise the figures in Michael Johnson’s helpful report, mentioned by my noble friend Lord Flight. Could he say what figures it does recognise because, clearly, the proposals for the single tier pension and the impact on contracted-out contributions came after the development of the public sector pensions and after the OBR report? There has to be a figure, given that he does not recognise that quoted by my noble friend, so what figure do the Government estimate it to be?
The best way of dealing with this is by writing to the noble Baroness to explain how the Government believe that the proposals for the single-tier pension can be accommodated within the finances we think are available. I do not believe that a single figure here deals adequately with it, but we will write to her. We have not had a huge amount of time to analyse Michael Johnson’s figures, but on first sight, they do not look like ones that we can follow.
As regards the amendments in the name of the noble Lord, Lord Whitty, and whether “material” is different from “significant”, is one a higher bar than the other? As I said earlier, we believe that they are virtually synonymous. We do not believe that material is of a lesser or greater value than significant. Therefore, we do not think that there needs to be any concern in that respect.
Amendment 31 would require that any change to scheme regulations undergoes consultation with a view to reaching agreement. I understand why the noble Lord is concerned that there should be meaningful consultation with scheme members and their representatives when scheme regulations are made. The Government carry out consultations for a number of reasons. While it is always good to have agreement, this will not always be the appropriate focus. Pensions are complex issues and regulatory changes may often be needed for minor and technical reasons. It surely would be impractical for the Government to undergo a more onerous consultation process every time a minor change was made. Moreover, this amendment is not necessary to ensure that this consultation is meaningful. This already is a mandatory requirement of any consultation process. If any stakeholder felt that a consultation was not meaningful or fair they could challenge this in court.
Amendment 35 goes somewhat further than Amendment 36. It would require that any change to scheme regulations after the first set of regulations has been made should follow the higher standard of consultation and reporting requirements set out in Clause 22. As I have said previously, this would be simply impractical. Amendments to scheme regulations can be made for a wide range of reasons down to the most minor of changes. It cannot be right that the more extensive provisions in Clause 22 should apply to every circumstance. Very often these changes are to the benefit of members and I am sure that any delay in implementing such beneficial changes because of the legal requirement to carry out the kinds of consultation set out in Clause 22 would not be seen by members in a positive light. I hope that noble Lords can understand why such a blanket requirement would not be in anyone’s interest. The Government already are committed to proportionate levels of consultation on all scheme regulations, which is the appropriate and responsible course of action.
Amendment 35 would also change Clause 22 so that, instead of setting a high bar for changing the protected elements, it would be illegal to make any such change unless the members or their representatives consent. I fully understand the concerns of some members and their representatives around these issues but, again, such a blunt instrument does not seem to me to be a particularly sensible way forward.
The Government have committed themselves to the reformed schemes as they have been negotiated and they are even now working hard with members and their representatives to ensure that these are implemented by 2015. The Government believe that the deal which has been put in place is one which should stand for 25 years, perhaps longer. It is an arrangement which represents a good outcome for both individual members and the taxpayer. The provisions of this clause are intended to reflect that commitment. The amendment in the name of the noble Lord, Lord Whitty, would go far beyond that and would seek to bind all future Governments over the next 25 years in a way that this House does not tend to endorse.
None of us can foresee the future. I will reiterate again that the Government see no reason why these pensions should not still be fit for purpose in a quarter of a century from now. However, the responsible course of action is to ensure that, if any future Government were to take a different view, for whatever reason, strong but appropriate processes are put in place to protect scheme members and to scrutinise the rationale for any changes they might seek to make. But the protections must strike a fair balance between the interests of the taxpayer and members. The Government do not believe that this can be achieved by allowing members to veto any change to scheme design, contribution rates and benefits. On that basis, I hope that the noble Lord will feel able not to move his amendment.
Amendment 5 agreed.
6: Clause 3, page 2, line 15, at end insert (but see section (Procedure for retrospective provision))
Amendment 6 agreed.
Amendment 7 not moved.
8: Clause 3, page 2, line 16, at end insert—
“( ) The consequential provision referred to in subsection (2)(b) includes consequential provision amending any primary legislation passed before or in the same session as this Act (as well as consequential provision amending any secondary legislation).”
Amendment 8 agreed.
My Lords, with the leave of the House I will repeat a Statement made earlier in another place by my right honourable friend the Home Secretary about our work to ensure the highest standards of integrity in the police. The Statement is as follows:
“Mr Speaker, we are lucky in Britain to have the finest police officers in the world. They put themselves in harm’s way to protect the public. They are cutting crime even as we reduce police spending, and the vast majority of officers do their work with a strong sense of fairness and duty. But the good work of those thousands of officers is undermined when a minority behave inappropriately.
In the last year, we have seen the Leveson inquiry, which cleared the police of widespread corruption but called for greater transparency in policing, and the shocking report of the Hillsborough independent panel. We have seen the sacking of PC Simon Harwood and the investigation of several chief officers for misconduct, and yesterday I told the House about the investigation led by Mick Creedon into the work of undercover officers from the Metropolitan Police.
I want everyone to understand that I do not believe there is endemic corruption in the police, and I know that the vast majority of police officers conduct themselves with the highest standards of integrity. This was confirmed by Her Majesty’s Inspectorate of Constabulary in its report last year. But that does not mean that we should ignore the fact that when it does occur, police corruption and misconduct undermine justice, let down the decent majority of officers, and damage the public’s confidence in the police.
We need the police to become much more transparent in their business. We need clearer rules for how officers should conduct themselves. We need to open up the top ranks so that policing is less of a closed shop. We need to make sure that officers who do wrong are investigated and punished, and we need to make sure that the organisations that we ask to police the police are equipped to do the job.
Many of our existing police reforms address these challenges. The new College of Policing will improve the quality of police leadership and drive up standards. Police and crime commissioners are making the police more accountable to their communities. Direct entry into the senior ranks will open up the police to talented outsiders. HMIC is more independent of the police, and for the first time it is led by a non-policing figure.
These reforms will help but we also need to take further, specific measures to root out corruption and misconduct from the police. First, in line with the recommendations made by Lord Justice Leveson, national registers of chief officers’ pay and perks packages, gifts and hospitality, outside interests including second jobs, and their contact with the media will be published online.
Secondly, the college will publish a new code of ethics, which will be distributed to officers of all ranks. In addition, the college will work with chief officers to create a single set of professional standards on which officers will be trained and tested throughout their careers.
Thirdly, to prevent officers who lose their jobs as a result of misconduct being recruited by other forces, we will introduce, for the first time, a national register of officers struck off from the police. The list will be managed and published by the College of Policing.
Fourthly, to introduce a sanction for officers who resign or retire to avoid dismissal, hearings will be taken to their conclusion, notwithstanding the officer’s departure from the force. When misconduct is proven, these officers will also be struck off by the College of Policing.
Fifthly, the college will establish a stronger and more consistent system of vetting for police officers, which chief constables and police and crime commissioners will have to consider when making decisions about recruitment and promotions. Every candidate for chief officer rank will need to be successfully vetted before being accepted by the Police National Assessment Centre.
Sixthly, Lord Justice Leveson’s report made several recommendations on policing, focused on providing greater transparency and openness. The Government accept what has been recommended, and the College of Policing, ACPO and others have agreed to take forward the relevant work that falls to them. I will place details of the Government’s response to each of the Leveson report’s recommendations on policing in the Libraries of the House.
Finally, I want to make sure that the Independent Police Complaints Commission is equipped to do its important job. Over the years, its work has been evolving and the proposals I announce today develop it further. Public concern about the IPCC has been based on its powers and its resources. I want to address both these issues.
Regarding its powers, last year Parliament legislated, with welcome cross-party support, to give the IPCC the ability to investigate historical cases in exceptional circumstances. In the same legislation, we gave the IPCC the power to compel police officers and staff to attend interviews as witnesses.
In addition, as I have already said, we will legislate as soon as parliamentary time allows to give the IPCC the power to investigate private sector companies working for the police, along with other powers the IPCC has asked for to improve its effectiveness and increase public confidence, and I am prepared to consider any further legislative changes that the commission says it needs.
But I believe the main difficulty for the IPCC is its capacity to investigate complaints itself. Last year, the commission investigated just 130 of the 2,100 serious or sensitive cases that were referred to it independently, while supervising or managing about 200. Individual police forces investigated the remainder. But 31% of appeals against forces’ handling of complaints were successful. That is simply not acceptable. I will therefore transfer to the IPCC responsibility for dealing with all serious and sensitive allegations. I also intend to transfer resources from individual forces’ professional standards departments and other relevant areas to the IPCC to make sure it has the budget and the manpower to do its work.
The Government’s police reforms are working and crime is falling. Corruption and misconduct are thankfully the rare exception and not the norm in our police, but that does not mean that we should not act. I believe this is a comprehensive plan to address public concern about the integrity of the police”.
I commend this Statement to the House.
My Lords, I thank the Minister for repeating the Statement in your Lordships’ House today. We certainly welcome the direction of travel on this issue, and many of the measures outlined are sensible in principle. Obviously, a lot of detail has yet to be revealed and I hope that we will have the opportunity to contribute to that debate in your Lordships’ House.
British policing has an enviable reputation across the world for low levels of corruption, high standards of integrity and our tradition of policing by consent. That is why, when there are cases where standards fall below the level that we expect, we are rightly appalled and action has to be taken to address that. On many occasions when I have asked police officers why they have joined the police, without exception all have very high on their list a very simple reason: to help people. The vast majority of police officers join the force to help the public and keep people safe from crime and harm, and they take great risks when doing so.
Most people, when they go out to work in the morning, know that they will never face a situation where their life could be at risk. However, in Greater Manchester, there is now the trial for the killing of two police officers who were shot down for answering a routine 999 call. Officers such as those and their colleagues know that this is a risk they face. Every day, police officers across the country face incidents and disturbances. They have to inform families if their loved ones have been injured or killed. They have to deal with some very unpleasant situations and they undertake those responsibilities with great integrity and without regard to their own safety.
However, police officers are deeply concerned about serious cases that undermine confidence in policing. The vast majority of police officers want action against officers who let down the force and the public. They also want action to improve standards. We must have robust and meaningful action to tackle those who have weakened public confidence and respect. The Minister mentioned some examples; others include hacking and the Hillsborough tragedy. It is clear that there are also problems with some undercover officers, and it is right that we address cases where policing has failed to protect the public or deliver justice. We must ensure that we have a framework in place to make such cases less likely and take effective action against those individuals involved.
In the light of that, many of the Home Secretary’s measures are sensible. We support the implementation of the Leveson recommendations. Your Lordships’ House made it clear that it wishes the rest of Lord Justice Leveson’s proposals to be implemented with similar speed. We support a code of ethics, stronger professional standards and stronger action when these are breached. The Stevens commission has taken evidence on issues around codes of ethics, national registers, the role of the College of Policing, and proposals for striking off police officers, and is likely to make new proposals in this area.
Perhaps I may ask the Minister some questions around this matter. I would appreciate his answering me today, but if he cannot it would be welcome if he wrote to me. Can he say any more about the professional register? My understanding from the Statement is that the new College of Policing will manage and publish the register and have a duty to ensure that those guilty of misconduct will not be allowed to work for any other police force. The Minister said that they will be “struck off”, but from what? There is currently no register of police officers from which they could be struck off. Will there be a new comprehensive register of police officers, or will there instead be a list of those who have been found guilty of misconduct or other offences? What criteria willbe used?
The Statement implies that this will apply only to officers facing disciplinary action leading to dismissal, and there may be other cases where it would be right for someone to be on the register. Given the welcome commitment that disciplinary action will continue, even after an officer retires or resigns, will the Minister confirm that such officers will still be included on any list? What is meant by “publish”? Does that mean that the list will be publicly available or available only to the police? The Minister will be aware that former police officers often find employment in private security work of varying kinds, including, I am sure, in G4S. Will the information also be available to prospective employers?
I have one further point on this issue. As I have said, it is welcome that disciplinary action will continue even if police officers resign or seek early retirement, and we have called for such action. However, the Minister said in the Statement that those officers will face sanctions if misconduct is proven. What will those sanctions be? Being placed on a list or struck off a register is hardly a sanction if the officers have already resigned or retired.
On the issue of vetting, the Statement says that the college will establish a stronger system of vetting but that chief constables and police and crime commissioners have only to “consider” this. It does not appear to be binding. Is that the case, or have I misunderstood? Although candidates for chief officers’ posts will be vetted, it is not clear by whom. Given that the Government’s Statement places on the College of Policing additional responsibilities beyond those previously proposed, is the Minister confident that it has the necessary resources to undertake this very important work? Unless it is 100% accurate, it will not be worth very much or be that effective.
We welcome the code of ethics. Can the Government confirm that the activities of undercover officers such as using the identities of deceased children should be addressed in such a code?
Although there is much to welcome in the Statement, we are disappointed by the proposals regarding the IPCC. The Minister will be aware that Yvette Cooper, the shadow Home Secretary, has argued for the past year that the IPCC has neither the powers nor the resources needed to be really effective. We remain concerned that it will struggle to produce a timely response to the Hillsborough tragedy, and there are countless cases where the IPCC has failed to investigate swiftly.
The problem is that the Home Secretary’s reforms, which are outlined today to the IPCC, seem to be incremental. We are not convinced that the Government are doing enough to give the IPCC the real powers that it needs, or to create a proactive rather than a reactive culture to deal with problems, so there is a concern that it will not do enough to restore public confidence in the IPCC to solve problems swiftly, to get justice, and to ensure that lessons are learnt when policing goes wrong.
I am still not clear—I listened very carefully and I read the Statement before it came to this House—about the additional resources that will be available to undertake the extra work. It appears that all serious and sensitive cases will be dealt with by the IPCC rather than by individual police forces. How will “serious and sensitive” be defined, and who will define it? What about initially low-level cases that are deemed not to be serious or sensitive but which, as the investigation progresses, are deemed to be serious and sensitive? Will they be transferred to IPCC? How much of the total police forces’ budget will be transferred to allow the IPCC to deal with all serious and sensitive cases? Will the Government commit to ensuring that the adequacy of funding is kept under review?
In the Police Reform Act, Ministers argued that more cases should be dealt with by individual forces rather than by the IPCC. As a result, my understanding is that under the Government’s policies the number of commissioners roughly halved. Can the Minister confirm that he considers that that was a mistake and that the Government will now be recruiting more commissioners? It is hard to imagine that with additional work and investigating all serious and sensitive cases, more staff will not be needed, but where will those staff be found? How many staff and how much financial resource do the Government envisage transferring from police forces to the IPCC, or will they recruit in other ways? Will there be any new money from the Government, or are the Government confident that the IPCC can be fully and adequately resourced by this transfer of funds?
My final question, the Minister will be pleased to know, is whether he can also confirm that the additional powers for the IPCC, announced by the Home Secretary, will be introduced in this Parliament.
