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The Minister of State, Home Office (Baroness Scotland of Asthal): My Lords, I too owe the noble Lord, Lord Williamson, an apology, as I too was caught out and not in my place. I hope that he will not take it ill that both the Government and Her Majesty's loyal Opposition were not here to welcome this sterling piece of work. In time, I hope that he will come to forgive me.
I am very grateful to have the opportunity of the debate to listen to the views that noble Lords have expressed on these important issues. I would especially like to pay tribute to the European Union Committee's detailed work on the directive. I wholeheartedly agree with everything said by the noble Baroness, Lady Morris, whom I welcome to her place. I think that it is the first time that she has appeared on the Front Bench, and if her speech was an example of to what we shall be treated, we will all welcome that very much. I agree with her about the good sense demonstrated in the report.
I thank the noble Lord, Lord Williamson, who opened the debate so eloquently, and all the members of his sub-committee, particularly the noble Baronesses,
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Lady Greengross and Lady Thomas of Walliswood, my noble friend Lord Harrison, and the noble Lord, Lord Colwyn, who all spoke today. I also thank my noble friend Lady Royall. Bearing in mind her sterling work in the European Commission, I think her support very valuable. However, I am sad to cause the noble Lord, Lord Lester, any disappointment. The intellectual purity of his argument is, as always, seductive; in this House, we have long valued his wise words, drawn from a wealth of knowledge and experience. However, as his noble friend Lady Thomas of Walliswood made plain, that purity must always be set alongside the practical effect that the directive has. As the EOC has demonstrated in its research, one has to look at the long-term benefits that we wish to see on the issue. I was particularly taken by the comment made by the noble Baroness, Lady Greengross, that when we look to see the change we want, we must look to see the advantage derived from it.
As noble Lords know, the inquiry conducted by the European Union Committee has been very much welcomed by the Government. We have been grateful for the contribution that it has made to the negotiations in Brussels, which have been conducted over a relatively short space of time for such a complex directive. As we said from the outset, the Government welcomed the draft directive and its aim to expand equal treatment to goods and services across the whole of the enlarged EU.
The noble Baronesses, Lady Morris and Lady Howe, mentioned that our national Sex Discrimination Act has worked well for nearly 30 years, and we firmly believe that the directive, when formally adopted, will be instrumental in developing sex discrimination legislation throughout Europe in a similar way to ours. I want to say to the noble Baroness, Lady Howe, that the directive provides us with jam today. Perhaps it is not quite so thickly spread as she would like, or of quite the flavour that she finds the most pleasing, but we should not ignore the fact that it is jam none the less.
As the noble Lord, Lord Williamson, said, the Government have already substantially presented our position in response to the report of the committee. As he was kind enough to indicate, the Government agree with most of its recommendations. That is especially welcome on issues such as: the exclusion of education, which must be outside scope both to maintain the principle of subsidiarity and to protect our single-sex schools; the importance of enabling the renting of a room in a person's own home; the continued provision of single-sex shelters for victims of sex-related violence to be permitted under the directive; and allowing positive action to benefit men or women as required by circumstances. That was ably outlined by the noble Lord, Lord Colwyn, when he talked about the challenges that we have to face in the health service, in terms of difficult decisions that must be made.
The committee rightly made much of the potential impact of the directive on life insurance, annuities and motor insurance. That area of the directive has been
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the main focus of debate during the negotiations and represents perhaps the most significant challenge in industry practice and implementation. It is therefore welcome that more than half of the committee's recommendations concern those issues.
The text which the committee examined is not the same text discussed at the Employment Council on 4 October. Negotiations on the text of the directive were continuing in parallel with the committee's work, which incidentally was a real bonus for our negotiators in Brussels. The text that received political agreement by 24 of the 25 member states at the October Employment Council will, your Lordships will find, meet many of the committee's concerns.
Some member states have relatively small insurance sectors and a heavy emphasis on social insurance provided through the state. The noble Lord, Lord Lester, referred to the difference of approach. Others, such as the United Kingdom, have a greater emphasis on private pension provision and a thriving insurance sector. The UK insurance industry is the largest in Europe and the third largest in the world. It is an important contributor to the economy, a major employer and a significant source of overseas earnings. Whether we are looking at health insurance, life insurance, pension annuities or motor insurance, the directive has potentially significant impacts on not only the insurance industry, but consumers and pensioners.
The text that has emerged gives an option to member states not to apply the principle of equal treatment in setting insurance premiums and benefits where the use of sex is a determining factor in the assessment of risk based on relevant and accurate actuarial and statistical data. It is not a time-limited opt-out, but a genuine recognition that a "one size fits all" solution is not always the right way forward, and that there are important differences between member states in existing practice.
