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Baroness Greengross: My Lords, it was a privilege to serve on the sub-committee headed by our excellent chairman, the noble Lord, Lord Williamson. I am also a vice-chair of the All-Party Group on Equalities. In that respect I have had the privilege of working closely
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with the noble Lord, Lord Lester. After listening to the noble Lord, Lord Lester, and the noble Baroness, Lady Royall, it is obvious that my ambivalence in the task that we were set—which was to consider these issues—was somewhat obvious, especially as I have campaigned for equal treatment and equality over many years and the subject is very important to me.

However, I believe that the aim of equality measures is, and must always be, to improve the situation of a minority or a group of people that is treated unfairly. The result of measures to eliminate inequality must be better than if those measures were not introduced. I start from there, as did, I believe, other members of our committee, and our extremely pragmatic conclusions are based on that premise.

It is worth noting, as the noble Lord, Lord Williamson, said, that UK sex equality legislation already exceeds in scope most of what the EU draft directive seeks to address, and it will not be brought down to the level of the draft directive if that becomes accepted in law. The committee took a great deal of evidence and considered it very carefully, as was our role. The evidence revealed the extreme complexity of these issues. They are not as straightforward as they seem and as many of us, wearing our other hats and campaigning for equality of treatment, would have one believe.

It was a difficult decision for all of us. That is why our key recommendation was that,

In our view, that is the case here.

In financial services, notably insurance, we are dealing only with commercial transactions and risk is the basis of the contract. We came to the conclusion that the financial services industry itself must always make the case for any continued gender differential. However, life expectancy differences are narrowing. We concluded that more research and consultation is needed before changes ought to be made and that continued monitoring must be part of the agreement.

Our ambivalence is obvious also in our conclusion on upholding differential treatment, which is less enthusiastic than that of the Government. However, when there is no difference—that is, when life expectancy becomes the same for men and women—then the differential treatment must disappear immediately. The insurance industry has to be held to that. Our recommendation is conditional and for the time being only. It is very sad that the Government have not responded by saying that they would monitor this.

Our feeling is that the Equal Opportunities Commission is the prime organisation able to take this on board. If it cannot, then perhaps the FSA or the Office for National Statistics could provide that information very quickly. I also agree that transparency is essential. However, even without formal monitoring, those of us
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who campaign for equality will not let the issue go in the event that the circumstances and actuarial data change. It will not disappear from view as a policy issue.

The paper produced by the Equal Opportunities Commission and the Pensions Policy Institute—in which I declare an interest as its president—concluded that the argument on unisex annuities has not been made conclusively, that annuity rates for men could decrease by up to 13 per cent, and that joint life annuity rates for men could decrease by 4 per cent. Unisex annuity rates would help only a minority of pensioners. More than three times as many pensioners receiving an annuity, including wives and widows dependent on their husbands' annuities, could receive a lower income, not a higher one. That made us think again.

On motor insurance, the committee felt that the industry should work towards a situation in which young drivers, particularly male drivers, could be risk assessed on the basis of their driving records over an initial period of a few years. That would change the need to use gender as it is currently used, where young men are automatically assessed as a very high risk simply because they happen to be young men. So we are some way towards agreeing with the noble Lord, Lord Lester, on that.

On positive action, it is important to note that, in the EU negotiations since our report was published, the Government have secured that,

That is very important. Overall, the committee felt that, at present and for the time being only, on the basis of objective data, we should continue to differentiate between the sexes. However, that must be monitored transparently; change must be effected immediately when the situation changes; and the overall advantages must outweigh the disadvantages to the consumer—the ordinary person who must always be the subject of our main concern.

Lord Harrison: My Lords, I take the opportunity to thank the noble Lord, Lord Williamson of Horton, for his masterly exposition of our report and for his superb stewardship of our sub-committee in his period as chairman. I also welcome the noble Baroness, Lady Thomas of Walliswood, as she takes up his duties. She will be reinforced by our excellent secretariat, which has played an outstanding role in forging this report.

We have the report before us. We also have the benefit of the Government's response. Perhaps we have similar conclusions but with different emphases. We acknowledged the need for the directive and the common interest of the European Union in introducing legislation to extend the principles of anti-sex discrimination into commercial transactions. We emphasised the need for increased monitoring of the directive when it comes into play and of the marketplace in which these businesses exist. We also emphasised the need for the swift implementation of non-discrimination when, for instance, the facts change—for example, when male and
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female life expectancy patterns change, impacting on the annuity market and the products deriving from it—and when supporting arguments are undermined by research or social change. I have in mind, in particular, the motor insurance industry.