We are concerned that this incremental reform is a lost opportunity to introduce a new, robust organisation with a new framework. Currently, the IPCC, the PCC, the police and crime panels and the College of Policing all have a role to play. One has to ask whether one strong organisation with the appropriate framework and powers would be more appropriate. I really feel that the Government should look again at replacing the IPCC altogether with a new police standards authority, and with a new and coherent framework of standards and accountability for the police.
We all want to see well motivated, professional police officers who are keen to do a good job and serve the public. We have a duty to the public to ensure that they can have confidence in the work of the police and that action will be taken when things go wrong. We also have a duty to ensure that police officers get the support that they need and have a proper framework of accountability to keep standards high. The Statement today is welcome and responds to many of the concerns that we have raised, for which we are grateful. However, we remain concerned that it does not go far enough and that it will not deliver the kind of protection and framework that the police and the public need.
My Lords, I thank the noble Baroness, Lady Smith, for her general welcome for this Statement. I know that in another place similar support was given to the Home Secretary’s Statement. This is good news. I shall start with the last point made by the noble Baroness, which was on rebranding. Do we want a new body? I do not think that is necessary. The IPCC has good leadership under Dame Anne Owers and it has a sense of direction, which is now supported by the Government through this Statement. Although I cannot anticipate what may be in future Queen’s Speeches, I am fairly confident that legislation on this matter will not be long delayed. Indeed the Statement drew attention to that.
The IPCC is currently engaged in a lot of extremely serious investigations. The Statement referred to them as probably lying at the heart of the realisation that we need to look afresh at how we investigate the police, and at what new framework we should establish. This is the Government’s response. We believe in beefing up not only the powers but the resources of the IPCC. The noble Baroness asked where those resources were coming from and whether there was any fresh government money. The Statement rightly said that they were coming from the existing budgets of police forces—certainly in the main that will be the case. However, the matter will be discussed with each police force.
A Statement such as this is clearly indicative rather than absolutist. Certainly we will debate the issues that it raises over the next few months. However, it is important, when the Government have something to say on an issue as important as this, that they demonstrate to the House, through the way they present the issues involved, their direction of travel. That was the purpose of the Statement today.
The noble Baroness asked a large number of questions. There was a radio programme called “20 Questions”. I did not count the noble Baroness’s but I felt that she asked a fair number. I will do my best to answer them, but she very kindly said that I might write to her. It might help if I wrote on some of these matters and put a copy in the Library of the House.
The noble Baroness asked how public the professional register would be. It will be a public document. It is intended that organisations such as the Security Industry Authority and private security firms will be able to take note of these matters. It will not be just for police officers to note who has been in effect deregistered from the police service as a result of misconduct.
The parallel organisation to the IPCC is the College of Policing. With its code of ethics, it will provide the framework in which the new sense of purpose about integrity can be addressed. The noble Baroness asked whether it would cover matters such as the identity of children. As she knows, that is being investigated by Chief Constable Creedon at the moment, and he will report on the full implications. That is just the sort of issue at which I expect a code of Essex—sorry, ethics—to look. I apologise for that slip of the tongue.
The noble Baroness also asked how one would define “serious” and “sensitive”. One tends to know what is serious and sensitive when it turns up. This will be about the relationship between the IPCC and individual police forces. Individual forces have just as great an interest in making sure that the public are supportive of them and perceive that the integrity of the police is based very locally within each police force.
I have a few further points to make. The list is designed to ensure that all those who are dismissed as a result of misconduct proceedings, or would have been dismissed had they remained in service, cannot find employment in another force. That is the principal purpose behind it. They are struck off from being a police officer in the future. We envisage that the list will be used by other employers—I have mentioned employers in the security industry—to consider whether or not to employ such dismissed officers.
I hope that the noble Baroness will allow me to write to her on the other questions which I have not addressed, and I hope that I have assisted the House in giving some sense of the thinking that lies behind the Statement.
My Lords, before the clerk starts the clock for Back-Bench contributions, in the interests of ensuring that as many noble Lords as wish to do so are able to contribute in the 20 minutes which now follow, perhaps I may remind the House that this is an opportunity to put brief questions.
My Lords, I declare an interest in policing and the security services. The Government are to be congratulated and supported by all sides of the House on bringing forward this courageous package of measures because it is clearly in the public interest and in the interests of the service to ensure the highest levels of integrity in policing. While there may be concerns about other aspects of police reform, this package is clearly moving in the right direction. When the Minister places a letter in the Library of the House, will he consider including in it a response to just how and when resources will be transferred from individual police services to the IPCC to enable it to carry out its enhanced role? It is not clear at the moment whether only budgets are to be transferred or whether this will involve real, live investigators moving sideways on attachments, moving permanently, and so on. The House would welcome some fairly clear guidance on how this is to operate, but in the round, these proposals are courageous and are to be welcomed.
My Lords, I thank the noble Lord, who speaks with considerable experience of these matters. I shall certainly do my best to respond promptly to his request for details of the transfer of resources and whether indeed that will involve more than cash and budgets, and will extend to resources. To some degree, the Statement is a starting point for a discussion with individual police forces and, indeed, with police and crime commissioners for they too are engaged in the governance of the police across the country; I hope that that dialogue will be productive. I am sure that noble Lords appreciate that this is considered to be an important development in the integrity of policing.
My Lords, I, too, welcome the Statement and I agree with the implicit message that transparency and integrity go hand in hand. I do not doubt that, when there is a problem, those who feel it most keenly are individual police officers who themselves have shown the utmost integrity. First, what consultation has been undertaken on these measures, not just with ACPO but with those who represent the lower ranks of the police service? Secondly, will any of these measures —I am thinking particularly of the registers of interests, gifts and so on—apply to civilian staff within police forces?
My noble friend has raised two very interesting aspects and I thank her for bringing them forward. The key thing about these proposals is that they will affect the professionalism of the police at all ranks so, as she rightly points out, they represent a development that I hope will be welcomed. They will be part and parcel of ongoing discussions that we are having as we seek to create a modern police force in this country—something that covers a whole load of matters and will now include this. We will make sure that that happens.
It is intended that those employed by the police in a civilian capacity will be subject to IPCC involvement, a matter that the IPCC itself has raised with us. I cannot say whether the register of gifts, or of contacts with the media, will be extended into that area but she makes a very interesting suggestion that it should do so.
My Lords, I would like to ask the Minister a question which my noble friend did not ask. The noble Lord started his Statement by referring to falling crime levels. The Minister will be aware that integrity and transparency are not simply about high-profile corruption cases or miscarriages of justice but about the way in which the police represent what is going on in relation to crime and their success in dealing with it. He will also be aware that, a couple of weeks ago, the Office for National Statistics seriously queried the rate at which crime is falling and suggested that some of the police forces’ figures,
“overstate the true rate at which crime has been falling”,
and that officers may have been failing to document some offences.
The Minister may also be aware that there are even more serious allegations around, some of which may well be aired in a meeting here tonight, that some of that underrecording is deliberate, whether as result of reduced resources in police forces or as a result of deliberate connivance or encouragement by senior police officers. If that is at all the case, there are serious issues of integrity that need to be addressed. I am not clear whether this new structure would be able to address such issues in the police force; they are basically administrative but have huge implications for the public’s and the body politic’s trust in what the police are telling us. In particular, can the Minister indicate whether the ONS suggestions are being pursued and whether, in future, they could be pursued through these new arrangements?
The noble Lord raises a very serious issue. There was in fact a letter in my local paper only last week on this very point, and I get—gratis, I have to say—a copy of the New Statesman, where I think there was a similar article last week. I have certainly read an article in a journal recently implying the same thing.
It is of course very important to keep oneself well informed, even if it is just to inform one of where people are going wrong. This issue is a very serious one. I do not think there is any dispute about the fact that crime figures are falling. There are matters of definition, which I think it is going to be in everyone’s interests to get tidied up, but the allegation that these figures are being manipulated is a very serious one. Unfortunately, I cannot attend the meeting which the noble Earl, Lord Lytton, who is not in his place at the moment, has called for this evening. I would like to have gone to it but I am on duty in the Chamber. However, I have asked an official to attend because it is very important that the Home Office follows these arguments and listens to what is being said.
My Lords, as one who was privileged, 45 years ago, to be Police Minister in the other place, I suggest that the situation which now obtains in relation to the police is not all that dissimilar to that which existed in the early 1960s. The Government of the day, a Conservative Government, set up the royal commission under Sir Henry Willink because they were convinced that only an inquiry that was wholly independent of government could have the chance of replacing the police in that position of trust and distinction which they had traditionally occupied in the community. I respectfully ask the Minister to consider deeply whether that precedent should not now be followed in the circumstances prevailing.
I cannot accept the noble Lord’s suggestion that there is equivalence between the two situations, but I am certain that the restoration of good practice within communities is a very local matter. That is why the focus of the Statement is on the engagement of individual forces and the maintenance of professional standards throughout the police force from top to bottom. I hope the noble Lord will understand that I am not prepared to go quite as far as he would suggest.
My Lords, perhaps I may pick up on something said by the noble Baroness, Lady Smith. Is it not the case that senior officials in Whitehall and others who need access to highly sensitive, classified information undergo a process called positive vetting? Does this apply to senior police officers and, if not, why not?
It is intended that an enhanced vetting process will apply to all senior appointments within the police force. All police recruits should be vetted at the point of recruitment, but the vetting process for senior posts within the police will be enhanced.
My Lords, as one who was a member of the former Police Complaints Authority who now serves on the small review group looking at serious cases for the IPCC, I welcome what the Minister has just announced. Perhaps I may ask him two questions. The first relates to the point raised by the noble Lord, Lord Condon, about the implications of a transfer of resources from local areas to the IPCC. Has the Minister worked out the figures that we are talking about, bearing in mind that the cuts that have been imposed on police forces are causing serious problems in local areas? Has he worked out what the implications of the transfer might be, because many lower level cases are best dealt with at the point at which they occur; that is, in the local area. Secondly, the Minister mentioned the powers that are required by the IPCC and said that we can expect legislation. Will he consult not only the IPCC but the many other relevant organisations which have repeatedly raised concerns about the existing powers of the IPCC? What will he do to ensure that their views are taken into account before the legislation is formed?
On the noble Lord’s latter point, if there is to be legislation, there will have to be a period during which Parliament and the wider public will be engaged in considering what might be in it. On resources, the Home Secretary will write to the IPCC, Her Majesty’s Inspectorate of Constabulary, PCCs and the college itself to seek detailed proposals on how the transfer of resources might take place and over what period. I think that will help the noble Lord, Lord Condon, in his question to me. This is a matter of consensuality. I think that there is sufficient consensus within the police service to enable this to be done on a consensual basis, recognising that integrity in policing is holistic and not specific to one particular force.
Can my noble friend confirm that there was a point at the turn of the century when in police education the phrase “leadership training” was changed to “management training”? If that is so, can he assure the House that that will be reversed and the lesson will be learnt that leadership is crucial in an effective police force?
My noble friend quite rightly recognises that we have been through a process where management has been seen as being the most important ingredient for success. Indeed, management is important, but in policing—and many other services—leadership is vital because of how those who command inspire those who work with them. The College of Policing is based on developing exactly that set of skills and indeed a professional ethos within the police force and reinforcing that professionalism.
My Lords, I, too, very much welcome the Statement, particularly the fact that the IPCC will now investigate all serious offences. For too long, we have had the ridiculous situation of the police investigating themselves, so this is a very welcome move indeed. I also welcome the other changes that the Minister has outlined.
However, there is another problem that needs to be addressed: the issue of police officers with a criminal conviction being allowed to remain as serving police officers. I have looked at this issue over the years, most recently in January 2012. I was looking at it in respect of the Metropolitan Police but I suspect that in other police forces the pattern is similar. I was absolutely shocked to find that there were 400 serving Metropolitan Police officers who had had a criminal conviction, a caution or a penalty note for disorder. Fifty-five of these were for offences of violence—of which 30 were for assault, ranging from battery through to actual bodily harm—and 22 for offences involving dishonesty.
All sorts of issues come out of this. For example, can it be right that serving police officers who have a conviction for violence are able to volunteer to be trained to use firearms or tasers? Can it be right that police officers who have a conviction for dishonesty can then appear in court? It seems inconceivable that police officers with serious criminal convictions should be allowed to serve. I urge the Government to look at this as a matter of urgency.
I am equally shocked by the figures that my noble friend Lady Doocey has evidenced. We had the case of Simon Harwood, which I think made everyone aware that it was possible for people to resign from one force and sign on with another. This is designed to make that much more difficult. Indeed, as I have said, the vetting of constable appointments will make it very much more difficult, and that will address the concerns that my noble friend has expressed.
Public Service Pensions Bill
Clause 5 : Pension board
9: Clause 5, page 3, line 4, at end insert “(or each scheme manager)”
My Lords, I will start with government Amendments 10 and 11, which would require equal numbers of employer and member representatives to be appointed to each pension board in the public service pension schemes.
The noble Lords, Lord Eatwell and Lord Sharkey, previously argued for an amendment that would have required one-third of pension board appointees to be member representatives. Their amendments essentially sought to create parity with requirements that apply to trust-based occupational pension schemes.
During Committee, I explained why simply importing those requirements was in our view inappropriate, but we accept the principle that employees should be properly represented, so, for the public schemes, we propose that there should be equal representation. That would mean that there will always be equal representation of employer and employee interests, regardless of the number of participating employers in a scheme. Given that public service pension boards will not have a role in setting the scheme regulations, there is no need to engineer a balance that favours either group.
The amendments would not prevent schemes appointing other types of board member. We anticipate that schemes will want to include scheme manager representatives, independent board members and other interests. It is of course right that other legitimate interests can be included alongside the core of employer and member representatives. We believe that our approach offers a fairer and better way to ensure that members’ interests are represented in the public schemes.
The other amendments in the group are straightforward clarifications and corrections. Amendment 9 would reinforce the appropriate reading of the Bill. As we know, there will be multiple scheme managers in the locally administered fire, police and local government pension schemes. The amendment makes it clearer that each of them shall have a pension board.
Amendments 12 and 13 are minor and technical corrections to ensure that the Bill operates as intended. Amendment 12 ensures that a scheme advisory board can be given a role in advising the scheme managers and pension boards in any public scheme that is administered by more than one scheme manager. The previous drafting inadvertently and incorrectly prevented a scheme advisory board being given such a role in the police scheme. The amendment corrects that.
Amendment 13 responds to a point raised by the noble Lord, Lord Hutton, in Committee, by adjusting the provisions that prevent a person with a conflict of interest being appointed to the scheme advisory board. The change means that mere membership of either the pension scheme or a connected scheme does not constitute a conflict of interest. The amendment would mean that the conflict of interest provisions in this clause exactly mirror those already in Clause 5. I commend the amendments to the House.
