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Lord Goodhart: I shall speak to Amendment No. 34, which is in my name and that of my noble friend Lord Thomas of Gresford. We also strongly support Amendment No. 32.

Amendment No. 34 has the effect of removing paragraph 10 of Schedule 1. That paragraph enables orders to be made that have the effect of modifying the pension rights of employees transferred from the magistrates' courts to the new agency. In the course of the modification, there is no guarantee that their pension rights will be maintained at the existing level. Paragraph 26 of the Explanatory Notes says:

This is a probing amendment to discover what is intended to be done to rationalise terms and conditions, how long that process will take, and whether existing pension rights will be maintained during the interim period for those who are being transferred. If not, what will the position be? We also want to ascertain whether existing pension rights will

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be maintained and that those who are transferred into the Principal Civil Service Pension Scheme will be no worse off as a result.

7 p.m.

Lord Bassam of Brighton: This is an important group of amendments. We fully understand the sensitivities that are wrapped up in the important questions that the amendments address. I shall take some time and care in going over those issues and exploring as thoroughly as possible each of the amendments in turn.

The effect of Amendments Nos. 31 and 33 would be to require the Lord Chancellor to consult those from whom property would be transferred and to consult eligible employees affected by a staff transfer scheme. The noble Baroness, Lady Anelay, explained why she proposed her amendment and asked several questions. We certainly intend that consultation should take place, but I question whether the amendment is necessary to effect it.

On staff transfers, it would be inappropriate to place the Lord Chancellor under a duty to consult staff who are not his employees. The Transfer of Undertakings (Protection of Employment) Regulations 1981, which we intend to follow rigorously, places a duty to consult on the current employer of employees who may be affected by the transfer. Consultation would therefore be a matter for the current employer—either magistrates' courts committees or local authorities.

Paragraph 9(6) enables the Lord Chancellor to give directions to employers about consultation. The directions must be complied with for each eligible employee to be transferred under the scheme, otherwise the scheme cannot be made. In respect of those staff who are not transferred, there would still be a requirement for consultation in accordance with the redundancy procedure under general employment law. The consultation requirement is already there. Furthermore, consultation needs to start now rather than on the coming into force of the Bill. Consultation with the union representing magistrates' courts committee staff is already under way. Consultation with those holding property on behalf of magistrates' courts committees, principally local authorities, will commence shortly.

The noble Baroness, Lady Anelay, asked what property would be transferred. There are several categories of real and personal property that will be transferred: property currently used for magistrates' courts purposes; property recently acquired for magistrates' courts purposes but yet to be put to that use; vacant or mothballed property or vacant space intended to be used to accommodate the magistrates' courts service in future; property in a PFI scheme, either completed or under construction or negotiation; and property that the transferor has contracted to acquire in relation to magistrates' courts but which has not yet been transferred.

The noble Baroness also asked why land-holding powers rested with John Prescott. That is a reasonable question. John Prescott has a very large job and

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portfolio. The simple answer is that such a provision avoids a proliferation of land-holding powers, so they are not sprinkled and distributed widely. Crown land is held, as a matter of practice, by a single Minister. The current power rests with the Office of the Deputy Prime Minister.

The noble Baroness also asked about the coverage of staff transfers. We will find out exactly how many local authority staff are eligible for transfer. The schedule is designed to cover any whose transfer seems suitable and sensible. There are roughly 10,000 staff working for magistrates' courts committees, but the number who will be directly reliant for their employment within the local authority sector on magistrates' courts committees may be somewhat lower. It is possible that some of those staff are involved in other activities in the local authority. That is why we must undertake an investigation to get it absolutely right.

From my experience of local government—I was responsible as leader for merging one third of a county and two district councils together—I know that finding out how some employees spend their time is not as easy as it may at first look. Anyone who has been involved in a merger will be well aware of the possible difficulties. This exercise is designed to secure that information .

Amendment No. 32, in the name of the noble Baroness, Lady Gibson, proposes that the existing paragraph 9 of Schedule 1 be replaced with a new paragraph. The effect would be to place the Lord Chancellor under a duty to make a staff transfer scheme to transfer eligible employees to the employment of the Lord Chancellor to work for the new agency. The Lord Chancellor's power is currently expressed as discretionary to enable him to have flexibility with regard to who is transferred. There would be no point in transferring anyone for whom there was clearly no suitable job in the new structure. That picks up a point that I made earlier about employees currently within the local authority orbit who will be doing some work for magistrates' courts committees and other work elsewhere within the local authority. We have to try to get that part of it right. Full compensation for redundancy should be available to those employees in their existing post if that is thought to be in the best interests of the service. The normal principles of employment law will require selection for transfer in these circumstances to be conducted fairly.

The effect of new paragraph 9(2) would be to change the definition of the term "eligible employee". Paragraph 9(4) currently defines an eligible employee as,

    "a person who is . . . under a contract of employment . . . by a magistrates' courts committee, or . . . an authority which is a responsible authority for the purposes of the Justices of the Peace Act 1997 . . . in connection with their functions under that Act".

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Those functions are set out in Section 55 of that Act. The proposed new paragraph 9(2) would change the definition of a local authority eligible employee to a person who is employed,

    "under a contract of employment . . . by a local authority in that part of the local authority's undertaking which carries out the local authority's functions under section 55 of the Justices of the Peace Act".

