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7 Mar 2003 : Column 1072—continued
Mr. Stephen McCabe (Birmingham, Hall Green): Does my hon. Friend agree that it is not really a question of choice? However, there would be choice for the few individuals who would benefit by exercising choice at the expense of the taxpayer. That would be the choice.
Mr. Dismore: As always, my hon. Friend is right.
I would challenge the hon. and learned Gentleman's argument about choice. I suspect—we have had the argument before—that he has not read his Bill. He did not write it, and he has obviously not read it either. Clause 1(4)(c) says:
- "after subsection (6) there is inserted—
'(7) Section 45 of the Sex Discrimination Act 1975 shall not apply to the annuity provided under subsection (1A).'"
Ms Oona King (Bethnal Green and Bow): Is it not the case that people do have the freedom to put their money where they want, but not if they want my taxes or anyone else's to provide them with a tax benefit in return?
Mr. Dismore: My hon. Friend makes a useful point. I shall be dealing with tax implications later in my remarks. However, the issue goes beyond that. Why should my pension contributions pay for my hon. Friend's pension? That is my big issue in terms of my personal pension. I would be compelled to make those contributions whether I liked it or not. I take objection to that. The hon. and learned Gentleman is entirely wrong when he talks about compulsion. As I have said, his Bill is full of compulsion for the average, ordinary working man and woman, but there is no compulsion for the very few rich people with multi-million pound pension schemes. That is at the nub of the Bill. I shall say a little more about that in a while.
In the end, there is no extra money in the pot. The Bill takes money away from a man to give it to a woman—a woman whom he probably does not know and has never met. Money would be taken from one gender unjustly to enrich the other.
As we know, the Bill has been introduced by an hon. and learned Member.
Mr. Pound: You could have fooled me.
Mr. Dismore: Given the Bill, the hon. and learned Gentleman could have fooled me, too.
I suspect that the hon. and learned Gentleman has not done his legal homework, either. The Bill undoubtedly has a human rights implication. I am sure that the hon. and learned Gentleman has not considered the implications of the Human Rights Act 1998, especially part II of the first protocol, article 1, which deals with the protection of property. The provision is straightforward and it bears reciting to the House. It reads:
- "Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.
The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties."
The hon. and learned Gentleman is no doubt an avid reader of the law reports.
Lawrie Quinn: I apologise for disturbing the flow of my hon. Friend's speech. However, he knows that I am but a simple engineer. From my professional perspective, to ignore central core tenets of a profession by disregarding major legislation and major statutes would have the most serious consequences. If I ignored principles while designing the foundations of a bridge, I would be construed within my profession as being negligent. My hon. Friend is from the legal profession. Would he go so far as to accuse the hon. and learned Member for Harborough (Mr. Garnier) of being negligent in ignoring the key, central tenets of his own profession by ignoring such an important part of statute law and of the British legal system that involves human rights?
Mr. Dismore: My hon. Friend makes a telling point. I would not accuse the hon. and learned Gentleman of professional negligence in the Chamber. He sits in the Chamber in connection not with his part-time job as a QC in the law courts, but with his other part-time job as a Member of Parliament. However, I would say to the hon. and learned Gentleman that had he advanced his argument before a judge without dealing with all the relevant points under the Human Rights Act and the case to which I shall shortly refer, his clients would at the very least have had something to say about it.
Lawrie Quinn: I shall again use the analogy of designing a structure. Is my hon. Friend saying that the very foundations of the Bill are flawed and that the case is undermined? Is it not deeply regrettable that the hon. and learned Gentleman did not provide explanatory notes, did not do his homework—
Mr. Deputy Speaker: Order. I have dealt with the question of explanatory notes. The hon. Gentleman has repeated the point more than once, which is unnecessary. We would do better dealing with the substance of the Bill.
Mr. Dismore: In response to my hon. Friend the Member for Scarborough and Whitby—not on the question of explanatory notes, but on his engineering analogy—I would simply say that the hon. and learned Gentleman's structure is built on foundations of sand.