My Lords, we on this side welcome the amendments. The Minister gave a commitment to the House which we are pleased has been honoured. We recognise that significant movement has been made by the Government in relation to governance and pension boards. In particular, we applaud what the Minister said about equal representation on pension boards. To have employees on such pension boards is a very welcome development.
Perhaps it is a small matter, but the Minister referred to the amendment dealing with conflict of interest. It is particularly gratifying to see that a small matter which might have been seen as an obstacle to equal representation on the pension board has been removed by careful drafting.
My Lords, I shall speak briefly in support of Amendments 9, 10 and 11. I raised the issue of member representation on pension boards at Second Reading, and in Committee, as the Minister said, I tabled an amendment that would have required one-third of members of pension boards to be members of the underlying scheme. I was grateful then for the support of the noble Baroness, Lady Donaghy, and the noble Lord, Lord Eatwell, for the amendment.
With the amendments now before us, I think that the Government have taken a realistic and fair view of member representation. The equality of employer and employee representatives on pension boards is an entirely satisfactory resolution to the problems that we outlined earlier. In fact, I think that the amendments provide a better solution than those proposed previously here and in the Commons. Equality of representation is very simple and clear and completely unambiguous. I know that my noble friend has been instrumental in securing the amendments, along with my right honourable friend Danny Alexander, and I pay tribute to their efforts and thank the Government for proposing the amendments.
Amendment 9 agreed.
Amendments 10 and 11
10: Clause 5, page 3, line 26, leave out paragraph (c) and insert—
“(c) requiring the board to include employer representatives and member representatives in equal numbers.”
11: Clause 5, page 3, line 32, at end insert—
“( ) In subsection (4)(c)—
(a) “employer representatives” means persons appointed to the board for the purpose of representing employers for the scheme and any connected scheme;(b) “member representatives” means persons appointed to the board for the purpose of representing members of the scheme and any connected scheme.”
Amendments 10 and 11 agreed.
Clause 7 : Scheme advisory board
Amendments 12 and 13
12: Clause 7, page 4, line 10, leave out from “Where” to “in” in line 13 and insert “, by virtue of section 4(5), there is more than one scheme manager for a scheme mentioned in subsection (1) (and accordingly there is more than one pension board for the scheme), the regulations may also provide for the board to provide advice (on request or otherwise) to the scheme managers or the scheme’s pension boards”
13: Clause 7, page 4, line 33, after “scheme” insert “or any connected scheme”
Amendments 12 and 13 agreed.
Clause 8 : Types of scheme
14: Clause 8, page 5, line 4, at end insert—
“(3A) A scheme under section 1 which replaces a defined benefit scheme may only be established as a defined benefits scheme.”
My Lords, this amendment, which is a reprise of something that we debated in Committee, derives from a peculiarity of the process through which this Bill has gone, in that many of the measures in the Bill derive from negotiation between the trades unions, other interested parties and the Government. Having reached agreement, the Government’s side seems to appear in the Bill but the assurances given to the other side in the negotiations do not. What we have instead is simply a continuous series of government assurances.
This amendment requires that a defined benefit scheme should be replaced with a defined benefit scheme. This reinforces the Government’s oft-repeated commitment to maintaining the defined benefit structure once the definition of the defined benefit has been changed, in the way that was proposed by my noble friend Lord Hutton. However, Clause 8 still provides that any scheme, once closed, can be replaced by,
“a scheme of any other description”.
Those are the exact words. As I said just now, the Government have continuously sought to give assurance that they would not replace a defined benefit scheme by anything other than a new defined benefit scheme but they have proved peculiarly reluctant to place such a condition in the Bill. This persistent reluctance is becoming quite disturbing and is significantly undermining the confidence of pension scheme members that their rights are going to be protected in the ways that have been suggested.
As I pointed out in Committee, the noble Lord, Lord Newby, further undermined the confidence of members when he said on 19 December that,
“although the Government have absolutely no intention to change the basis of the schemes, it makes sense for a piece of legislation, which we hope has a long life itself, to allow flexibility in the future if there are unforeseen changes”.—[Official Report, 19/12/12; col. 1585.]
Therefore, the Government are making a commitment: they continuously assure members that they will replace defined benefit schemes only with newly constructed defined benefit schemes—but, on the other hand, perhaps unforeseen circumstances mean that they will not.
I feel it is appropriate that the Government keep their side of the deal, which was that the defined benefit schemes would move from a final salary scheme to a salary-averaging scheme, which was a deterioration in the future pension benefits available to scheme members. They accepted that because the other side of the deal was that the Government said that they would commit not to move away from defined benefits. The Minister really has to tell us why the Government are so reluctant to keep their side of the deal. I beg to move.
My Lords, this is indeed a reprise of a debate which we had in Committee. I believe that the Government have been extremely clear about their position on this issue throughout the legislative process, both here and in another place. Let me explain again why we remain unmoved. At the risk of stating the obvious, the Government have no desire or intention to replace the defined benefit schemes that have been negotiated. Officials, employers and member representatives have worked extremely hard to agree scheme designs that meet the needs of the different workforces and which are fair and affordable.
We believe that the new schemes are fit for purpose. Everyone is now working to implement these schemes from April 2015 for most workforces, but earlier than that in some cases. Draft regulations for the Civil Service scheme have been shared with the House, while the local government scheme in England and Wales has gone out to informal consultation on its own draft regulations.
While each set of regulations remains a work in progress, there can be no doubt that they would establish a defined benefit scheme of the agreed career average design. So when the Government say that we have no other intention than to create defined benefit schemes, those are not mere words—we are putting them into practice. The Government say that we have no intention of replacing defined benefit schemes with other designs, and that intention is underpinned clearly in the Bill by Clause 22.
The extent to which a scheme is a CARE scheme is explicitly one of the protected elements in the clause. That means that for a full 25 years—26 years in some schemes—the defined benefit design could not be easily changed. To do so, the responsible authority would have to consult on the proposed changes with all those affected,
“with a view to reaching agreement”.
That is a higher standard of consultation than in most other statutory consultations. The authority must do more than seek out and consider the views of interested parties; it must engage with them, with the aim of reaching agreement with them. In addition, the authorities must present a case to Parliament, or the devolved legislature, for changing the scheme design from career average, notwithstanding an explicit presumption written into the Bill that it would not be desirable to change the design before 2040.
There is no ambiguity here. Noble Lords and scheme managers can be fully reassured of our commitment to a defined benefit arrangement. It would be misleading and unnecessarily alarmist to imply anything to the contrary. So I say again: there is no prospect of the Government wanting to replace the defined benefit schemes that we are working so hard to develop, and I believe that that is the position of the party of the noble Lord, Lord Eatwell, also. The noble Lord may say, as he has in the past, that Governments come and go, but the status of the new defined benefit schemes will be protected by the Bill. I therefore urge the noble Lord to withdraw his amendment.
That was an intriguing reply. The usual reply in circumstances where the Government feel that they have covered all bases is that an amendment is unnecessary, but the Minister did not feel that he could say that. It is striking that, despite his variety of assurances, a simple statement is unacceptable. However, under the circumstances, I will take this away and think about it further. For the moment, I beg leave to withdraw the amendment.
Amendment 14 withdrawn.
15: Clause 9, page 5, line 22, leave out “or decrease”
My Lords, this amendment relates to revaluation. Clause 9 appears to allow the Treasury to change yet again the basis of revaluation, this time away from the CPI to something else. We discussed this in Committee and various assurances were given in that respect, although they are not as yet reflected in the Bill. However, no reassurances were given—indeed, the Minister was less than his usual emollient self—in relation to the provision in the Bill that in effect allows for negative revaluation in the light of changes in the CPI. That means that the Treasury can on the one hand amend the index and on the other impose a decrease in the accrued pension without any consultation with those affected, and in a way that, in the case of the LGPS, seriously undermines not only long-established practice but the recent agreement between the LGA and the trade unions.
I have looked at the history of the LGPS over the past 30 years, although it has actually run for a longer period than that, and there was only one point at which the relative index, at that point the RPI, actually fell at the point at which it was evaluated, and that was from September 2009 to the 2010 increase.
There were no precedents at that time. We had to refer back to the Pensions (Increase) Act 1971, which allows for increases but does not allow for decreases. The interpretation at that time was that that Act did not permit a decrease, so the 2010 adjustment was, in effect, zero. That is one aspect.
The other aspect of having the potential for a negative adjustment in revaluation is that it is inconsistent between those who are already receiving pensions or who are entitled to deferred benefits and are therefore governed by the Pensions (Increase) Act 1971, in which case their benefits would not be reduced, and active members who are still contributing to the scheme and who would, at precisely the same time when a negative revaluation could be made under this clause, see their benefits go down. We would therefore be treating active members disfavourably compared with members who have left the scheme or are already drawing their pension.
I am grateful for the assurances on the continuation of the CPI, but the fact is that the sudden and unexpected replacement of long-established RPI by the CPI has left a legacy of distrust in the schemes. Part of that is that if the CPI, as is expected, performs, if that is the word, less substantially than the RPI, there is a greater likelihood or possibility of a negative figure. The recent agreement between the LGA and the trade unions made it clear that past practice would continue to operate, and that if there were a negative change in the index there would be a nil adjustment. The implication of this clause is that it is attempting to override that commitment and agreement, which I think the Minister, and certainly some of his predecessors, would accept got the Government out of a very difficult position on pension reform in general and the LGPS in particular. Therefore, unravelling that aspect of the agreement—there are other amendments I will come to with a similar effect—is not helpful.
Amendment 15 would stipulate precisely what is already past practice and in the agreement: namely, that if there is a negative movement in the index, there will be a nil adjustment. I think the Government should accept the amendment. I appreciate the strong words of the Minister last time that the Government are not prepared so to do, despite the anomalies and distrust it would create. There are alternative amendments on this in this group in the name of my noble friend Lord Eatwell. Perhaps the Government could at least show their good will by accepting that if there were a negative increase, it would have to be subject to the affirmative procedure as provided for in my noble friend’s amendment, which no doubt he will speak to more ably than me shortly.
If the Government do not move at all, we are in some serious difficulty. It is causing considerable upset among employers, among those who have to engage in the new cost-management process within the Local Government Pension Scheme, among the unions and among the members of that scheme. The Minister could assuage those anxieties easily tonight by accepting my amendment or, in default of that, my noble friend’s amendment. It would be wrong for the Government to reject both. We would be on some sort of collusion course, whereas in general the LGPS and the arrangements for it from 2014 are done and dusted in a way that frankly was probably beyond the Government’s dreams only a year or so ago. I think that would be most unfortunate not only for the members of and employers in the scheme but for the Government and for future relations. I genuinely hope that the Government can move on this issue tonight. I beg to move.
My Lords, I fully support the arguments put forward by my noble friend Lord Whitty, particularly on the complications that would arise with respect to the Local Government Pension Scheme. The amendment in my name and that of my noble and learned friend Lord Davidson refers to the general proposition in Clause 9(3) that,
“the Treasury may determine the change in prices or earnings in any period by reference to the general level of prices or earnings estimated in such manner as the Treasury consider appropriate”.
The Treasury has a completely free hand to determine the change in prices or earnings to be applied to the structure of the pension scheme. It seems to us on this side that this is really a step too far, so we have proposed that it should be subject not to a negative Commons procedure but to the affirmative procedure so that there can be a truly substantive debate on any particular proposal that might be unreasonable.
In Committee the Minister said:
“Any attempt to exercise this discretion in such a way that did not produce accurate and appropriate estimates”—
I must say as an economist that there is no such thing; there are estimates, but “accurate and appropriate” is something different—
“with reference to a reasonable index of prices or earnings”—
there is no such thing as that either—
“could be challenged by scheme members. Any decision which is not reasonable”—
that is fine—
“even without this amendment … could be challenged by judicial review and struck down by the High Court”.—[Official Report, 15/1/13; col. 608.]
What a cumbersome procedure. The affirmative procedure may be seen as taking somewhat more time and requiring more effort than the negative procedure, but how much better than saying, “Well, if this goes wrong, you’ve got to take it to the High Court”? That really is truly unsatisfactory.
Introducing this very minor amendment will provide an environment for the discussion of changes in the chosen index that can be deemed to be reasonable and to have the confidence of members of the schemes. I feel that this approach, perhaps allied with that suggested by my noble friend, would provide the confidence in the process of revaluation that from time to time can be enormously important in maintaining standards of living, particularly of more elderly pensioners.
My Lords, as we are debating a group that started with an amendment moved by the noble Lord, Lord Whitty, I shall take this opportunity to answer the question he asked me earlier about whether the administering authority or the employing authority would determine whether an effect is significant. I am extremely pleased that I did not try to reply at the time because the answer is neither. It will be the “responsible authority”, because that is the authority that will be making the scheme regulations. In the local authority scheme, it would be not the employer but the Secretary of State. I hope that answers that question.
We have debated the amendments in this group before, so I shall try to be relatively brief in explaining why I do not believe it would be fair to restrict the revaluation of accruals from directly tracking growth, including when it is negative. Even though negative changes in prices or earnings are exceptionally rare, the Government firmly believe that if there is no revaluation ceiling, it would be unfair to have a revaluation floor to the benefit of members.
This is the sort of unbalanced risk-sharing between members and the taxpayer that the measures in this Bill seek to remove. The report by the noble Lord, Lord Hutton, specifically criticised this “asymmetric sharing of risk”. In addition, such a revaluation floor could lead to the cost cap being breached, to the detriment of future members who simply end up paying for past members’ accruals growing faster than the scheme revaluation rate. For those reasons, I will not be able to support the amendment of the noble Lord, Lord Whitty.
I am also unable to support the amendment of the noble Lord, Lord Eatwell, which would make the annual Treasury revaluation order affirmative rather than negative. As we have said before, this would not be an efficient use of parliamentary time and would be counter to the long-standing convention with other public service pension indexation. The order will be a run of the mill piece of legislation, and it would be incongruous for it to be subject to the affirmative procedure in each and every year.
However, I hope that I can go some way to meeting noble Lords’ concerns. In the years when the values in the order are negative, there will be a strong expectation that the Government of the day should ensure that there is a full parliamentary debate on the changes, not least because they would be so rare. Perhaps we can go further than that general statement and look at whether to require the affirmative procedure when, as unlikely as these events will be, the order sets out a negative figure. It seems that this would strike the appropriate balance between parliamentary scrutiny and sensible regulation-making.
I would therefore be willing, if the noble Lords were able not to press their amendments, to take this away to consider it further, with a view to returning to the matter at Third Reading with an amendment that would require any annual order to come before the House for affirmative procedure if the CPI index slipped into negative territory. I therefore hope that the noble Lord, Lord Whitty, will feel able to withdraw his amendment.
