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Lord Tebbit: My Lords, before my noble friend leaves the point, if we take all that he has said—I am sure that he is right—about Her Majesty's Government's policies in this area, why do we need an exemption to be able to discriminate on grounds of sex in cadet forces?

Lord Henley: My Lords, I shall be coming later to the subject of cadet forces. The simple point is that cadets are not employed, and so they are not covered by the employment legislation about which we are talking. It does not affect those adults employed supervising cadets; it is purely an exemption from the Act—I shall reach this point in due course—with regard to the admission of cadets and not to their employment. My noble friend will understand that those cadets are not employed.

Lord Lester of Herne Hill: My Lords, I am sorry to take more time, but will the Minister deal with the point that the employment provisions under the Sex Discrimination Act cover training and training organisations. Surely there is no doubt that being a cadet is a way of becoming a member of the Armed Forces and falls within the training provisions covered by the relevant part of the statute.

Lord Henley: My Lords, some cadets join the Armed Forces, although not a high proportion. However, to

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argue that that is a means by which they train to become members of the Armed Forces does not follow the actuality of what is the case. Cadets are totally separate from the Armed Forces. Admittedly the Armed Forces greatly value the cadets. I would offer them a great deal of support as one of our most successful youth movements, but Section 84(5)—the noble Lord will correct me if I am wrong—covers purely the admission of cadets. It does not deal with their employment, because they are not employed.

As I said, I shall return to the subject of cadets in due course. I wish to revert to the regulations. The High Court decision to which the noble Lord, Lord Lester, referred—I believe, as he said, he acted for some of the parties—related to pregnancy dismissals in December 1991, which led to the position that total exemption of the Armed Forces from the Sex Discrimination Act was inconsistent with European law. The policy of compulsory discharge of servicewomen upon pregnancy ceased in 1990 when maternity leave was introduced. In order to act fully and fairly, and in accordance with the law, the Ministry of Defence admitted liability to pay compensation to women discharged on pregnancy between 1978—when the European equal treatment directive came into effect—and 1990. There have since been over 4,500 claims for dismissal during that period. We have made every effort to keep payments to a level consistent with the taxpayer's interests. Although there have been a few high awards by industrial tribunals, about 80 per cent. of the claims have now been settled for an average of about £10,000 each.

The purpose of the regulations, as I argued, is not to make any substantial change in the law but to tidy up national law to reflect the actual position under European law as it applies to the Armed Forces. My noble friend Lord Tebbit asked what was the practical effect of the regulations. The practical effect as regards potential claims for sex discrimination is that claims now have to be brought within three months of any discrimination. That is because the rest of the Sex Discrimination Act, including time limits, applies now to service personnel in the same way as it does to civilians. I can say frankly to my noble friend that had we not passed the regulations the claims about which he complains could continue indefinitely.

The Motion seeks also to repeal the blanket derogation for the Armed Services in Section 1(9) of the Equal Pay Act 1970. We do not believe that there is any need to do so. The Equal Pay Act 1970 does not deal with the Armed Forces in the same way as does the Sex Discrimination Act 1975. Section 7 of the Equal Pay Act specifically precludes the Secretary of State for Defence from making any distinction between servicemen and servicewomen in pay, allowances or leave, unless it is fairly attributable to differences in obligations undertaken. The basic pay of the Armed Forces already complies with the principle of equal pay for equal work.

Lastly, I shall say a little about the cadets. As I made clear—I sense that the noble Lord, Lord Williams of Elvel, has an element of doubt—there is no direct vocational link between cadet forces and the Armed Forces. Individuals join the cadets for the opportunities

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offered and for their own personal and social development. As I did earlier, I again pay tribute to the important service that they provide and to the fact that they are an important element in the nation's voluntary youth movement.

I should stress—as I did earlier—that the cadets are not employed. The cadet force exemption is in respect of admission only. It does not cover the employment of adults or the activities of cadets once they have joined. Our legal advice is that because the equal treatment directive imposes no obligations in relation to the cadet forces it would be ultra vires—that is something of which we have been accused in other parts of the regulations—to remove or amend the cadet force exemption under Section 85(5) of the Sex Discrimination Act by virtue of a statutory instrument under the European Communities Act.

The exemption for cadet forces is in line with that available to other bodies, including youth organisations—I believe that that is dealt with under Section 34—but we will obviously consider with the cadet forces the scope for amending or removing the existing exemption for admission to the cadet forces in due course, should it be necessary. Again, I stress that it does not affect the cadets themselves, because they are not employed; it does not cover the employment of all adults or activities once the cadets are in. I hope that with those explanations the noble Lord will feel that we have answered his points and that it is not necessary on this occasion to press his Motion.