Our report foresees a middle path of promise and practice. In it, we declare that we support the introduction of such legislation so long as it can be shown to be necessary, soundly based, proportionate and consistent with the principles of competence and subsidiarity. In passing, it is interesting to note that the anti-sex discrimination legislation passed a generation ago by Lady Castle—I have in mind the Equal Pay Act 1970 and the SDA 1975—was more wide-ranging and broadly based than the relatively modest proposals in this draft directive. Not all that emerges from Brussels is as radical and revolutionary as it is sometimes portrayed, and so wilfully misrepresented, as the noble Baroness, Lady Royall, pointed out.

Indeed, it is a further finding of our report that our understanding and our intelligence of these commercial markets, where gender dictates and influences the products marketed, is woefully inadequate, not only across the single European market as a whole but frequently, too, here in the single marketplace of the four countries comprising the United Kingdom. For these reasons, our report is peppered throughout with calls for greater research by the Commission and by the industries involved into deepening our understanding of the relevant markets. Let me give two examples.

I do not think we knew enough about the functioning of the motor insurance market across the now 25 member states of the European Union with respect to pricing policies as they are modified by considerations of gender. Our researches show, for instance, that France had a unisex approach to computing insurance, but it then appeared that it was mono-sex, in the sense that the greater risk of the two sexes was applied universally to both sexes.

When we received the witness from the Commission, it was the first time that we heard a wholly different view about how the insurance market might be informed when she used the word "solidarity", a word infrequently heard in your Lordships' House. In other words, perhaps touching on some of the elements from the speech of the noble Lord, Lord Lester of Herne Hill, the insurance market could be operated by solidarity, evening out the risk of those who have different risk potential.

My second example is the impact on the pensions and annuities markets, which currently discriminate on the grounds of sex in establishing premiums and benefits. We have little sense of either the broader picture of this market throughout Europe, nor of its smaller detailed parts. We badly need more profound research into and analysis of all these areas.

It is for the self-same reasons of rigour that we, unlike the Government, I believe, have suggested greater monitoring of these commercial markets to ensure that where residual sex discrimination remains it must be cogently justified, at least on a short-term basis. We prefer independent monitoring of both the markets and the directive, when it comes into play, at
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member state level—in Britain's case, the Equal Opportunities Commission—co-ordinated across the EU by the Commission. Ministers, however, were lukewarm, preferring a working group in Brussels made up of the industry and other interest groups. It remains to be seen which of the methods will more greatly favour the consumer, whose champions we on the committee seek to be.

We insist, too, perhaps more urgently than the Government, on greater transparency of the market and its players. Too many brochures and too much literature are produced by pension firms and insurance companies that are frequently unsatisfactory. I also have in mind transparency with regard to the calculation of insurance risk. Some of us want to do the sums ourselves, to check the arithmetic of firms which all too often shroud themselves in opaqueness of reasoning, paucity of evidence and obscurity of language, wrapped up in the body armour of commercial confidentiality.

I give one example from the motor insurance industry to illustrate some of these points. Sex is clearly used as a major—if not the major—criterion for assessing risk and calculating premiums, and the statistics show, as colleagues have mentioned, that young men, newly qualified as drivers, have more accidents and incidents than young women. The facts, therefore, support some continuation of this discrimination. But many other factors contribute to the risk assessment of drivers of which, surely, the soundest is the history of claims, or no claims, that each individual makes. I was of the opinion in the committee, although this was not included in our final report, that a three-year period should mark the phase-out of discrimination in premiums on the grounds of sex. Surely in three years an individual has built up a sufficient history upon which true risk assessment can be accurately calculated.

My abiding impression gained from listening to the industry is that a mantle of complacency has fallen upon it. Too few players in the market seem keen to review ancient criteria and ancient practices and to put into the market new products whose underlying risk is based on up-to-date market intelligence and an appreciation of changing lifestyles in modern Britain. I hope that I am wrong about this, but I fear not.

Three other matters of concern are thrown up indirectly by our report. First—and this follows from my remarks on car insurance premiums, and my being a father of two university students, aged 22 and 19—can nothing be done about the wickedly high premiums levied on new drivers? In many ways, we should be encouraging young people to drive and gain practical experience of that imperative skill at a time when their minds are blotting paper and are best framed to absorb these crucial skills.

Secondly, the very poor and inadequate pensions and annuities for women need further reflection. They still reflect a world in which the men in a partnership are the sole breadwinners.
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My third and final comment concerns the insurance and pensions industries and the associated financial markets. They boast of their efficiency within the United Kingdom, but I fear that they are not taking advantage of the single European market of 15 member states—now swollen to 25—from which they would benefit in terms of profits and wages to their workers. Doing so would also benefit the consumers in that wider market of 480 million people and lead to increased competitiveness between the industries along the lines of the Lisbon strategy. There is a complacency which ought to be brushed away, and I hope that, in part, this report will encourage a greater examination of the opportunities for British industry in this respect.

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