My Lords, I thank the Minister for at least part of that response. I also thank him for the clarification of “authority”, although it alarmed me somewhat more than I thought it would. The only more alarming thing would have been if he had said that it was the Treasury. It is clearly not within the bounds of the scheme to assess it, so my noble friend’s point in a previous debate is rather more valid than I was hoping it was. We will perhaps return to that at a later stage, at least informally.
On the amendments in this group, I read the Hutton report fairly thoroughly at the time. I do not recall the noble Lord, Lord Hutton, advocating that we should have negative adjustment. Clearly there is a balance of risk, which is reflected in the changes to the substance of the scheme that has been proposed by the Government and, in the case of the LGPS, has been accepted in the negotiations between the employers and unions. If the noble Lord seeks further rebalancing of the risk over and above what is already reflected in a scheme, which, I remind him, has been endorsed by the sponsoring department and, however grudgingly, by the Treasury, that reopens a can of worms.
Were I in the Minister’s shoes, which thank the Lord I am not, I would probably have said, “I will not accept the amendment of the noble Lord, Lord Whitty, but I will accept the amendment of the noble Lord, Lord Eatwell”. In that case, I would clearly have deferred to the amendment of the noble Lord, Lord Eatwell, and I and the rest of us could go home reasonably satisfied. As it is, the Minister on the one hand has said explicitly that he is going to reject that amendment, but on the other has described a process that did not seem a million miles from my noble friend’s advocacy of the affirmative procedure.
The Minister said that if there is a negative movement in the index, Parliament should have a full and thorough debate, having a couple of paragraphs earlier said that it was run of the mill legislation. It is clearly not run of the mill if it has not happened for 30 years. That full and thorough debate would normally be accompanied by an affirmative procedure, or something very like it. I am therefore not feeling quite so negative towards the Minister as I thought I would at the beginning of his remarks. He has said that he will go away and look at this. I think that if he looks at it carefully, he will come back and accept, or propose something equivalent to, my noble friend Lord Eatwell’s proposition. In that case, although I will not be completely satisfied, it gives a serious safeguard for the members of these schemes, and for the coherent administration of and trust in them, which are so important to tens of thousands of local authority workers and dozens of local authority employees.
I do not regard the Minister’s reply as satisfactory, but rather than press my amendment to the vote or encourage my noble friend so to do, we have to grab hold of the Minister’s offer of further consideration and see what he comes up with at this rather late stage of the Bill. Nevertheless, an important consideration now faces him. I am grateful for his commitment thus far, and therefore beg leave to withdraw the amendment on that understanding.
Amendment 15 withdrawn.
Amendments 16 and 17 not moved.
Clause 10 : Pension age
18: Clause 10, page 6, line 2, after “be” insert “set in scheme regulations but must be no more than”
My Lords, Clause 10 imposes a normal pension age of 60 on firefighters as well as on police and members of the Armed Forces. My amendment would build some flexibility into that but does not rule out 60 in respect of firefighters.
The Government, under the previous Fire Minister in the other place, set up a review, chaired by Dr Tony Williams. It published its report in January, just a couple of weeks ago. I think it is at best odd, and perhaps even outrageous, that the Government are pressing ahead here and are not taking the review properly into account. The report does not recommend a normal pension age of 60; nor does it make the case for firefighters working to 60. The review was set up to assess the appropriate normal pension age. Nowhere in the review does it say that 60 is appropriate. At most, the review’s recommendations establish a set of conditions —such as national firefighter fitness standards, fitness entry standards at recruitment, fitness training throughout careers, and an accepted testing regime—that would have to be met before working to 60 was possible.
The report provides medical evidence that working beyond 55 is not attainable by most current firefighters. Between half and two-thirds of current firefighters would not be fit enough to work beyond 55. Other figures in the report suggest that more like four out of five firefighters would not be fit enough to work beyond 55. The Government seem intent on imposing a national pension age of 60 despite the medical evidence against that. I hope that in his response today the Minister will explain fully why that is the case.
A national pension age of 60 will hugely disrupt the fire and rescue services. There is also a danger that it will not only discriminate against women but will drive out most women firefighters, undermining decades of equality work. A national pension age of 60 will not just remove the link to the occupational nature of the pension scheme; it will also risk making it unsustainable. With higher contributions, it will take a drop-out rate of only 7% to do so.
The Williams report recommended that firefighters over the age of 55 who can no longer meet the fitness requirement should be allowed to leave early on an actuarially reduced pension, calculated so there is no overall financial advantage or disadvantage to the firefighter. This means that most firefighters will get a reduced pension because the national pension age is wrong.
I want to move on to make some remarks about fitness. Aerobic fitness, one of the core components of fitness—along with anaerobic/high-intensity fitness and strength—is often measured using the rates of oxygen uptake, or VO2. The Williams report suggests that at least 42 VO2 is necessary for firefighting. This is the level recommended by experts in the field and is the level that the majority of fire services are using today. The report admits that at 50 to 54 years of age, 51% of firefighters are below the figure of 42 VO2. At the age of 55 to 60, that rises to 66%: two-thirds of firefighters are below that standard. The report suggests that if 42 is the standard, then by 60 years of age up to 92% of present firefighters could be below the minimum standard for operational duty. To push ahead with this is risky and dangerous.
The report suggests that, even in a best case scenario, where firefighters maintain their physical activity status, their body mass index and their smoking status as they age, at 55 years of age approximately 15% of firefighters would be below the minimum standard required for operational duty. By 60 years of age, this percentage would rise to 23%. However, this best case scenario model uses a higher entry standard than the one currently in force. It assumes that firefighters are recruited at 47 VO2, whereas actually the recruitment standard is much lower at 42. This means that the best case scenario is flawed as it assumes a much higher fitness level on recruitment than is in fact the case.
Will the noble Lord spell out clearly what kind of fitness regime and lifestyle changes will be necessary to meet this best case scenario? Most firefighters are likely to do fitness training at work of at least 30 minutes per shift; some do up to four hours a week. Does the noble Lord accept that what may be possible in the future, with new recruits and different standards, is fundamentally different from expecting people now in service to reach these service levels at ages between 55 and 60? It is risky and dangerous. If the noble Lord is not prepared to accept the amendment, can he tell the House why? The amendment commits the Government to do nothing other than accept that the national pension age must be set in scheme regulations and must be no more than 60. It allows for further discussions to take place, and if the Government are not persuaded, they can set the level at 60.
I had a meeting with the noble Lord. He very kindly met me and representatives of the Fire Brigades Union and I thank him very much for that. It was a very useful meeting and people put their case across very well. I appreciate that he did that. I hope that the Government will come back today with something positive.
I think that probably all noble Lords have had a most interesting letter from the general secretary of the Fire Brigades Union setting out the union’s case on this matter. I do not know whether I read it wrong, but I got the impression from the letter that there are safeguards to protect those who are approaching retirement age at the present time and that the issue arises much more for firefighters who are now 40 to 45. In those cases, when it is recognised that people are going to live longer and when the pension age may rise to 67 or higher, it seems that we are going to be looking for a different standard of fitness. It is quite difficult to argue in your Lordships’ House that nobody is fit any longer at 55.
I think the noble Lord is absolutely right that there is a difference in fitness. That is the problem. A regime could be put in place for people when they first come as recruits. By accepting my amendment, the Government could set the age in scheme regulations, whereas at the moment the age would normally be 60. I beg to move.
My Lords, there are also in this group a pair of amendments in my name and that of my noble and learned friend Lord Davidson, both of which seek to add flexibility and that famous characteristic, future-proofing, to the Bill. It is a laudable objective of the Government to have a common movement—a standard process—that can be seen as fair and generally acceptable across the entire structure of public service pensions. However, it is an objective which will, inevitably, from time to time, run up against reality. We have already seen it run up against reality in the case of the uniformed services, which we discussed earlier. It could also run up against reality in a whole series of other circumstances where the best would be the enemy of the good. In other words, the commitment to uniformity would produce elements of unfairness and, perhaps, elements of unsatisfactory performance because individuals were staying in employment longer than they ought to in some circumstances.
We need a degree of flexibility and Amendment 19 relates flexibility to a scheme-specific capability review. These reviews are now becoming quite common within public services, as they already are in private industry. They are designed in some circumstances to relate to the capabilities of individuals with respect to age. If there were to be a thorough review which a Government at the time accepted, this amendment would give the Government the flexibility to amend the pension ages set out in Clause 10(1) and (2). This would provide a degree of flexibility and that is all it is intended to do.
I questioned the noble Lord in Committee about a number of reviews that are currently under way. He pointed out to me that those reviews were not considering issues of pension age and I accept that entirely. However, this does not mean that considering pension age relative to capability will not occur or is not likely to occur. On the contrary, it is highly likely to occur over the next 10 years or so. Amendment 19, therefore, provides the Government with the necessary flexibility to respond to scheme-specific capability reviews.
Amendment 20 would incorporate into the Bill a proposition directly taken from my noble friend Lord Hutton’s excellent report. He argued at the time that the relationship between the state pension age, which is the sort of anchor of the whole structure, and the structure of pension ages in the public sector should be reviewed from time to time. This amendment incorporates my noble friend’s proposition.
In Committee, the Minister said:
“The DWP White Paper published yesterday says that we intend to hold a review every five years, so the link will be reviewed when a review is announced”.—[Official Report, 15/1/2013; col. 621.]
He got a bit muddled there but we know what he meant. That is fine, but could he tell us what is going to happen to this DWP White Paper? Is it the forerunner of some legislation? If so, when will that legislative proposition appear? Would it not be comfortable, given the structure of this Bill, to include Amendment 20, taken from the Hutton report, to achieve the goal he declares to be the Government’s goal, as set out in that DWP document?
I entirely understand the commitment to having a standardised, clear, comprehensible system, but there will always be anomalies which have to be appropriately addressed. I believe that these two amendments provide flexibility and would ensure that the Government could do exactly that.
My Lords, I support Amendments 19 and 20, which aim to ensure greater flexibility in the Bill with respect to pension age. Clause 9, as we have heard, links normal pension age for public sector pensions to the state pension age, with the notable exception of firefighters, police and the Armed Forces. There is a strong case for other sections of the workforce being kept under review, as proposed in these amendments. In the NHS, a review is already under way—the working longer review—of the planned increase in the normal pension age for staff in the NHS pension scheme to 68. It is being undertaken jointly by the Government, employers and health unions.
The BMA, of which I am president, strongly believes that this review should be able to make genuinely evidence-based recommendations, which should cover any—and, if so, which—front-line NHS staff who have roles that are particularly physically, mentally and/or emotionally demanding and, therefore, should have their normal pension age capped at a lower age. The review was a key component of the scheme’s specific discussions between the Government and trade unions. However, these discussions appear to have been sidelined by Clause 9.
The principle is now established that not everyone should be linked to the state pension age. The list of occupations exempted from the Bill could lead to the curious situation whereby someone within those exempted occupations could have a less physically demanding role and would be protected, whereas someone who works in front-line clinical care—perhaps in the intensive care unit—is not protected because the NHS pension scheme is not included.
In a hospital setting, for example, there is pressure to deliver 24/7 care and it does not seem fair to protect one group completely on the basis of their occupational status, yet ignore the potential needs of another group. Many front-line NHS staff are engaged in very demanding work. I hope that the Bill can be amended to allow some flexibility. Amendment 19 would allow for further categories of workers to be exempt from the state pension age link if a scheme capability review found it appropriate. I hope that the Government will support it.
In the final report of the Independent Public Service Pensions Commission, recommendation 11 states that,
“the link between the State Pension Age and Normal Pension Age should be regularly reviewed, to make sure it is still appropriate”.
As written, the Bill does not seem to allow for that. Therefore, I hope that Amendment 20 also will be supported to make this explicit in the Bill.
My Lords, as regards Amendment 18, we are aware of, and greatly respect, the hard work done by the police, firefighters and the Armed Forces. But the noble Lord, Lord Hutton, was clear that the normal pension age for these schemes should be equal to 60, subject to regular review. As we know, this fixed age is already significantly different from the position for all other public service workers. A pension age of 60 for police and firefighters is in line with the reforms implemented by the previous Administration. We are not, and nor should we be, in the business of reducing pension ages given the longevity challenges we face. To do so would go against all that the Bill is designed to achieve.
We already have made a commitment to review these provisions as and when future changes to the state pension age are announced. Those reviews will be separate from the state pension age reviews to ensure that the specific impacts on public service schemes are taken into account. The noble Lord, Lord Eatwell, asked about where we would legislate for the DWP White Paper more generally. We will legislate separately for that. Obviously, it is not appropriate to do that in this Bill. It is a much wider issue and we will deal with the question of reviews in the context of the rest of the White Paper.
I firmly believe that the drafting of the Bill is correct on this issue and that the pension age provisions, including the link to state pension age for other schemes, are rightly the cornerstone of the legislation. It is also worth remembering that setting a normal pension age of 60 does not prevent people retiring before 60 if they wish. Early retirement factors can be taken within the scheme rules and added pension can be bought. Both of those allow for more flexibility over when people can access their pension. All three schemes captured by this amendment already allow people to take benefits from the age of 55 if they wish.
However, I will attempt to respond briefly to the points raised concerning the firefighters and the review by Dr Williams, about which the noble Lord spoke. I should start by making it clear that it is not the case that the review found evidence that a very large proportion of firefighters would not be fit enough to work to 60. The report finds that the average serving firefighter is already beyond the required fitness levels at the age of 35 to maintain operational fitness until the age of 60, if those individuals maintain their physical activity levels and BMI.
In our meeting, I discussed with the union that there is an argument for more structured and formal procedures to be in place to help people keep fit. People may spend time on physical activity but quite a lot of it might generously be called pretty informal. Getting a more formal and rigorous fitness regime in place, which would help individuals more generally as well as in their ability to work to the age of 60, falls outside the scope of the Bill and is something that the FBU no doubt will want to discuss further with its employers.
The report projects that in circumstances where people maintain their physical activity levels and BMI, individuals could maintain operational fitness in many cases until their mid-60s. We simply do not believe that it is necessary to make an amendment which enables a lower pension age than 60 for members of the firefighters’ scheme, or for the police and Armed Forces schemes.
The difference from Amendment 19 is that it would allow for exemptions to any of the normal pension age provisions currently set out, should a capability review make such a recommendation. We are not talking about just the police, firefighters and Armed Forces but all other public servants who will have their normal pension age linked to the state pension age.
I should briefly remind the House of the reason for the state pension age link in the first place. To get a grip on public finances, we were faced with a choice. We could either significantly reduce the value of scheme benefits or ask people to work slightly longer before they can receive their pension. We decided that the latter approach is best. Scheme benefits will be marginally less generous in the new schemes but only by a small amount. Instead, we are asking people to wait until their state pension age before becoming eligible for their pension. We think that this is preferable to significantly reducing benefits and increasing hard-working public servants’ reliance on means-tested benefits in their retirement.
