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People over 50 are still disadvantaged in the labour market, as the noble Lord pointed out. At 55.2 per cent, the employment rate of 50 to 69 year-olds is still some 19 percentage points behind the overall employment rate for people of working age. That is why we launched Age Positive in 2002—to engage with employers about age discrimination and promote the business benefits of employing a mixed-age workforce. There is much more to do, and we are not complacent about the progress that has been made. That is why last year we introduced legislation to outlaw age discrimination in employment and vocational training and why Jobcentre Plus provides tailored training for older workers through New Deal 50 Plus.



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Paragraph (a) of the amendment would require the Secretary of State to present biannual reports to Parliament regarding the number and distribution of people over 50 who are seeking work. It is vital for us to understand the characteristics of older workers and share this information to understand the support that the Government can give them in seeking and remaining in work. For that reason, the DWP already publishes an older workers statistical information booklet twice a year, a copy of which is in the Library. As my noble friend was recommending publications earlier this evening, I feel that I should recommend that one. It is packed with up-to-date information about the profile of older workers and how training is accessed, along with all sorts of other important information. To tackle the problem, we have to understand it.

Paragraph (b) of the amendment would require the DWP to produce reports on the provision of training for individuals over 50. I understand that the noble Lord has moved this as a probing amendment to prompt a debate; he has asked a number of questions, which I shall come to. Training and skills are vital to the country’s economic growth and productivity. The Government’s skills strategies are designed to help to meet the skills challenges of an increasingly competitive world economy, including the challenges posed by an ageing society.

The provision of training for older workers should be considered within the context of the Leitch review of skills, on which there was a wonderful debate last week. The final report of my noble friend Lord Leitch gave a clear analysis of the future skills needs of the UK. The Government have welcomed the report’s ambitions and recommendations and will shortly publish an implementation plan to take forward the Leitch agenda.

The subject of training was raised on Second Reading by the noble Baroness, Lady Greengross, who is not in her place at present. On that occasion, she commented that,

The noble Lord made that point as well. While we are aware that this tendency may prevail, we are tackling it directly through legislation to outlaw age discrimination in vocational training and by engaging with employers to challenge discriminatory behaviour. This work is being actively pursued by the Age Positive initiative.

In encouraging employers to invest in the skills of their workers, we are working to ensure that programmes such as Train to Gain are open to learners of all ages. Train to Gain provides employers with free and subsidised support to train low-skilled workers. The opportunities that this programme supports are available to older workers. As at March 2007, 18 per cent of Train to Gain participants were over 50, which equates to well over 24,000 learners. In addition, for older people returning to work through New Deal 50 Plus, an in-work training grant worth up to £1,500 is available to enable them to access the training that they may need to sustain their move into employment.

Training provision is available to older workers, but I do not wish to suggest that more could not be done

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to support older people in remaining in, or returning to, employment. Officials from the DWP and the Department for Innovation, Universities and Skills have worked together to establish a shared evidence base on the role of skills in the labour market and are conducting further research into evidence on the extent to which a lack of access to education or training can be a barrier to older people remaining in, or returning to, the workforce.

I do not have information on the FE budget in my brief, but I am happy to look into that and write to the noble Lord before Third Reading. He stressed the importance of the DWP’s commitment to end the bar on public appointments over the age of 65. I cannot answer his question on that today but, if we are talking about making age discrimination illegal, that is an important point for me to follow up.

I hope that I have been able to reassure the noble Lord on the points that he made when moving his amendment. A lot of information is available, but we are not complacent about the importance of training for older people, who tend to have lower levels of skills and difficulty accessing the kind of training that may be important if my department is to achieve its target of greater participation in the workforce of older people.

Lord Skelmersdale: My Lords, I am grateful to the Minister for giving a much fuller reply than my activities on the previous occasion allowed her. She spoke about all-age training. That worries me if it means different age groups on the same training course at the same time. Many years ago, I decided that I ought to learn to type, so I went to the local technical college, as it then was, and joined a daytime typing course. I was then 27 or 28 and was surrounded by 18 and 19 year-old women. Needless to say, the net result was that I was so put upon that I was not required, so I was unfairly dismissed from a course that I had paid for. I say that only to illustrate the point that, if mixed sexes and mixed ages are on the same course, there is likely to be trouble and it will not be as effective as it otherwise would be.

I shall not press the amendment, but what the Minister said is on the record. I shall get back to her when necessary—I am afraid that it will become necessary in due course. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 8 not moved.]