Lord Lester of Herne Hill: My Lords, the Minister has been kind enough to refer to my purity, which is not something that my friends would normally describe as my best-known quality. My speech depended on my view of the law, not my purity. I have argued that this exception is unlawful. Does the Minister disagree with that view and, particularly, does she disagree with my comments about race and gender? If young black drivers had a worse accident record than young white drivers, she would agree, as would the Government, that that should be unlawful. What is the difference between race and gender when it relates to relying on accurate actuarial calculations which involve generalisations that discriminate against individuals? What is the difference? If she accepts that it is wrong for race, why is it not wrong for gender and why is that not unlawful under European law?
Baroness Scotland of Asthal: My Lords, the Government's view is that the directive, as currently structured, complies with discrimination law and, indeed, with the ECHR. That is a view which has been held for a significant time. I understand the point made by the noble Lord and would be happy to write to him in detail regarding why we came to that view. The
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nature of the noble Lord's question would involve us in a long debate and today is not, perhaps, the time for that. However, I take the noble Lord's point. We do not agree with him on that issue. The issue of race deals with a whole section of people; the issue of women and men is one where the discrimination laws have been cast slightly differently, as the noble Lord well knows. I also appreciate that the noble Lord said that there should be no such differentiation in our law and that sex discrimination and race discrimination should be put on precisely the same footing. That, too, is a debate for another day.
Returning to the issues that we have been debating today, my noble friend Lord Harrison made a powerful speech about the importance of avoiding complacency in the insurance industry and said that there must be rigour and control. I very much take on board my noble friend's comments. The Commission has also listened to the concerns of the industry, which were shared by your Lordships' committee, that the Commission should engage in full consultation with representatives of UK insurers and actuaries and corresponding national bodies in other EU member states to look further at the impact of the likely consequences of removing sex from the equation. A working party will be established which will include representatives of the governments of each member state, of the insurance and related financial services sector, European consumer bodies and bodies for the promotion of equal treatment. I can assure your Lordships that we will be vigorous in that working party. It will examine how to implement the insurance provisions and look at the quality and availability of the data relevant to the use of sex as a factor in pricing insurance premiums and benefits.
It would be wrong to deduce that the Government have simply bought into the insurance industry's arguments or missed an opportunity to extend anti-discrimination legislation to all forms of insurance annuity. I would reassure noble Lords, many of whom have raised this matter, that we have not ruled out during that process looking at the recommendation about monitoring the price-setting of gender. That is an issue which we will continue to take into account.
The committee expressed views about unisex premiums for experienced drivers. It is an excellent principle that good drivers who make few claims should be rewarded with lower insurance premiums. I know that my noble friend Lord Harrison has said much regarding that. A good driving record is reflected in premiums through no-claims discounts of up to 60 per cent, which apply irrespective of gender or age. In practice, premium rates for male and female drivers tend to be equalised at around the age of 30. Legislation to enforce a practice that has been adopted voluntarily by the market would seem unnecessary. It would impede competition among companies who specialise in different client groups.
In addition, the Government note the committee's recommendation for independent monitoring of the use made of sex-based factors by insurers and suppliers
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of related services. As I have tried to make clear, we will continue to look at that matter vigorously.
I had hoped to assist your Lordships regarding implementation, as the noble Lord, Lord Williamson, mentioned that. We believe, as my noble friend Lady Royall so ably said, that the onus will be on the insurance industry to ensure that its practices are defensible. Are they using up to date mortality tables? Do the accident statistics back up the differences in premiums? I can assure your Lordships that the UK insurance industry is in a much better state in terms of the relevance and availability of such data than many other member states.
These are early days in terms of implementation. There are three years before this directive comes into effect and we shall, of course, consult widely. The Government have argued strongly during these negotiations for the continued use of sex-based differences in insurance where they are fair to consumers. We will adopt the same approach during the implementation phase of the directive. I should tell the noble Baroness, Lady Thomas of Walliswood, that I am certain that in her chairmanship of the committee, she will apply the rigour that has been applied by the noble Lord, Lord Williamson, she will ensure that the Government are kept on their toes and that no stone will be left unturned. I would expect nothing less of her. I also welcome the vigour and energy that the noble Baroness, Lady Morris, brings to this issueand her passion, because it is a passion that is shared by many noble Lords, not least by me.
Once again, I thank your Lordships' committee for its very useful inquiry. It has been extremely helpful to the Government in their negotiations on this important and complex directive. The agreement that has been reached is a sensible and, as the noble Baroness, Lady Morris, said, pragmatic compromise which we worked hard to achieve. The Government are looking forward to sharing their experience of the Sex Discrimination Act and our expertise on insurance issues with our colleagues in other member states. We are confident that what will come from this directive across Europe will be better than the present position.
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