We should remember what this state pension age link really means. For those retiring in the near future, it means waiting until the age of 66. When people talk about waiting until 67 or 68 and beyond, they are talking about several decades’ time from now. We are not talking about extending people’s working lives overnight. Instead, we have a lot of time to assess how best to adapt to extended longevity and how to ensure that employers provide the right working conditions to allow people to work up to the state pension age. That is why the NHS working longer review—to which the noble Baroness, Lady Hollins, referred—is so important.
I think everyone recognises—I made this point in Committee—that it is not just in the public sector that there are a range of occupations which people cannot do as well at the age of 67 as they can at 27. It is a challenge across society to find methods of working which reflect that so that people can carry on working to a later retirement age without being faced with undue stress during their latter years. The review is looking not at the link with retirement age but at how best to deliver NHS services with a workforce who is living longer. I am sure that other workforces in the public sector will need to follow the lead of the NHS in looking at how they can achieve that.
What we should not do is seek to make exceptions to the state pension age link. As I have outlined, the link has very little effect in the short to medium term, but it is a crucial part of the solution to the long-term problem. While we should not dig our heads in the sand, there comes a time when it is best to accept the reality of the situation: people are living longer and the public service workforce must and will adapt to that. The previous Administration recognised that when they asked all public servants—barring those whom we have identified—to work to the age of 65. We are simply future-proofing that approach by tracking the state pension age as it moves beyond 65. If we do not face up to the challenge of increases in longevity now, we would only have to do so in the near future when there will be less resource available. For those reasons, I cannot support this amendment. The universal state pension link is absolutely vital to putting public service pensions on a fair and sustainable footing. I have complete confidence that, with the appropriate foresight and common sense from employers, it will be deliverable across all the relevant public service workforces.
Finally, Amendment 20 seeks to provide for an independent review of the pension age mechanisms in this Bill. I reiterate that the Government are totally committed to reviewing the pension age, as and when future changes to the state pension age are announced. This was one of the recommendations of the noble Lord, Lord Hutton, and we are sticking to it. I add that the House should be reassured that, when coming to decisions on any changes to the state pension age, Ministers will bear in mind the consequences for public servants. We would also expect member representatives to feed into this separate process. None the less, there are good reasons why this Bill does not provide for the review to the normal pension age provisions, which would follow any state pension age reviews that result in a change to the state pension age. For a start, public service pensions link to the state pension age, not vice versa, so given that work on the state pension age reviews is still in its early stages, and we do not know exactly how it will consider public service schemes, it would be premature to lock down details of the normal pension age provisions at this stage.
More importantly, we have not yet even developed those details—and that is sensible. We should not be determining the parameters for such reviews so far in advance, nor should we be trying to do so. It would be for the Government of the day to consider what is appropriate, beyond of course taking into account any changes in longevity. If that were to involve an independent assessment, so be it. However, again, it would be for the Government of the day to decide if that were appropriate. The Government may already have had all the independent advice that they require on longevity from the wider state pension age review, depending on the final details of that process. If, during the course of that review, there was no representation from the public sector that it wished to be treated any differently from anyone else, the scope of a review would be rather less than if there was a lot of independent evidence and representations being made from the public sector that it was in a different situation from the rest of the workforce—and not just a different situation, but a worse situation. Of course, nobody is going to argue that the public sector should have a differentially higher retirement age. While we could put a bland commitment into the Bill just to review the provisions from time to time, that would not be worth while without being able to include any details. It would carry very little weight and give no more assurance on this matter than the public statements that we have made on our intentions on a number of occasions. I therefore urge the noble Lords to withdraw their amendments.
I thank the Minister for his response. I am happy to withdraw the amendment, but it is a bit odd and not really joined-up government to have the previous Fire Service Minister, Mr Bob Neill —I think I am right, but correct me if I am wrong—commissioning a report on firefighters’ pensions for 12 January, less than a month ago, when this Bill is going through. It is not very well organised and I think it should have been done better. However, I hear what the Minister says and, with that, am happy to withdraw the amendment.
Amendment 18 withdrawn.
Amendment 19 not moved.
20: Clause 10, page 6, line 14, at end insert—
“(4B) The link between the state pension age and a person’s normal or deferred pension age shall be regularly and independently reviewed to ensure that the link remains appropriate in light of scheme members’ longevity.”
My Lords, the Minister has said that, with respect to the notion of the review, the Government will have reviews, because the DWP White Paper says so, but they are not quite sure what those reviews would be—it is all too complicated at the moment and they have not worked it out. Therefore, they cannot include it in the Bill. That is pretty unsatisfactory. On the one hand, they are prepared to make an assurance that there will be reviews but, on the other hand, they are not sure what form those reviews might take, who might be involved or what sort of procedures there might be. They are not willing to back up that assurance in the Bill. Finally, we are told that legislation does not matter very much and that it is just as good as an assurance. That is entirely unsatisfactory.
The issues that have been raised by the noble Baroness need to be considered on another occasion, and we will need to return to this issue at Third Reading.
Amendment 20 not moved.
21: After Clause 10, insert the following new Clause—
The Secretary of State will, within twelve months of this Act coming into force, bring forward proposals to ensure that a member of a public service pension scheme is entitled to remain an active member of that scheme following—(a) the compulsory transfer of his contract of employment to an independent contractor; and(b) any subsequent compulsory transfer of his contract of employment.”
My Lords, this amendment, dealing with the fair deal, covers a lot of common ground. But rather as with the last grouping, one finds that the common ground is not found in the Bill. As my noble friend Lord Eatwell has already observed, there is a possibility of an erosion of trust, certainly on the union side, if the outcome of discussions does not find itself reflected in the Bill.
In Committee, the Minister observed that one was not able to accept this type of amendment because one was in the middle of a process of consulting and, therefore, such an amendment might be premature. But the principle appears to be held in common by all sides. The Minister has observed that,
“we are committed to the principle”.—[Official Report, 15/1/13; col. 627.]
We do not in any way doubt his sincerity, but we urge that it could be demonstrated that that commitment is found by putting it into the Bill.
The amendment that is before the House allows the principle to be put in the Bill, and allows for the consultation process. When one looks at the amendment, one sees that it permits the Secretary of State to bring forward the proposals within 12 months. That plainly allows any sensible consultation to take place and be concluded. It would also allow the commitment from Her Majesty’s Government to be honoured expressly.
Ahead of the government amendments in this grouping, I observe very briefly that we were genuinely puzzled as to what they were aimed at and why the Government have seen fit to bring them forward. Elucidation would be gratefully received. I beg to move.
My Lords, I speak now according to the convention, although it may be more logical for the Government to explain their amendments. My Amendment 49 is also in this group. It is another one of these whereby what appears to be the implication of this Bill, if nothing else is done, is that it would unravel what has been agreed between the LGA and the trade unions on the Local Government Pension Scheme.
Pensions payable by the LGPS are revalued using the Pensions (Increase) Act 1971. The amendment is required to enable the same methodology to be used for revaluation during service to continue once a scheme member is in receipt of their pensions. But there is a snag. The current situation, under Section 1 of the Local Government Act 2003, is that the Best Value Authorities Staff Transfers (Pensions) Direction 2007 requires this to be applied to those in the best value authorities. So under the existing scheme and direction the provisions relate only to those who are in best value authorities. It does not apply to those members of the LGPS who are employed by other local authorities and other members of the LGPS.
The agreement reached on the position beyond 2014 would provide for all LGPS members who are compulsorily transferred to be able to retain their membership of the scheme subject to the valuations provided in the scheme. I thought that the easiest thing to help the Government out of this one would be to tack on to the back end of the repeals process at the end of the Bill, when everybody is packing their bags to go home, something that simply says that we repeal the direction order. I am informed that it is not possible to do so in that form, but that one way or the other the Government intend to repeal the directions order. If the Minister could tell me how he proposes to do that, and preferably when, my particular concern about this group of amendments might be met.
The measure I am discussing is essentially part of the fair play aspects although the directions order covers slightly wider issues. However, the repeal is essential to achieve what I think most of us are agreed should apply beyond 2014 in the case of the local government scheme. I am really asking the Government to tell us how they are going to do the tidying up. If we cannot do it by repealing that order, how can we do it, and how can we do it so that there is no differentiation between LGPS members who happen to be employed by different member funds of the LGPS scheme? I would be grateful if the Minister could tell me that when he winds up. I hope that that will satisfy me.
My Lords, I start with the amendment of the noble Lord, Lord Whitty. As he says, the LGPS differs from the unfunded schemes in several respects. While the current fair deal does not technically apply to that scheme, a similar principle is contained in the Local Government Act 2003. That Act requires the Secretary of State to make a direction to specify how pension issues are to be dealt with when staff are transferred out from a best value authority.
The noble Lord is understandably concerned to understand how the Government intend to implement the new fair deal policy for the LGPS, given this existing provision. The Department for Communities and Local Government is currently considering how best to do it. Should it prove necessary to amend the 2003 Act to implement the new fair deal policy, I can assure the noble Lord that the Government will do so at the earliest possible opportunity. I hope that I have given him the answers that he was seeking.
As regards the amendment of the noble and learned Lord, Lord Davidson, the Government have stated a number of times—both in this House and the other place—that we are committed to reforming the fair deal. There are provisions in the Bill to facilitate this. Indeed, the government amendments in this group are concerned with fair deal, which I shall come to in a minute, and work is under way to determine how this commitment will be implemented.
However, consultation closed only yesterday on some of the final policy details of fair deal. We are in the final stages of planning for its implementation. Therefore, in our view there is no need to refer to fair deal in the Bill in the way proposed and we believe that the amendment has serious flaws. As drafted, it would commit the Government to bringing forward proposals for ensuring that compulsorily transferred members of public service schemes can remain in those schemes. It would also seem to commit the Government to bring forward the proposals for the purpose of ensuring that compulsorily transferred staff can remain in their schemes, effectively committing government to implementing the proposals. However, it would not be appropriate to give any member of the scheme an unconditional right to remain an active member if their contract of employment was transferred to an independent contractor. While, of course, it is the Government’s aim that transferred employees would have a right to remain in the scheme when transferred out of the public sector, this right cannot be unconditional. While in the vast majority of circumstances it will be appropriate for fair deal to apply, there may be some cases when it would not.
There have been examples in the past, notably during the financial crisis, of highly paid specialist financial staff who have been brought into government for a time-limited period, and then transferred to independent employers. Although it may have been right to offer these staff access to the schemes while working in government, it would not be appropriate to allow them to retain access to the schemes when they leave, especially as the taxpayer is ultimately responsible for paying these pensions.
Similarly, on the wording of this amendment, a member of staff who was transferred out and then voluntarily moved off the public service contract to do purely private work could remain a member of the public service scheme. Again, this would not be right. The public service pension schemes are in place for those doing public service work, not for everyone who was once engaged in public service work at some point in their career.
These examples demonstrate that the implementation of the fair deal is complex. The Government are carefully considering these complexities to ensure there are no unintended consequences when the policy comes into force. Given this, it is the Government’s view that the fair deal commitment should not be on the face of the Bill. However, I can assure noble Lords that the fair deal will be implemented when we have done all the necessary work.
I hope that I can explain why government Amendment 42 is necessary. This amendment is concerned with people who are admitted to a public service pension scheme but who are not part of the main public service workforces listed in Clause 1. For example, it could apply to staff employed by a hospice who are offering services under a contract to the NHS and whose employer would like them to have the advantage of the NHS Pension Scheme. It is important to note that this amendment does not affect any of the main workforces in Clause 1. It can apply only to other people who are admitted into the scheme under the extension power in Clause 24.
Under the proposed new fair deal, a range of private and third sector bodies will be able to participate in these schemes in future. The amendment is concerned with ensuring that the schemes can be appropriately modified to reflect differences in the structure and nature of those diverse bodies. First, the amendment clarifies that scheme regulations may make special provisions in respect of people who are allowed to participate in the public schemes. The health and local government pension schemes already have a wealth of experience in providing for admitted bodies. The special provisions that are currently applied to those schemes include requirements for indemnities, guarantees, additional record-keeping, et cetera. These provisions are needed to ensure that the body meets the costs of participating in the scheme. The amendment would also allow for modifications that have already been made in respect of admitted bodies in the National Health scheme to be carried forward to the new schemes. Such modifications currently relate to about 60,000 scheme members and it is important that these can be maintained.
Secondly, the amendment allows for modifications to be made where bodies are admitted to the schemes in the future. Where scheme regulations provide for it, the responsible authority will be able to issue a direction to modify how the scheme applies to the staff of a body that is brought into the scheme. The NHS Pension Scheme currently makes between 100 and 150 such directions every year. Allowing for modifications to be made via an administrative direction will ensure that the scheme is applied appropriately in each case without the need to legislate for every single one or the delays that that would cause.
The Bill provides that a direction may be made only for permitted purposes. Those are that the modification is necessary to protect the public purse from costs arising from that body participating in the scheme, where additional information requirements are needed to allow the scheme and the risks to be managed properly by the scheme manager or to reflect the nature of the employment or the structure of the employer. This is not a new or novel power. The Secretary of State for Health has had broader powers to modify the health pension schemes since 1967. For those who wish to study the details, those powers are to be found in Section 7 of the Superannuation (Miscellaneous Provisions) Act 1967. The power explicitly set out by this amendment is more restrictive in scope than this existing power, which provides unfettered scope to modify the existing health schemes. The important safeguards set out in our amendment will ensure that any modifications are appropriate. Allowing bodies to participate in the schemes under Clause 24 will usually be as a result of fair deal. In such circumstances it would not be appropriate for modifications to alter members’ benefits in any way. Modifications that relate to fair deal transfers will, therefore, be limited to ensuring that employers meet their liabilities in full or provide the information necessary to run the schemes properly. I hope I have succeeded in explaining why we think that that amendment is necessary.
Amendment 43 relates to the locally administered public service pension schemes. Under Clause 24(3), scheme regulations may specify bodies or persons that may be permitted to participate in the scheme. It is anticipated that the regulations will prescribe the types of body that may be permitted: for example, a body that is providing services related to the main scheme workforce or a body that staff are transferred to under fair deal. Clause 24(5) then provides for an administrative determination to be made to extend the scheme to persons employed by such a body. Clause 24(8) requires an up-to-date list of persons to whom the scheme has been extended.
All these functions sit with the responsible authority. Our amendment allows for the functions in Clause 28(5) and (8) to be delegated to the scheme manager in a locally administered scheme. This is subject to any condition that the responsible authority considers appropriate. This reflects current practice in the local government scheme, in which it is the local authority that determines to admit a body to its pension fund. There are more than 5,000 admitted bodies in the local government scheme, and local authorities are best placed to determine their eligibility to participate in the scheme and to assist in administering the list of those who participate. They will do so within the limits of the scheme regulations set by the responsible authority. In turn, it is the local authorities that will be responsible for managing and administering the scheme for that body. They will collect data, contributions and provide benefit information and pensions to members.