Lawrie Quinn: Technically, that is not a problem.
Mr. Dismore: That shows that my hon. Friend is an engineer and I am a lawyer.
Mr. Bryant: And I am a theologian.
Mr. Deputy Speaker: Order. Perhaps we should remember that for the purposes of today's debate, everyone in the House is a parliamentarian.
Mr. Dismore: I am grateful to you for calling us to order, Mr. Deputy Speaker. You are right to say that we
are all parliamentarians. That is the point I was making before the intervention from my hon. Friend the Member for Scarborough and Whitby—if the hon. and learned Member for Harborough had been speaking in his other capacity, his clients might have had something to say about it.I have dealt with the Human Rights Act implications, but there is another legal aspect that we should consider. I do not know whether the hon. and learned Gentleman reads The Times—he probably does. This morning, he may well have read, as I did, yesterday's edition of The Star Sheffield, which reports an important case that is not on all fours with his argument for equalisation of the pension rules between the sexes. The newspaper reports the judgment of Mr. Justice Elias on a judicial review application by Barnsley equality campaigner Mr. David Moody, who claimed that recent increases in pension unlawfully discriminated against men, in that women started collecting their retirement pension at 60, whereas men have to wait until they are 65. Mr. Moody and another man, both in their 60s, sought judicial review of the decision of the Secretary of State for Work and Pensions. Mr. Moody argued that the increases were unlawful and that women benefited from them while men of the same age got nothing.
That is the mirror image of the argument in the Bill. The Times reported that the High Court judge, Mr. Justice Elias, threw the case out as lacking in merit. I believe that there is an argument for equalisation of state benefits, based on the material to which I referred, but if that does not apply, it surely does not apply with knobs on to private sector pension arrangements, which is what we are discussing today, in the context of the Human Rights Act.
Gender is a recognised factor in the setting of risk premiums by insurance companies in many contexts, not just in relation to annuities. I do not see women queuing up to argue against better car insurance rates, for example, because women as a group are less likely to commit motoring offences. As far as I am aware, the gender differential has not been contested in other areas where women do better than men out of insurance arrangements.
However, gender is but one factor that insurance companies take into account when setting annuity rates and determining risk premiums. When a person requests an annuity, they also consider general health, lifestyle, and whether he or she has a disability. Over the years, there has been much coverage, of people who are at risk of contracting HIV and their relations with the insurance industry, which has often tried to be intrusive in these matters when it comes to setting annuities. Insurance companies may also take into account whether someone is a member of a certain ethnic minority. Indeed, insurance companies have been specially 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 that generally speaking, they have, a shorter life expectancy.
The fact remains that as far as they can, insurance companies 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.
Insurance companies' ability 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.To wander into such terrain without well-thought-out and coherent proposals would be foolhardy. It would have ramifications and implications right across the insurance industry. The hon. and learned Gentleman has neglected to examine how risk is assessed by insurers. It is important to consider the impact that the imposition of unisex annuity rates would have on individual insurance companies. If insurance companies were forced to offer unisex rates, as the Bill provides, and only unisex rates, they could face an unpalatable choice. For the 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 out—not just men; women would not gain as much as the hon. and learned Gentleman envisages.
Alternatively, insurers could face risks to the solvency of their businesses. With all the problems facing the insurance industry, this is hardly the time to consider any risk or threat to the solvency of any of the life insurers. Everyone would risk losing out. As I mentioned, I lost out dramatically from Equitable Life, and we see from the press that one or two other insurers potentially face the same problems.
Why is it desirable to force insurance companies to discount just one factor, when they can take account of so many other factors? Why should they discount only the gender of the annuitant, yet still be able to take account of whether people smoke, or their occupation. For example, if somebody is a fit SAS man, he may have a long life expectancy, as opposed to a fat, overweight Member of Parliament, who is doing his best to improve his health. My life expectancy may be very much less, and that factor may be taken into account.
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