7.15 pm

Schedule 1 [State pension: consequential and related amendments]:

Lord McKenzie of Luton moved Amendment No. 9:



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The noble Lord said: My Lords, I shall speak also to Amendments Nos. 10, 11, 36 and 37. In Committee, I moved an amendment to Clause 14 that I described as covering a complex and technical issue. I do not propose to tax noble Lords’ patience by explaining the matter again other than to remind them that I introduced the House to the PUCODI. The amendment was designed to prevent someone from losing out in the event of their scheme converting their guaranteed minimum pension; it would prevent those in receipt of increases to their guaranteed minimum pension at the point of conversion from losing the inflation protection given through increases to the state pension.

After that amendment was agreed, we realised that it did not cover a specific group: widows, widowers and surviving civil partners of scheme members who had had their GMPs converted before they died. This amendment corrects that oversight and allows that group to inherit those increases, as they do now. However, while working on it, we also discovered that a reference in the legislation governing such inheritance—Schedule 5 to the Social Security Contributions and Benefits Act—has the unintentional effect of requiring a double deduction in respect of scheme indexation from the amount payable to those survivors. The second part of the amendment will remove that. The other amendments are needed simply to tidy up various references in the light of these changes.

I must apologise to noble Lords for asking them to make such amendments. My only excuse is that this is a very complicated area and the legislation is particularly dense. We intend in the longer term to look again at the whole area in detail to see whether it can be simplified, a result that I assure your Lordships would be much welcomed by anyone who has needed to look at this legislation. I beg to move.

On Question, amendment agreed to.

Clause 14 [Conversion of guaranteed minimum pensions]:

Lord McKenzie of Luton moved Amendments Nos. 10 and 11:

On Question, amendments agreed to.

Baroness Noakes moved Amendment No. 12:



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(a) in paragraph (a), at the end of sub-paragraph (ii) insert “together with his recommendation as to whether there should be an alteration in either or both of those percentages and if so what alteration is required”;(b) omit paragraph (b).

The noble Baroness said: My Lords, the amendment would insert a new clause after Clause 14. It would amend Section 42 of the Pension Schemes Act 1993 and remove the Government’s power to over-ride the recommendation of the Government Actuary when setting the level of the contracted-out rebate for defined benefit schemes.

At present, the Government Actuary has to provide a report on the cost of providing actuarially equivalent benefits when schemes are contracted out. Since the Government Actuary is the Government’s expert on actuarial equivalence, that is not surprising. What is surprising is the fact that the Government can then ignore the Government Actuary’s advice: they can choose not to change the rebate or reduce it at will.

If the Government decide that there should be no change, that is an end to the matter. Parliament has no say. If they decide to make a change, they have to make an order subject to the affirmative procedure, which, as we know, means a little bit of parliamentary procedure but not very much.

The Minister will be aware that the previous quinquennial review resulted in an order last year that ignored the Government Actuary’s advice. The Government Actuary said that the rebate should be increased from 5.1 per cent to 5.8 per cent, but the Government instead increased it to only 5.3 per cent. At the time, the Minister tried to argue two things. The first was that it was cost neutral, which it plainly was not, because the cost to employers of providing the relevant pension benefits in effect went up. If the Government will not pay the actuarial price for transferring liabilities, it is clear that employers will have to make up the difference. Secondly, the Minister ran the argument that, as the Government were considering the results of the review of the Pensions Commission, it was not right to implement the Government Actuary’s advice. We found that quite confusing, but it is now clear that they have stopped considering the Pensions Commission’s report and have separately decided not to review the contracted-out rebate at an interval shorter than the five-year maximum. We can therefore comprehensively ignore that second argument.

The real reason for the Government’s decision has been admitted only very recently. When we debated the amendment in Committee on 4 June, the Minister said that the Government did not want to remove,



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We always suspected that, but it is now official. If the Chancellor’s coffers look a bit empty, he can have another go at destabilising the funding of private sector pensions. It is a mini-version of the ACT raid and, like that raid, it goes on year after year.

This is not good government. If we want companies to take responsibility for good occupational pensions, the rules of the game have to be clear and fair. Fairness dictates that if employers assume some of the responsibility of the state for a part of an individual’s pension, the companies should be adequately compensated. That is what actuarial equivalence is all about. Employers take long-term decisions about pension provision and its funding and they should not be messed about by the Government’s short-term funding decisions. My amendment would install the presumption that the expert advice of the Government Actuary is to be followed. I beg to move.

Lord Oakeshott of Seagrove Bay: My Lords, this is a significant amendment, which we support. The Government should not keep a dog and bark themselves.

Lord McKenzie of Luton: My Lords, I thank the noble Baroness for this amendment. We had a preliminary discussion on this matter in Committee and I am happy to revisit it. I apologise in advance for repeating some of the information that I gave on that occasion, but that is because, unsurprisingly, the facts remain the same.