I commend Amendments 42 and 43 to the House.
My Lords, I have indicated in relation to the government amendments that elucidation would be gratefully received. Accordingly, I thank the Minister.
In relation to my amendment, I have listened carefully to him. We are clearly both trying to achieve the same objective and I immediately appreciate the complexity in having to draft these issues. What he has said is dense, but in a good way, and I wish to read it more carefully. In those circumstances, I beg leave to withdraw the amendment.
Amendment 21 withdrawn.
Clause 12 : Employer cost cap
Amendments 22 and 23 not moved.
24: Clause 12, page 8, line 2, at end insert—
“(10) This section does not apply to the Local Government Superannuation Scheme.”
My Lords, I am sorry if this amendment appears to be another bit of LGPS exceptionalism but I hope that it can actually clarify the situation. There is a bit of confusion between Clauses 12 and 13. On my interpretation, Clause 12 applies to all schemes, whereas Clause 13, to which I have little objection, provides for funded schemes. However, if Clause 12 indeed applies to funded and unfunded schemes, it will cause some difficulty for the agreement that has been reached on the new cost-management system for the LGPS. As the clause stands, it does not reflect the dual process required by the LGPS and the separate cost management that was negotiated.
We have received some relatively friendly indications from the Treasury that it recognises this problem and we would like assurances from the Minister that the Government recognise the dual process. The other implication for the LGPS is that it is ahead of the other schemes in terms of the 2014 start date. I would therefore welcome reassurance from the Minister that the ability of the Treasury, at various points that are set out, to override a funded scheme—in this case, the LGPS—would not be applied to a scheme that had its own government-endorsed cost-management process in place. If I can have that confirmation, or something like it, I would not press the amendment. Clarification would also be useful on whether the whole of Clause 12 is indeed intended to apply to funded schemes. I beg to move.
I hope that I can go at least some way in giving the noble Lord the reassurances that he seeks. The Government recognise the unique nature of the LGPS and that the cost-control mechanism for that scheme must reflect it. We have therefore developed a dual process to which the noble Lord referred, which will give scheme stakeholders additional flexibility to manage costs, while allowing the Government to retain final control over the costs and design of the scheme.
Clause 12 will provide for the Government to retain this overall control. They will use these provisions to put in place an automatic backstop which will apply if the scheme costs become unsustainable. The additional flexibilities that we will give to scheme stakeholders in their management of costs will operate alongside this backstop. As the noble Lord knows, this mechanism has been developed after extensive discussions with the LGA and the trade unions. We are confident that it will work and that the process envisaged is not inconsistent with the provisions in the Bill.
I know that this is not the noble Lord’s intention, but the effect of the amendment would be to remove the backstop that is part of the agreed mechanism. Given the importance of the cost-cap mechanism in ensuring the future sustainability of all the schemes, it is vital that the LGPS is covered by these statutory provisions in exactly the same way as the other schemes. All schemes need this mechanism to ensure that they are a sustainable way to provide good pensions that last. There is simply no reason to exempt the schemes. I hope that that will help to satisfy the noble Lord.
My Lords, I am grateful to the Minister, who clearly recognises the cost-management system that was agreed by the stakeholders of the LGPS. That is now on the record. I am not attempting to sabotage a backstop. However, Clause 12 looks to be a rather more interventionist clause than a backstop would imply. Nevertheless, if it is simply a backstop and the noble Lord recognises that the agreed system will work and will have government backing, then I will beg leave to withdraw the amendment.
Amendment 24 withdrawn.
Clause 18 : Restriction of existing pension schemes
25: Clause 18, page 10, line 25, after “scheme” insert “except for a Scottish scheme, where the closing date is 31 March 2016”
My Lords, the aim of the amendment is to push back to 2016 the relative closing date for the Scottish LGPS.
As observed in Committee, it was thought that a greater time would be required for the Scottish scheme to be renegotiated, for scheme regulations to be drafted, for consultation to take place and for implementation to be laid down. There is certainly a view in Scotland that more time will be required for this process. Indeed, in a letter from the Scottish Finance Secretary to the Chief Secretary dated 7 September last year, it is stated that the date was “exceptionally challenging” if it were to be in 2014 or 2015. If the Minister can assure the House that the Scottish Government are now confident that they can meet the current timescale, and that trade unions and employers in Scotland have been consulted, I would plainly be in a position to reconsider whether the amendment should be advanced. At this point, however, pending what the Minister has to say, I beg to move.
My Lords, the purpose of the amendment is extremely straightforward, and the noble and learned Lord has asked me a question about the attitude of the Scottish Government. As I explained in Committee, the Scottish Government may think that the timetable is challenging but they have not asked for the extension of time that the amendment proposes. There has been a series of correspondence between Westminster and the Scottish Government in which there have been no calls for a delay. In fact, when the Chief Secretary wrote to the Scottish Government asking if there were any particular amendments that they would like us to consider tabling, a request for a delay was not specifically made. I should take this opportunity to reiterate that we do not believe that a delay is necessary. There is ample time—just over two years—for the Scottish Government to prepare before the existing schemes are closed. These important reforms do not come as a surprise either north or south of the border.
The noble Lord, Lord Hutton, recommended back in March 2011 that the key scheme design features should be part of a UK-wide policy framework. Everything that has been done since then, for almost two years now, has proceeded on that basis. Furthermore, the new Whitehall-administered schemes provide an excellent basis for the Scottish Government to consider when finalising their scheme designs. We are not suddenly asking the Scottish Government to start these reforms from scratch.
I should also reiterate the financial implications of introducing a delay. This would result in hundreds of millions of pounds of additional liabilities being accrued in the Scottish schemes. These additional costs would have to be met from the Scottish budget at the expense of Scottish jobs and services, something that I am sure all noble Lords would want to avoid. In addition to the cost implications, we should also consider the disadvantages that Scottish public service workers on lower and middle incomes would face if the reforms were delayed. They would continue to subsidise the pensions of high flyers for another year. Taking all of this into consideration, I hope that the noble Lord would feel that it would be inappropriate for us to accept this amendment.
I have listened carefully to what the Minister has said. It may be that the Scottish Government are treating this with a degree of insouciance because they may recognise that, after a certain event in 2014, they may have quite a lot of free time on their hands. At this point I shall withdraw the amendment.
Amendment 25 withdrawn.
Schedule 5 : Existing Pension Schemes
26: Schedule 5, page 32, line 27, at end insert—
“6A A scheme under paragraph 7A of Schedule 10 to the Rent Act 1977.
Exception: injury benefits and compensation benefits”
Amendment 26 agreed.
Schedule 6 : Existing injury and compensation schemes
27: Schedule 6, page 34, line 18, at end insert—
“1A A scheme under paragraph 7A of Schedule 10 to the Rent Act 1977.
Specified benefits: injury benefits and compensation benefits”
Amendment 27 agreed.
Schedule 7 : Final salary link
28: Schedule 7, page 36, leave out lines 14 and 15 and insert—
“(ii) such earnings as scheme regulations for the new scheme may specify, being earnings derived by the person from the new scheme service, are to be regarded as derived from the old scheme service (subject to sub-paragraph (3)).(3) The amount of the earnings that are to be regarded as derived from the old scheme service must not be materially less than the amount of the earnings that would have been the person’s pensionable earnings derived from that service had it ended when the new scheme service ended.”
My Lords, these are minor amendments that have been urged on us by scheme members. They increase the level of flexibility given to schemes and protect the value of the final salary link for benefits that have been accrued in the current schemes. The amendments concern the definition of pensionable earnings to be used in the new schemes and for the purposes of the final salary link. The current drafting ties the definition of pensionable earnings for the use of the final salary link to the definition of pensionable earnings for the new schemes. We have recognised, however, that in some instances this might not be desirable; for example, the differences between the calculation of career average and final salary benefits might make a shared definition incongruous.
Furthermore, we have listened to concerns that imposing a shared definition means that the value of final salary benefits could conceivably be reduced. This would go against the spirit of the Government’s commitments on the protection of the final salary link. These amendments, therefore, mean that schemes may use the same or a different definition of pensionable earnings for the purposes of the final salary link as that used for the purposes of the new scheme. This does not preclude the option of applying the definition of pensionable earnings that is used in their existing schemes for the purposes of the final salary link, if desired.
However, to make sure that the value of the final salary link cannot be undermined by using a new definition, the amendments contain a backstop protection, which is that the definition of pensionable earnings for the purposes of the final salary link may not result in the amount of earnings being materially less than they would have been had the definition provided for in the old scheme been applied when the new scheme service ended. I hope that noble Lords will find these amendments to be a suitable resolution to this issue.
Paragraph 3 of Schedule 7 sets out which periods of time should be disregarded in determining whether someone has continuity of employment for the purposes of retaining their final salary link. First, any gap, or gaps, of five years or less where the person is not a member of a public service or public body pension scheme should be disregarded. This is directly in line with the recommendations of the noble Lord, Lord Hutton. It allows public servants, for example, to take carer’s leave or to gain experience in the private or voluntary sectors without seeing a detrimental impact on their final salary pensions by losing this link to their future public service salary.
Secondly, and most pertinently to Amendment 30, any gaps of any length of time should be disregarded if a person was in a different public service or public body pension scheme. Again, this is to allow members to gain experience in different areas and to move from one area of public service to another. Crucially, it is also part of the Government’s very clear commitment to public servants to honour their final salary benefits. The amendment in the name of the noble Lord, Lord Whitty, would cut across that commitment. It would be unfair to exclude current members of the local government scheme from final salary link protections, which are being given to other public service workers. Additionally, it would create a barrier to movement between local government and other public service and public body employment.
Under paragraph 2 of Schedule 7, members of existing public service and public body final salary schemes are able to maintain their final salary link when they move between schemes by transferring their rights to benefits out of their old final salary schemes into their new employer’s old final salary scheme. This amendment would not affect this. However, members of local government schemes should not have to proactively transfer their benefits out of the LGPS to ensure benefiting from the Government’s commitment on protecting their final salary benefits, especially where other public service workers do not have to do this. I hope that the noble Lord, Lord Whitty, will withdraw his amendment.
My Lords, this is complicated territory. The way in which the Minister described the implications of my amendment is not the way in which I understand it. The LGA and the unions are concerned that Schedule 7, as it stands, could reintroduce an additional complication —an additional cost—into the LGPS scheme, which was expressly removed by the agreement between the LGA and the unions. That relates not so much to movement between the LGPS employer and different public sector employers but to the situation with people who have been employed by one LGPS employer, who then leave and come back. I do not specifically stand by the wording in the amendment, so I shall withdraw it shortly. However, the Government need to make it clear where the responsibility lies. It seems to us that responsibility for those in pensionable public service could see the original employer being liable rather than the final employer. That would give rise to unknown liabilities lying with the original employer and not with the employer of the individual once they return to LGPS employment.
This could carry on over a substantial number of decades, so the administrative costs of an employer trying to find out where their ex-employees have moved would be quite substantial. It is difficult to estimate, but some actuaries are telling the LGA that it could cost an additional 1% to the scheme. If that were anywhere near an accurate estimate, it would seriously jeopardise the 19.5% cost-management figure that has been built into the LGPS and would increase the overall cost to the LGPS over and above the ceiling.
I understand some of what the Minister says but, having outlined the dilemma, perhaps he could suggest some other way of doing it. At the moment, there is potentially a quite unnecessary cost loaded on to the management of the LGPS. As I say, actuaries are telling us that that could amount to a full 1% of the total cost. Even if it were half that figure, it would be a serious issue. It needs to be solved. My amendment may not solve it, but I would be grateful for more guidance from the Minister. Perhaps he could have some discussions with the LGA on this issue before the passage of this Bill is completed.
My Lords, we realise that there is concern about the potential costs involved in this policy, but we do not believe that it generates unreasonable costs. It is about offering fairness and consistency. The likelihood is that most people who leave local government service for prolonged periods of time to work in different public service employment would not expect to return. It is therefore most likely that they will transfer their final salary benefits to their new employer’s final salary scheme. However, if liabilities for certain local government funds are increased by the risk of a final salary link attaching to future employment with different local government employers, it would be a matter for individual funds to make appropriate financial arrangements, with the help of scheme regulations if required. Undoubtedly, further discussion will be required on exactly how this should be carried forward. However, we do not believe that it is an insuperable problem for a very good feature of the scheme. We hope very much that negotiations and discussions will take place and that some of the fears of local government actuaries will turn out to be unfounded.
Amendment 28 agreed.
29: Schedule 7, page 36, leave out lines 41 to 43 and insert—
“(ii) such earnings as scheme regulations for the new scheme may specify, being earnings derived by the person from the new scheme service, are to be regarded as derived from the deemed transfer scheme service (subject to sub-paragraph (2A)).(2A) The amount of the earnings that are to be regarded as derived from the deemed transfer scheme service must not be materially less than the amount of the earnings that would have been the person’s pensionable earnings derived from that service had it ended when the new scheme service ended.”
Amendment 29 agreed.
Amendment 30 not moved.
Clause 21 : Consultation
Amendment 31 not moved.
Clause 22 : Consultation and report
Amendments 32 to 34
32: Clause 22, page 11, line 34, leave out from “period” to end of line 38
33: Clause 22, page 12, line 7, leave out “In the case referred to in subsection (1)(a)”
34: Clause 22, page 12, line 14, at end insert “or the Lord Chancellor”
Amendments 32 to 34 agreed.
Amendment 35 not moved.
36: After Clause 22, insert the following new Clause—
“Procedure for retrospective provision
(1) Where the responsible authority proposes to make scheme regulations containing retrospective provision which appears to the authority to have significant adverse effects in relation to the pension payable to or in respect of members of the scheme, the authority must first obtain the consent of the persons referred to in subsection (3).
(2) Where the responsible authority proposes to make scheme regulations containing retrospective provision which appears to the authority—
(a) not to have significant adverse effects as specified in subsection (1), but (b) to have significant adverse effects in any other way in relation to members of the scheme (for example, in relation to injury or compensation benefits),the authority must first consult the persons specified in subsection (3) with a view to reaching agreement with them.(3) The persons referred to in subsections (1) and (2) are the persons (or representatives of the persons) who appear to the responsible authority to be likely to be affected by the provision if it were made.
(4) The responsible authority must, in a case falling within subsection (1) or (2), lay a report before the appropriate legislature (as defined in section 22).
(5) In a case falling within subsection (1) or (2) there is no requirement to consult under section 21(1).”
Amendments 37 to 39 (to Amendment 36) not moved.
Amendment 36 agreed.
Clause 23 : Other procedure
Amendments 40 and 41
40: Clause 23, page 12, line 34, leave out paragraph (b) and insert—
“(b) section (Procedure for retrospective provision)(1) or (2) (procedure for retrospective provision having significant adverse effects) applies.”