Lord Lester of Herne Hill: My Lords, I am grateful to the Minister for that full reply. Indeed, I am grateful to all noble Lords who have participated in the debate. I hope that your Lordships will consider that the subject was appropriate to be raised in this way; there is no other.

Perhaps I may be brief and deal with only one or two points. First, I found myself in agreement with a great deal of what was said by the noble Lord, Lord Tebbit, about the process of law-making. However, I have an important qualification to make with which he might not agree. The European Communities Act 1972 is a brilliant legal conjuring trick devised by Sir Geoffrey Howe, as he then was, to enable the United Kingdom swiftly to comply with its treaty obligations through subordinate legislation, among other things. I doubt whether either House knew exactly what was happening when that provision was passed, any more than it understood Section 2(4) and its effect on the role of the courts in interpreting statutes. As someone sympathetic towards accession to the Community, I cheer the fact that that means was devised. However, there is a need for important safeguards and this debate has shown the lack of effective safeguards in a case of this kind.

Secondly, I believe it to be the view of the House as a whole that women have made a most important contribution to the effectiveness of the Armed Forces and the police service and that there should be no more sex discrimination than is necessary in order to achieve the legitimate aims of the Army or the police force.

Thirdly, it would be inappropriate for me in this House to attempt a legal reply on points of law to what was said by the Minister. In my respectful view, the

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vires of these regulations is doubtful and their compliance with Community law obligations is very doubtful.

I agree entirely with the noble Lord, Lord Williams of Elvel, that what should have happened is that a genuine occupational qualification exception should have been included in the regulations and on their face. The noble Lord, Lord Tebbit, asked what the consequence would be if the Government and Parliament have got these regulations wrong. The consequence would be disastrous. It would mean that the three-month time limit would be quite ineffective, as the Emmott case shows. Therefore, the main purpose for introducing the regulations would have failed. Women or men will be able to complain of sex discrimination without time limit unless and until proper regulations are made and brought into force. I suggest that that will not be in the interest of the Armed Forces, their members or taxpayers. However, it would be inappropriate for me to argue further and I beg leave to withdraw the Motion.

Motion, by leave, withdrawn.

Pensions Bill [H.L.]

8.23 p.m.

House again in Committee.

Lord Marsh moved Amendment No. 145YR:

After Clause 53, insert the following new clause:


.—(1) In any case where a payment ("the first payment") has been made by any person under section 53 to a scheme following an actuarial valuation of the scheme assets which disclosed a shortfall (within the meaning of that section) and a subsequent actuarial valuation of the scheme assets discloses that the value of the scheme assets exceeds the value of the scheme liabilities, that person shall become entitled, at the time the subsequent valuation is signed, to a refund of an amount—
(a) equal to the amount of the first payment, or,
(b) the excess,
whichever is the less.
(2) Where paragraph (b) of subsection (1) has applied in relation to a scheme, then that subsection may be applied again on a subsequent valuation which discloses a further reduction in the shortfall to permit the person concerned to recover an amount equal to the amount of that further reduction.
(3) In relation to a scheme the terms of which do not permit the trustees or managers to make a refund falling within subsection (1), subsection (1) shall be construed as conferring power on the trustees or manager to make that refund.
(4) The provisions of this section are without prejudice to Schedule 22 to the Taxes Act 1988 or section 33 of this Act.").

The noble Lord said: The proposed new clause is fair, simple and, I am sure, totally non-controversial and I hope that the Minister will say something helpful about it. It allows a company which under the MSR puts money into the fund to get it back again, in particular in the case of a closed fund or where the age profile produces minimal contributions.

The value of pension schemes inevitably fluctuates with the markets. When a scheme's assets eventually rise with the markets, the employer normally takes a pension holiday. That option is not necessarily available in the case of closed schemes. Those schemes are closed to new entrants, with the result that they tail off

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eventually to zero. As a result, there is little if any scope for recovering the overpayment through a pension holiday.

It may be argued that the overpayment will be returned in due course as a so-called surplus under the Taxes Act 1988. But there are many strings to that bow and this Bill adds a great many more. The process takes so long that, particularly as regards small businesses, it is a nightmare. It is a simple statement of fact that it is neither fair nor sensible that an employer who has had to pay what could well be a large sum of money in order to meet a temporary shortfall should not be able to get the money back and put it to work for the business when the problem for which it was paid in in the first place has ceased to exist. I beg to move.

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