This amendment seeks to impose an additional and explicit requirement on the Government Actuary. If accepted, it would shift much of the responsibility for recommending to Parliament the level of rebate rates for contracted-out salary-related schemes from the Secretary of State to the Government Actuary.

I will begin with the rebate rates themselves and the decisions taken at the last rebate review. The timing of the review meant taking decisions ahead of the Government’s response to the Pensions Commission’s major proposals on the future of contracting out. The Government Actuary’s considerations, if accepted in full, would have resulted in a significant increase in the overall cost of rebates from April 2007. I can assure the House that we thought very carefully about whether this would have been the right thing to do. As part of that, we took into account existing fiscal circumstances, as was only right and proper.

The rebate rates that we set for the previous quinquennium of 2002-07 represented a significant increase in rebates for all forms of contracting out—around an additional £10 billion over the quinquennium. However, over the same period there was no increase to contracting out in defined benefit schemes, or indeed to the numbers of people who were members of those schemes. While we accept, therefore, that the rebate is important to schemes, it is clear that it is only one of many factors affecting them. We do not agree with any assertions that the level of the rebate should be held responsible for

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scheme closure or employer insolvency. Indeed, “a mini-raid” was the phrase used, I think, which I reject, as I reject the continuing challenge on the so-called ACT raid. We have been over that many times and know the arguments.

Taking all this into consideration when we were reviewing rebate rates in 2006, we decided that it would be sensible to adopt a cautious approach, which we estimated would broadly maintain the level of expenditure at that time. We have always said that we would keep the timing of the next review of rebate rates under consideration. The next five-year review of rebate rates is due in 2012 and, although we do not anticipate that the rebate rates from 2007 will have a significant impact on defined benefit pension provision, it remains an option to bring the next review forward if we think it appropriate. The Government still expect to spend around £50 billion in rebates over the next five years. That is a considerable amount.

I now move on to the process by which the rebate rates are set; I hope that it will be helpful if I explain this briefly. Legislation ensures that the level of the rebate is reviewed and subjected to parliamentary scrutiny at least once every five years. The Secretary of State is required to lay before each House of Parliament a report that includes a statement about any changes that he considers are needed to the existing rebate rates. The report takes account of the accompanying Government Actuary’s report to Parliament. This amendment seeks to extend the statutory responsibilities of the Government Actuary and would bind Ministers to accept his recommendation. Currently, the Government Actuary’s statutory responsibility is to provide an independent report to Parliament on his assessment of the cost of providing benefits of an actuarial value equivalent to that of the state benefits forgone by those who are contracted out. This report is confined to actuarial matters, appropriate to the Government Actuary’s role.

The Government Actuary’s report is prepared after full public consultation and due consideration of the responses to that consultation. As with all advice from civil servants, Ministers are obliged to give fair consideration and due weight to this informed and impartial report to Parliament. It is, however, for Ministers to take decisions on the level of the rebate, in the light of other relevant considerations and advice. That is rightly the case, given the expenditure involved. It would therefore be inappropriate to fetter ministerial decision-making by removing Ministers’ ability to determine the level of the rebate in light of the broader public policy context and having regard to the prevailing and anticipated fiscal situation.

Lord Oakeshott of Seagrove Bay: My Lords, the Minister said that it was for Ministers to take decisions in the light of other advice. What other advice do they receive apart from that which we are seeing here?

Lord McKenzie of Luton: My Lords, I imagine that they have a range of advice. I was not the Minister involved at that time and I am happy to get back on

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this, but part of it would be the fiscal backdrop, the general economic situation and what was happening generally to pensions. A whole range of data would be available to the Minister. The Government Actuary could not be expected to take a view on such matters on behalf of the Government of the day and, indeed, it would not be reasonable to expect the Government Actuary to do so.

I hope that that helps the noble Baroness—although I suspect not—and that she might just feel able to withdraw the amendment.

Baroness Noakes: My Lords, the Minister will get no better response from me today than he got last time, which was that I was not one jot convinced by what he said. He has confirmed that the Government now think that fiscal circumstances are at least as important as actuarial equivalence, but the whole basis of contracting out is on—

Lord McKenzie of Luton: My Lords, I do not believe that I said that. I said that the fiscal backdrop is clearly one consideration that needs to be taken into account. I did not mention equal importance at all.

Baroness Noakes: My Lords, the only consideration that the Government could have taken into account to arrive at their decision last time was a fiscal one. I have certainly not heard any other reason adduced. I went through the arguments that the noble Lord, Lord Hunt of Kings Heath, gave us when we debated the order, and the issue of fiscal circumstances was the new information that the Minister gave us when we debated this in Committee.


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