41: Clause 23, page 12, line 36, at end insert “or
(c) they are scheme regulations for a scheme relating to the judiciary, unless the pension board for that scheme has stated that it considers the regulations to be minor or wholly beneficial.”
Amendments 40 and 41 agreed.
Clause 24 : Extension of schemes
Amendments 42 and 43
42: Clause 24, page 13, line 19, leave out subsections (6) and (7) and insert—
“(6) By virtue of a determination under subsection (5) the scheme regulations then apply to the persons to whom the determination relates as they apply to other persons to or in respect of whom pensions and other benefits are provided under the scheme (or such class of other persons as may be specified in the determination).
(7) Subsection (6) is subject to—
(a) any special provision made in the scheme regulations, and(b) a direction under subsection (7A). (7A) Scheme regulations made under subsection (2) or (3) in relation to any persons may include provision authorising the responsible authority by direction to modify provisions of the regulations in their application to those persons for the purpose of—
(a) securing appropriate protection against additional costs to the scheme that might result from the application of the scheme regulations to those persons, (b) obtaining information about those persons, their employers and other relevant persons, or(c) taking appropriate account of—(i) the arrangements under which those persons are employed, and(ii) the organisational structures of their employers.”
43: Clause 24, page 13, line 27, at end insert—
“( ) Where, by virtue of section 4(5), there is more than one scheme manager for a scheme under section 1, the responsible authority may delegate its functions under subsection (5) or (8) to the scheme managers, subject to such conditions as the responsible authority considers appropriate.”
Amendments 42 and 43 agreed.
Clause 25 : Non-scheme benefits
44: Clause 25, page 13, line 32, leave out “persons to whom the scheme relates” and insert “—
(a) persons within the description of persons specified in section 1(2) for which the responsible authority may make the scheme, and(b) any other persons to whom the scheme relates by virtue of section 25.”
My Lords, I turn to two government amendments to Clause 25. Amendment 44 is intended to remove any ambiguity as to the persons to whom Clause 25 applies. It has always been the Government’s intention that this clause should relate to any person who qualifies for a public service pension scheme under Clause 1(2) of the Bill, as well as any other persons to whom a scheme has been extended under Clause 24—that is, all those who are eligible for a public service scheme and not just those who are currently members of such a scheme. Doubts have been expressed about whether the clause has that effect. This amendment sets out the Government’s intentions unambiguously.
Noble Lords will remember that at Third Reading we debated a proposed amendment to Clause 25 moved by the noble Lord, Lord Whitty. Noble Lords were concerned that the clause was too general in its scope and could allow local authority employers to undermine the Local Government Pension Scheme by offering alternative pension arrangements as a matter of course. The noble Lord therefore sought to exempt the Local Government Pension Scheme from Clause 25. I gave assurances in that debate that these powers did not allow eligibility for the main schemes to be overridden, nor did they allow employers to make any alternative arrangements mandatory. I stand by those assurances. In short, Clause 25 does not allow scheme managers or employers to act in the unscrupulous manner that a number of noble Lords feared.
However, I am aware that some people, particularly in the local government sector, still have a lingering nervousness about the clause. The LGA and others have explained that, while they accept that the clause cannot lawfully be used in this way, they remain concerned that some employers will misrepresent it. To put the matter beyond doubt, the Government tabled this amendment, which makes the use of Clause 25 subject to any provisions contained in scheme regulations. It makes it clear that provisions in scheme regulations take priority. Furthermore, it will be open to scheme regulations to restrict how the Clause 25 power is used in the scheme, if that is thought appropriate. My officials discussed the amendment with the LGA and I understand that it is content with this approach. I trust that this provides a further level of reassurance. I beg to move.
Amendment 44 agreed.
45: Clause 25, page 13, line 32, at end insert—
“( ) Subsection (1) is subject to any provision made in the scheme regulations for the scheme that restricts or otherwise affects the power to make payments under that subsection.”
Amendment 45 agreed.
Schedule 8 : Consequential and minor amendments
Amendments 46 and 47
46: Schedule 8, page 40, line 36, at end insert—
“15A In section 11 of that Act (provision against pensions under two or more judicial pension schemes), at the end there is inserted—
“(5) This section does not prevent a scheme under section 1 of the Public Service Pensions Act 2013 having effect in relation to a person”.”
47: Schedule 8, page 42, leave out line 33 and insert—
“Schedule 1, paragraph 2(1).
Schedule 2, paragraph 1A.”
Amendments 46 and 47 agreed.
48: Schedule 8, page 42, line 37, at end insert—
“Legal Aid, Sentencing and Punishment of Offenders Act 2012 (c. 10)In Schedule 4 to the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (transfer of employees etc of Legal Services Commission), in paragraph 4 (pension schemes), after sub-paragraph (2) there is inserted—
“(2A) Where an individual who is employed in the civil service of the State by virtue of paragraph 1(1)—
(a) was a member of a relevant LSC scheme immediately before the transfer day,(b) had been a member of that scheme immediately before 1 April 2012, and(c) becomes, on or after the transfer day, a member of a civil service scheme,the individual is to be regarded, for the purposes of section 18(5) of the Public Service Pensions Act 2013, as having been a member of the civil service scheme immediately before 1 April 2012.(2B) In sub-paragraph (2A)—
(a) “relevant LSC scheme” means a scheme made or treated as made under paragraph 10(1) of Schedule 1 to the Access to Justice Act 1999;(b) “civil service scheme” means a scheme under section 1 of the Superannuation Act 1972.””
My Lords, this amendment rectifies a small oversight that occurred as a result of the large number of moving pieces in the machinery of government and it corrects a small injustice that might otherwise have affected staff in the Legal Services Commission. Under the Legal Aid, Sentencing and Punishment of Offenders Act 2012, these members of staff will become civil servants from 1 April this year. The Government’s intention is, and always has been, that they will be treated in exactly the same way as other civil servants. This includes access to the transitional protection offered under the pension reforms.
Unfortunately, without this amendment the staff of the Legal Services Commission would fall between two stools. They would not be members of a public service scheme that could be included in Schedule 10 to the Bill, nor would they have been members of the Civil Service scheme on 1 April 2012. They would therefore not have been eligible for the transitional protection for those close to their current normal pension age.
I should add that this is an isolated issue. The staff of the Legal Services Commission are the only members of the Civil Service scheme who would have been left out in 2015. This is because they are the only ones to transfer in between 1 April 2012 and the enactment of the Bill. This amendment rectifies that very small problem. I beg to move.
Amendment 48 agreed.
Amendment 49 not moved.
50: Before Clause 35, insert the following new Clause—
“Amendment to the Railways Act 1993
(1) The Railways Act 1993 is amended as follows.
(2) In Schedule 11 (pensions), after paragraph 11 there shall be inserted—
“11A (1) This paragraph applies if an insolvency event occurs in relation to the employer or former employer of a protected person.
(2) Where this paragraph applies, the Secretary of State shall become liable to discharge any liabilities in respect of relevant pension rights, to the extent that they are not discharged by the trustees of a new scheme in which the employer was a participating employer.
(3) For the purposes of this paragraph—
(a) “insolvency event” has the meaning set out in section 121 of the Pensions Act 2004;(b) “relevant pension rights” means the relevant pension rights referred to in paragraph 6(3) above.11B The duty referred to in paragraph 11A also applies if an insolvency event has occurred in relation to the employer or former employer of a protected person on or after 1 October 1994.””
My Lords, the amendment stems from the situation that arose on 31 March 2010 when Jarvis, a rail maintenance company, went into administration. The amendment is not intended to make any new demands but simply to close what I think was an unforeseen loophole in the Railways Act 1993. Schedule 11 to that Act was intended to provide railway workers employed by British Rail at the time of rail privatisation with the right to a protected pension. This amendment is intended to restore that right.
In other instances where rail companies collapsed or gave up contracts, the workforce had always been transferred to other companies, but this did not happen with Jarvis, due to complex reasons related to the application of the transfer of undertakings regulations. Nevertheless, many of the Jarvis workers who had been employed by British Rail at the time of privatisation rightly expected that at least their pensions would be protected by the 1993 Act. It was then discovered that the Act does not cover cases of companies going into administration, which meant that these workers simply lost out. It is estimated that some 650 former Jarvis workers have been affected, and that the cost of meeting the pensions shortfall that would arise from accepting this amendment would be in the region of £400,000. The amendment would also honour the spirit of the Railways Act 1993 and ensure that in the unlikely event that another successor company to British Rail went into administration and the work was not transferred to another company, any affected workers who were also employed by British Rail in 1993 would have their pensions fully protected.
I am seeking to put right something that was not foreseen and which clearly represents an unfairness and an injustice. Jarvis’s former BR employees are not receiving the protection that was promised at the time of privatisation. The major flaw in the protection order is that it is an obligation on the employer, but where the employer disappears it seems that there is no entity to take up that obligation. That is obviously a serious gap in the original privatisation process, and the former BR members employed by Jarvis were misled by the UK Government as a result. They expected to get the pensions to which they were entitled, instead of the much lower one they ultimately received.
I do not think that this amendment was debated in the House of Commons because it was not reached. If it was passed, it would mean that the British Government had honoured an obligation and a promise made at the time of privatisation that employees’ pension rights would be protected so that they were at least as favourable as the rights they enjoyed under the BR pension scheme. The new clause would provide the protection sought.
However, I understand that there is another option which the Minister may prefer. Under the terms of the Railways Act 1993, the Government could introduce an order to rectify the situation. The Minister therefore has two options. He can either accept the amendment or he can achieve the same end in another way. This is a matter of honour and integrity, and I think it is only right that several hundred workers should not be penalised due to something that was really only an administrative oversight. I beg to move.
My Lords, as the noble Lord has explained, his concern relates to a situation that has arisen for people covered by the railways pension scheme, which is a very different kind of scheme from those covered by this Bill. That scheme was created as a railway industry-wide pension scheme for the multi-employer railway industry following privatisation. It is a unitised fund made up of a number of different sections, only one of which is underwritten by the taxpayer. Moreover, the scheme focuses predominantly on those working for private sector employers in the rail industry. Conversely, while some of the public service pension schemes in scope of the Bill may admit certain private or third sector organisations, they are predominantly focused on workers in the public sector. I will attempt to respond briefly to the points raised in the noble Lord’s amendment, but I am afraid that the primary focus of his attention should be my right honourable friend the Secretary of State for Transport.
The amendment would create a liability for the taxpayer to underwrite any shortfall in a railways pension scheme section. This underwriting would be required if the section develops a shortfall as a result of the insolvency of a participating employer or former employer who is the employer or former employer of a “protected person”. Protected persons are beneficiaries of the section who still retain certain rights deriving from British Rail days and enshrined in regulations made under the Railways Act 1993 in relation to their pension: for example, if their employer is obliged to provide pension scheme rights “no less favourable” than the relevant pension rights in their former designated pension scheme from British Rail days.
Let me set out the current position. As I have said, the railways pension scheme is a unitised fund that is divided up into sections. There tends to be one section for each employer. Most participating employers in relation to sections of the pension scheme are private sector railway operating companies. Only two sections of the scheme benefit from a solvency guarantee from government. The first of these is the “1994 Pensioners Section”, a closed section that deals primarily with the residual, deferred and pensioner members of the former British Rail pension schemes at the time of privatisation. The second is the “BR Section”, a section comprising a small category of contributing members and beneficiaries deriving from the former British Rail pension scheme. Even if the amendment were within the scope of the Bill, the Government do not believe that it is appropriate to amend the existing legislation in relation to railway pensions, as set out in the Railways Act 1993 and regulations made under it, and create a further liability for the taxpayer, as the amendment seems to propose.
The noble Lord has tabled the amendment specifically because of the Jarvis case. One employer, Jarvis, made use of the railways pension scheme, but has become insolvent. In a situation where the sponsoring employer of a section of the railways pension scheme no longer supports the pension’s scheme, there are complex legal requirements affecting how the scheme should operate in the future. The trustee of the RPS has been working with the Pension Protection Fund to understand whether the three sections of the RPS affected in this case are eligible for support from the Pension Protection Fund. The three sections are currently still in an assessment period. In the mean time, the trustee retains responsibility for paying benefits, although the Pension Protection Fund provides guidance on how the trustee should do this.
I hope that my explanation has provided some clarity for the noble Lord, although I appreciate that he might not have got the help he seeks. However, I hope that he will understand me when I say that the railways pension scheme is not a public service pension scheme in the same way as those being legislated for here, and that this is not the appropriate place to deal with the very important matters he has raised.
The Minister has given me a fairly complicated explanation and I think I would not be out of order if I said that I want to study it in Hansard rather than comment on it directly, particularly since I am not an expert on the intricacies of this issue. However, the outcome is disappointing. No one is challenging the principle that these Jarvis workers should have been better looked after than they were, given the commitments that were made at the time of railways nationalisation, so what has happened is rather unfortunate. This does not seem to be a fair outcome, whatever the technical process by which the Minister has reached his conclusion.
I should like to make two comments. The Minister has suggested that I should address my comments to the Secretary of State for Transport. I hope that he will be helpful to me if I redirect my arguments to the Secretary of State. I have no Bill under which to do that, although there may be other ways. I look forward to receiving the Minister’s help. Also, under the terms of the Railways Act 1993 maybe the Government could introduce an order to rectify the situation. The Minister did not comment on that suggestion, but I wonder whether he could take it away as an alternative to the other option he put forward. However, in the circumstances, I beg leave to withdraw the amendment.
Amendment 50 withdrawn.
Clause 36 : Regulations, orders and directions
51: Clause 36, page 20, line 26, after “Service” insert “or the Lord Chancellor”
Amendment 51 agreed.
Arrangement of Business
My Lords, because the Question for Short Debate of the noble Lord, Lord Desai, will now be taken as last business, the time limit for the debate becomes 90 minutes rather than 60 minutes. Speeches should therefore be limited to nine minutes, except for the speech of the noble Lord, Lord Desai, and that of the Minister, which remain limited to 10 and 12 minutes respectively.
Crime: Women's Safety
Question for Short Debate
To ask Her Majesty’s Government, in the light of the publication on 10 January by the Ministry of Justice, the Home Office and the Office for National Statistics of An Overview of Sexual Offending in England and Wales, what steps they are taking to protect women’s safety in the United Kingdom.
My Lords, it is my pleasure to introduce an important theme in our series of Questions for Short Debate. I am very grateful to all noble Lords who have put down their names to speak. Peers from all sides have joined; and not too many, so we all have enough time to discuss this issue.
I was in Delhi when the horrible gang-rape incident happened on 16 December. I observed the amazing upsurge of movement among men and women in India, which later spread to other parts of the world, about the very urgent question of women’s safety as they go about the ordinary business of life—both inside and outside their homes. That is very important. This is not just a local Indian problem but a world-wide one. When I got back, I saw that the Government had issued an excellent document. The Ministry of Justice, the Home Office and the ONS had published a statistical bulletin, An Overview of Sexual Offending in England and Wales, which I want to use as a background to introduce the question of women’s safety.
