Ruth Kelly: Let me respond to what has been an incredibly interesting and informative debate on the Sex Discrimination Act 1975 and the proposals to require insurance companies to offer unisex annuity rates. The first major question discussed today was the fundamental one: are women being short changed? My hon. Friends explored that point, which involves an interesting equality issue. Women receive a lower annuity rate year in, year out, but for longer than men, although over their life span they also receive, on average, cumulative amounts that are equal to or in excess of those received by men. We could debate that point for a long time, as there is no clear cut conclusion to it.
I note the point made by my hon. Friend the Member for Hendon (Mr. Dismore) that there is no satisfactory outcome, because if we imposed unisex annuity rates we would have to take from men to give to women. There is no other money that may be used to resolve those questions or to sweeten the pill for men. That is not an easy one, and in my view it is not clear that there is an equality issue to resolve at all.
Gender is a recognised factor in the setting of risk premiums by insurance companies in many walks of life, and women are not queueing up to argue about receiving better car insurance rates, for example, because women as a group are less likely to commit motoring offences. As far as I am aware, that has not been contested in other areas.
Gender is but one factor that insurance companies take into account when setting annuity rates and determining risk premiums. They also consider the general health of the individual, whether the individual has a disability and, controversially, as my hon. Friend the Member for Hendon pointed out, the lifestyle of the person requesting an annuity.
As the hon. Member for Arundel and South Downs (Mr. Flight) remarked for the Opposition, insurance companies may also take into account whether someone is of a certain ethnic minority. Insurance companies have been specifically designed and set up to cater for certain ethnic minority groups, as they are able to offer higher rate annuity products to those people, recognising the fact that they have shorter life expectancy.
The fact remains that insurance companies, as far as they possibly can, set rates on the basis of what they consider to be individual risk premiums. When they cannot set individual risk premiums, they look across broad classes, use proxy and set risk premiums on that basis.
The ability of insurance companies to determine risk and to attach it as closely as possible to the individual determines their competitive advantage in an extremely competitive market. That is how insurance companies and the insurance market work, and to wander into such terrain without well thought out and coherent proposals would be foolhardy. It would also have ramifications and implications across the insurance industry.
It is important to consider the impact that imposing unisex annuity rates would have on individual insurance companies. If insurance companies were forced to offer unisex rates, and only unisex rates, they could face an unpalatable choice. For reasons that I explained earlier, they might have to set cautiously low annuity rates, so everyone would lose out. The reason behind that is that companies could not be sure that take-up of their annuity products between males and females would match the risk that they assumed at the outset. In the end, everybody would lose outnot just men, but women would not gain as much as the right hon. Member for Skipton and Ripon (Mr. Curry) envisages. Alternatively, insurance companies could face risks to the solvency of their businesses. In that event too, everyone would risk losing out.
Why is it desirable to force insurance companies to discount just one factor, when they can and do take account of many other factors? I am thinking of whether people smoke, the nature of their occupation, where they live, and any other factors that may be considered relevant to the setting of annuity rates. I do not think that we will solve the equality problem today by imposing unisex annuity rates on companies, or that we will solve some of the problems mentioned by the hon. Member for Hendon relating to incentives to save by that means. I certainly do not think that such action will create a more favourable environment for insurance companies.
Ruth Kelly: Of course it is important for any amendments to be compatible with the Act. The points that my hon. Friend has made are very relevant, and it is at least debatable whether the amendments are compatible with the Act.
Mr. Curry: I do not accept the amendments, for a very simple reason: we must start somewhere in our attempt to deal with these inequalities. I repeat the question I posed earlier to the hon. Members for Hendon (Mr. Dismore) and for Brent, North (Mr. Gardiner), who have performed a wonderful Morecambe and Wise act today. Do they really think that, 10 years from now, we shall be able to sustain a system into which discrimination has been built? The idea that men are suffering in terms of human rights and that we should move in the opposite direction strikes me as wonderfully inventive in the context of a Friday matinee performance, but I feel that it lacks a great deal of intellectual and legal substance.
Mr. Dismore: My point about the Human Rights Act was a serious one. Perhaps the right hon. Gentleman will tell us whether he took legal advice before speaking today, and established whether the effective withdrawal of men's pension rights would be compatible with the Act.
Mr. Curry: The process of government is a process of intervening in the way in which people live their lives and, in many ways, intervening in the market, as this Government know more than anything else. All legislation is capable of being tested on human rights grounds. I believe that if we stack up my beliefs and those of the hon. Gentleman, it will be seen that by and large the trend is going my way.
Clark, Mrs Helen (Peterborough)
Iddon, Dr Brian
Johnson, Miss Melanie
Ward, Ms Claire
Tellers for the Ayes:
Mr. Andrew Miller and
Mr. Andrew Dismore.
Arbuthnot, Rt Hon James
Beresford, Sir Paul
Browning, Mrs Angela
Cable, Dr Vincent
Chapman, Sir Sydney
Curry, Rt Hon David
Duncan, Alan (Rutland & Melton)
Field, Mark (Cities of London)
Forth, Rt Hon Eric
Howard, Rt Hon Michael
Johnson, Boris (Henley)
Laing, Mrs Eleanor
Lait, Mrs Jacqui
Lewis, Dr Julian (New Forest E)
Maclean, Rt Hon David
Osborne, George (Tatton)
Redwood, Rt Hon John
Young, Rt Hon Sir George
Tellers for the Noes:
Mrs. Cheryl Gillan and
Mr. Charles Hendry.
Question accordingly negatived.
Mr. Eric Forth (Bromley and Chislehurst): On a point of order, Madam Deputy Speaker. You have had to ask the Serjeant at Arms why Government Members were lingering unnecessarily in the Aye Lobby to prolong events. Were you aware that a figure no less than the Government Deputy Chief Whip was party to this and was indeed one of the last to leave the Aye Lobby reluctantly? Is there anything you can do to ensure that someone as senior as the Government Deputy Chief Whip sets a better example to hon. Members than to abuse the voting procedures[Interruption.]