I seriously question whether this amendment is necessary or desirable. Section 55 uses the term "responsible authority" rather than "local authority". Changing the reference from responsible authority to local authority would not therefore work in terms of drafting. It would also have the effect of excluding any staff employed by other authorities working on duties in connection with Section 55. Until a detailed staff survey of the magistrates' courts committees has been undertaken we cannot rule out the possibility that such staff exist.

New paragraph 9(3) makes specific reference to the Transfer of Undertakings (Protection of Employment) Regulations 1981, to which I referred. In developing our provisions for the transfer of staff, we have followed the drafting model of the Courts and Legal Services Act, which does not include specific reference to TUPE. However, we are committed to following the principles of the TUPE regulations, as we are required to do under the Cabinet Office Statement of Practice. We believe that the Bill effectively replicates the majority of the TUPE regulation provisions and that the Bill as drafted gives protection fully equivalent to those principles.

We are aware of the concerns that the trades unions have raised about our wording here. While I do not believe there is anything between us on the substance of what we want to achieve, I also recognise that it is very important that staff faced with substantial change should have full assurances that their position will be protected. Accordingly, where following further discussions with the unions it seems right to redraft and clarify paragraph 9 of Schedule 1, to give further assurance to magistrates' courts and local authority staff that their rights on transfer will be fully protected as if the TUPE regulations applied, we will bring forward the amendments necessary to do so. I hope that that assurance satisfies that interest and that the amendment will not be pressed.

I turn to Amendment No. 34. As the noble Lord, Lord Goodhart, outlined, the amendment proposes that paragraph 10 of Schedule 1 be removed. Paragraph 10(1) provides that employees transferring into the new agency will not be subject to paragraph 9(7) with regard to pensions. That is consistent with the Transfer of Undertakings (Protection of Employment) Regulations 1981 and with EU legislation (Directive 2001/23).

Eligible staff who transfer to the new agency will become civil servants and will be eligible for membership of the Principal Civil Service Pension Scheme or the partnership pension scheme. Paragraph 10 puts into place the necessary arrangements for staff to transfer from their current pension schemes to the Principal Civil Service Pension Scheme or to the

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partnership pension scheme. It also allows staff to remain in their present pension scheme after the date of the staff transfer to the new agency. That will be necessary if negotiations with the relevant unions and existing pension providers about staff membership of the PCSPS or the partnership pension scheme—including matters as detailed as actuarial calculations—have not been completed before the date of transfer.

I can give an assurance that we will endeavour to transfer all staff into the PCSPS or the partnership pension scheme on the date of transfer into the new agency. Obviously, that will be subject to the necessary negotiations with the relevant unions and the existing pensions providers being completed by that date.

The effect of Amendment No. 34 would be to require pension provision—where it is part of the terms and conditions of employment—to be carried over to the new employer. That would in practice be impossible for us to achieve as it is envisaged that transferred staff, as civil servants, would transfer to the PCSPS or partnership pension. It is for those reasons that I hope that noble Lords will not press the amendment.

I am conscious that I may not have fully responded to the point made by the noble Lord, Lord Thomas of Gresford, on 28th January, at col. 1045 of the Official Report. I want to put that right, and to do so on the record, as I have been asked to do. I am aware that in respect of the transfer of a number of their employees from their present superannuation schemes to the PCSPS, the Greater London Magistrates' Courts Authority faces deficiencies in the relevant pension funds which could be as high as 7 million to 8 million. Scaled up in proportion to the number of employees who could be expected to transfer, that would correspond to a figure not far below 100 million, as the noble Lord observed, although the actual amount would depend on the state of the individual funds concerned. Pending a detailed actuarial evaluation, which is being put in hand, such calculations are entirely speculative.

However, whatever the amount, it is not actually a cost of transfer. The costs of maintaining the present magistrates' courts system include continuing actuarially evaluated payments to meet deficiencies in the local authority pension funds upon which employees of magistrates' courts committees, and those local government employees whose work relates to MCCs, depend for their pension entitlement. Transferring employees may rephase these payments. It will not of itself increase them. These payments are not a result of transfer and in our view should not be regarded as a cost of transfer.

I make this point at some length especially because later, at cols. 1050 and 1053 of the Official Report, the noble Lord seemed to be suggesting a scenario in which, to avoid those costs, the Government avoided transferring many eligible employees to the new executive agency. Not only is that a total misconception—the Government fully expect that the new agency will make the best use of at least the great

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majority of eligible employees—but it would not even avoid the costs which are effectively a commitment arising out of the present employment of those staff. So we could not do it even if we wanted to. Indeed, the scenario which the noble Lord imagined would result in massive cost increases on account of the high but justifiable redundancy payments that would result.

That in itself should reassure the noble Lord. More importantly—and with respect to him—it should reassure MCC employees and others who depend on MCCs for their employment that they will at all times be treated in an entirely fair and constructive manner which recognises the continuing and enhanced demand for their skills in the new structure that we propose.

I think that I have answered all the points with perhaps one exception—on the pension rights of those who transfer, which was raised by the noble Lord, Lord Goodhart. The terms of the transfer to the PCSPS will be negotiated. We aim to ensure that the transfer terms secure for those who transfer a position that is no less favourable than the current provision. We cannot be fairer than that. We will have secured something very important for those employees by having achieved that.

I apologise for having dealt with the matter at length, but the questions were detailed and important. We want to record our appreciation for the co-operation that we have had from staff so far in the detailed negotiations, and put on record our continuing commitment to those staff for the future and for the new service.

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