First, although it is a very good document—it lays out the complexity of the issues, the different statistics, and the different sources and definitions with which we have to deal in judging the extent and seriousness of crime against women—parts of the problem are not covered in it. It relates mainly to adult women, aged 16 to 59, and therefore avoids the important question of children. There have been scandals in Rochdale, Derby and Torbay relating to the grooming of young girls and their exploitation. Perhaps other noble Lords will take up that issue. There is also the question of the abuse of elderly women. There are many other facets of the problem, which I hope other noble Lords will bring out.
The way the document lays out the issues emphasises one thing. According to the Crime Survey for England and Wales, only 15% of the victims of adverse sexual events actually report the case to the police. What we have in the statistics of police action on complaints is a very small part of the total problem. We ought to give some thought to how we can increase the rate of complaints and encourage women not to withdraw into a shell if they have had a horrible sexual experience and how we can encourage them to come out and complain.
A major difficulty with rape and other sexual assaults is that 85% to 90% of the perpetrators of the crime are known to the victim. They are partners, somebody in the family or somebody the victim knows very well. Part of the reluctance to complain may be that you might be harming a family member or friend. We ought to set up ways, perhaps after asking experts, to make the extent of the problem more visible to the police and the criminal justice system than it is at present. If we do that, we may be able to find out even more than before.
One rather tragic example is that of Frances Andrade, who was abused when she was a student at a music school. The case came to light many years later and she tragically died while the court case was going on. That shows us that women undergo a huge amount of bad experiences but somehow or other they are reluctant to, forbidden from or cajoled against complaining. We ought to deal with that as a first step.
If you bring together rape, sexual threats and indecent exposure, one woman in five experiences something sexually unpleasant. That is a very large number. It seems to be that practically every woman has an unpleasant experience in their life and somehow we do not find ways of getting around it. Half a million adult women are victims of sexual offences. Typically, according to the survey, the women who are more vulnerable to such attacks are young—16 to 19 years-old—are single or separated, have a low income, are sometimes students and are often physically unwell or disabled, as well as economically inactive. We have a profile of a vulnerable person who is more likely to be predated upon, and when we devise our systems for encouraging them to complain, following through what has happened to them and getting justice for them, we ought to look at this profile very carefully and find out how, based on that profile, we can add better things to protect these women’s lives than we have otherwise done.
I have very little complaint about the way the police operate and the courts go through with a complaint after it has been made. Perhaps other noble Lords will know more about that. There is of course a problem of delay. It seems that it takes more than a year from the beginning, when the police register the complaint, to the end of the process. It may be that this is inevitable—you must not hurry a process in such a way that may make injustice more likely, and we want to be scrupulously fair both to the victim and the offender and not prejudge the issue. Have the Government thought about any means for speeding up this process, while preserving the scrupulous care with which we administer justice? The victims would have some guarantee that there would be a somewhat speedier resolution to their problem than at present.
I do not want to take up all my 10 minutes, because I think other noble Lords will want to say more. I am looking forward to hearing the Minister say what the Government are doing to tackle this problem.
My Lords, I am grateful to the noble Lord for introducing this subject. The noble Baroness, Lady Stern, in her influential review into how rape complaints were, and maybe are still, handled—I have to say that the noble Baroness should be speaking earlier than me in this debate—concluded that,
“it is time to take a broader approach”—
broader, that is, than relying on the conviction rate—
“to measuring success in dealing with rape”.
She talked in the report of,
“a range of priorities that needs to be balanced”,
in particular by giving “higher priority” to,
“Support and care for victims”,
as well as of helping,
“the victim to make sense of the police and prosecution processes”.
As the noble Lord said, if we did not understand the need for that before, the response of Frances Andrade to the prosecution of Michael Brewer has made it shockingly vivid.
The Government’s progress review of the action plan on ending violence against women and girls reported that a number of actions had been completed to identify ways to improve communication with victims of sexual violence. The actions taken were the completion of a Home Office handbook and a CPS booklet. Perhaps this issue needs to be revisited. The Home Secretary acknowledged last week that Frances Andrade’s suicide might discourage others from coming forward with complaints.
In late 2011, I attended a conference at New Scotland Yard for SOIT—sexual offences investigation trained; this is a new acronym to me—officers. I was impressed by the concern then shown by police to extend understanding and professionalism in this work, but I wonder whether this is still not something which is often better recognised by the more senior officers. Has it trickled down to the junior officers who will respond initially to complaints and offences?
What also made an impression on me were some of the comments made by victims of sexual offences, though “victims” seems to me to be the wrong word, because the women in question presented themselves very much as survivors. I looked this morning at the notes that I made. They included: “Victims have lots to lose … villains are the defence teams and the judiciary”—I recognise that that is a pretty complicated area and I do not want to be too simplistic, but this is the reaction—and “getting DNA on the database is regarded as a result”. What all that amounts to is the victim not being taken sufficiently seriously and not being treated as any of us would feel we or people whom we know to be in this situation would want to be treated.
Since I thought that we would have even less time available this evening than we have, my focus in preparing my remarks was deliberately narrow, although there is one other particular issue which I will come to in a moment. The noble Lord’s referring to how women are treated inside the home as well as outside prompts me to mention, though not at length, domestic violence. Another point that he made which is similar to what I have been saying was about the attitude of less senior police officers. When I mentioned this in a debate not long ago in the presence of a retired, very senior police officer who is a Member of this House, he took me to task afterwards. I raised the matter also with the chief executive of a domestic violence charity with which I used to be associated and she said, “No, the attitude has not changed. We’d like to think it has, but it hasn’t, certainly not to the extent that would be appropriate”.
The other issue that I will slot in, and on which public awareness is probably about 20 years behind that on domestic violence—which is how I have heard others describe it—is that of trafficking of women. Here I make a plea for imaginative understanding of victims. That ranges from how immigration issues are dealt with through response to minor offending by the victims of trafficking to treating the trauma which they have experienced.
It is not a very good idea to add to my speech in a rather disorganised way a whole lot of scattered points, so let me come back to the other item that I wanted to raise. The report which is the subject of this debate inevitably presents snapshots, but it is trends which are the most important. I am not saying that trends are completely ignored by the report, because one trend which is very clear within it is the steady rise in the number of offenders in prison for sexual offences, from around 6,000 in 2005 to almost 10,000 in 2011. That suggested to me that offender management is not succeeding, but then I came across the statistic that more than 80% of those offenders had not previously been cautioned or convicted for sexual offences. I am not sure how these statistics lie together and whether the Government have any comment to make on them, nor am I sure whether they are affected by a tendency to prosecute for a lesser offence than rape, which I presume is to ensure a conviction. Perhaps the questions on this should all be about the rehabilitative skills which will be available in the world of payment by results that we all see coming along the track.
I cannot get away from the thought that perhaps no distinction is being made with other offenders and that the best approach to rehabilitation as well as punishment is the big question. However, I shall return to where I started: I heard it said the other day that someone who is murdered is murdered once—I do not condone that, of course—whereas someone who is raped is raped over and over again, because that trauma is experienced again and again. In the system’s treatment of victims, we would do well to remember that.
My Lords, I warmly thank the noble Lord, Lord Desai, for securing this debate, which is timely for many reasons, and for his good judgment in knowing that we would in the end be given nine minutes instead of five—that was extremely prescient of him. I am very glad that he cited in the title of his debate the Office for National Statistics publication, An Overview of Sexual Offending in England and Wales. I take this opportunity to thank the Ministry of Justice, the Home Office and the Office for National Statistics for producing this compendium and for the hard and painstaking work that has gone into it.
When I was working in 2010 on the report on the treatment of rape complainants by public authorities, which the noble Baroness, Lady Hamwee, so kindly mentioned, I was struck many times by how confusing, uninformative and contradictory the official statistics were and how unhelpful they were in enabling people to have any understanding of what might happen to them if they were to enter the system. I therefore recommended in my report that clearer data be produced by the Office for National Statistics so that victims and the wider public would have a better idea of what might await them and how people are dealt with. At last, we have such information and it is very welcome.
I shall refer to just two points in the authoritative report that we are discussing today—I hope that it will be widely read, because there is much in it that is useful and which helps us to understand, as the noble Lord, Lord Desai, said, the complexity of the subject. First, it says that between 2008-09 and 2011-12, the number of rape offences reported to the police increased by 22%. Secondly, it notes that conviction rates for all rapes—of females and males—increased between 2005 and 2011 by 9.9%, and that the conviction rate in 2011 was 51.8%. I understand that the figures for 2012 are somewhat higher. These changes in reporting and conviction are substantial moves in the right direction and reflect the profound changes that have taken place in the police, the prosecution service and the whole approach to serious sexual offences in the past few years.
In many places, most of the time, rape services are better trained and investigations and prosecutions are done by specialists. According to recent research by the Association of Chief Police Officers, 19 forces now have specialist rape teams. The research suggests that these teams increase reporting, victim confidence and victims’ willingness to stay with the long drawn-out process. More victims now have access to a sexual assault referral centre as more of these centres open. Research shows that these centres are universally welcomed. Everyone in the field will tell you that they have made an enormous difference to the humanity and effectiveness of the whole process. More victims, although not nearly enough, now have an independent sexual violence adviser to guide them through the system and help them with the ordeal of going to court and understanding what will happen to them and how they can best prepare themselves for it. The system of independent sexual violence advisers is so admired that the Government of New Zealand have been advised that it should be introduced there.
These improvements are the result of the efforts of a substantial number of people in the police and prosecution service, the health service, the voluntary sector and the rape crisis movement. These are people, often with huge commitment, working together and responding more effectively and creatively to victims. I will mention three very quick examples.
In London people who have been raped can go to the sexual assault referral centres called the Havens. I declare an interest as patron of the Havens. Some of these people are prepared to report to the police and some are not. Some of them come for medical and other help and do not want to go through the criminal justice process. The Metropolitan Police have placed a specially trained police officer—a SOIT officer, as the noble Baroness, Lady Hamwee, explained—in the centre from 8 am to 10 pm. This officer deals with those who want to report, and those who do not. Of course, it is their right not to report. Those who do not report are invited to talk to the officer anonymously, if they wish, to tell their stories without detail but to give enough information to contribute to intelligence-gathering—and perhaps prevent more rapes, as rape is often a serial offence. This must be good practice.
My second example is the UK Network of Sex Work Projects, which I am patron of, which runs a scheme to protect prostitutes from violent clients. The scheme is called Ugly Mugs. Information is collected from prostitutes who report violent clients and circulated to prostitutes who join the scheme via a website. This project has prevented much violence and rape and helped to arrest perpetrators. I thank the Home Office for supporting it and hope that the Minister will personally ensure that this support continues.
My third example is a project at a Cornwall rape crisis centre, where the counselling the centre offers to victims is now also offered through the probation service to women in trouble with the law, as a very large proportion of those women have been sexually abused in their early lives and those experiences have led them in many cases to the position they are now in.
This Government have built on the work of the previous one to ensure that we have a system that provides an all-round approach, with the victim at the centre; victim services for everyone, whether they report or not; a good healthcare response; efficient law enforcement; prevention campaigns that do not blame the victim; and work to change attitudes. There is very good news in an even more recent report from the Office for National Statistics that only 8% of the public now blame the rape victim if she is drunk or wears inappropriate clothes. That is a change from the previous set of figures.
So we have a system that works to change attitudes and is beginning to make special effort to protect the vulnerable. All this constitutes an approach that other countries want to copy, which is taking us, slowly but surely—there is indeed much more to do, including looking at the delay in cases coming to trial—from the gross deficiencies of the past to a more just and effective response.
I ask the Minister: how are the Government going to ensure that this continues? Specifically, what is the Home Office doing to inform police and crime commissioners that this work, although expensive, is very cost-effective and must be a priority? Will they keep the specialist units? What will be the exact arrangements in the reorganised NHS for providing sexual assault referral centres? Where will the responsibility lie? Where will quality assurance come from? I understand that the Minister may need to write to me about that. Finally, what do the Government envisage happening to the funding of the network of rape crisis centres and other voluntary projects that deal with many thousands of victims as local authorities face more cuts? Will the support come from central government? I look to the Minister for some reassurance on all these points.
My Lords, I welcome this debate and am grateful to the noble Lord, Lord Desai, for introducing it. I will focus my remarks on drawing attention to three ways in which the scourge of sexual violence against women might be tackled more effectively alongside seeking to increase the number of cases that come to the police, before making a more general point.
The report to which this debate draws our attention tells us that shocking numbers of women are victims of sexual offending. It is a horrifying reflection upon our society. The noble Lord, Lord Desai, has noted that the resolution of cases that do come forward takes a long time. If this is to be addressed in the manner that he wants, there is surely a need for greater provision of resources and training for the police, the Crown Prosecution Service and others involved in bringing justice to speed up the rate at which sexual offences are brought to court. Investigation has to be thorough and justice must be scrupulously pursued, but a year is a very long time for a case to reach court.
Secondly, independent domestic and sexual violence advisers and other such agencies play an invaluable role in accompanying survivors through the system, as the noble Baroness, Lady Stern, noted. I hope that the Government are prepared to invest significantly in that crucial work. More cases might be resolved if that were to be the case; and some of the concerns raised by the noble Lord, Lord Desai, and the noble Baroness, Lady Hamwee, about cases not being pursued or not being taken sufficiently seriously by the police might be addressed.
Thirdly, I hope that the Government will recognise that recent budget cuts have led many local councils to reduce provision of services for survivors of violence. That is a real problem. I should add that a great deal of good work continues to be done by organisations such as the Worcestershire Forum against Domestic Abuse. Many individuals and organisations in civil society work with that organisation, as they do with others.
I believe that the suggestions that I have made would be a real help, but although they are crucial, they are tackling the symptoms, terrible as they are, of a deeper malaise. Lying behind the horrifying facts that the report highlights is the increasing sexualisation of our culture, which creates an enabling environment for sexual offences to develop. I feel that acutely as the father of two daughters, one aged eight and one aged 13. Reg Bailey, the chief executive of the Mothers’ Union, carried out an independent review of that in 2011, and noted the concern of parents on a number of issues, including the sexualised and gender stereotyping of clothing, products and services for children and pressure on children from a range of sources to act as consumers.
Those are just the background, but I suggest that it is an important one. A lot of what we see is the result of that increasingly sexualised culture. The number of children suffering from sexual offending is one result. Reg Bailey’s report suggests a range of actions to address those concerns which deserve attention, but which I cannot go into now. Suffice it to say that, as all noble Lords will recognise, there are big issues to which I hope that the Government will pay attention.
I add that it cannot be just the Government’s responsibility. It is good to know that attitudes to victims are changing. Much more needs to happen. Although I welcome the Question to the Government enshrined in the debate, I suggest that responsibility for tackling it lies with us all.