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The legislation before your Lordships today seeks to achieve three objectives. The first is to restrict the application of the rule against perpetuities to successive estates and interests in property. It will no longer apply to rights over property such as options, rights of pre-emption and future easements, and would exclude virtually all pension schemes. Secondly, in future, to those remaining interests to which it still applied, there will be a single perpetuity period of 125 years, and the principle of “wait and see” will apply. Thirdly, the rule against excessive accumulation will be abolished except in relation to charitable trusts. These proposals, moreover, when implemented would have prospective and not retrospective effect, as the noble Baroness, Lady Deech, has again pointed out. In other words, we will at the point of implementation and thereafter have three perpetuity and accumulation regimes. The relevant regime in any particular case will, of course, depend on the date of the instrument seeking to create the future interest.
These legislative proposals, essentially, seek to rectify two major flaws in the operation of the existing rules. First, the existing rules were designed to prevent settlors or testators from tying up property so that it was kept in the family permanently. However, its application has developed, as we have seen, so as to cover a variety of future interests that arise in a commercial context,
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Clarification with respect to pension schemes appears to have been of particular concern to the Law Commission. Pension schemes are established under trusts. Under them, benefits are made contingent upon beneficiaries attaining a certain pensionable age. Moreover, some benefits may be contingent on the exercise of discretion by trustees. In Lucas v Telegraph Construction and Maintenance Co. Ltd, it was decided that the rule against perpetuities does apply to pension scheme trusts. In that case, Mr Justice Russell held that the period begins to run when the scheme is established. A competing approach is to say that every time an employee forms a scheme, a new settlement is created and he or she is treated as the settlor, so that the perpetuity rule applies to each individual settlement. Under that happier construction, the vesting of any benefits under the pension in favour of the employee’s dependants is almost certain to happen within the perpetuity period. Attractive as the latter analysis is, however, we cannot be sure that it is the law.
Since 1927 there have been statutory exemptions from the rule for certain types of pension scheme. The present position is to be found in Section 163 of the Pension Schemes Act 1993, which states:
“The rules of law relating to perpetuities shall not apply to the trusts of, or any disposition made under or for the purposes of a personal or occupational pension scheme at any time when this section applies to it”.
This section applies whether the trusts are made before or after Section 163 comes into effect. However, the section does not revive, with retrospective effect, any trusts that the perpetuity rules require to be treated as void before Section 163 becomes applicable.
The application of Section 163 is wide, comprising public service pension schemes, contracted-out occupational pension schemes and personal pension schemes. Nevertheless, the section is not all-encompassing—it excludes, for example, unapproved retirement benefit schemes.
It seems obvious that the need to place limits on the extent to which one generation can control the devolution of property for the future has no relevance to pension funds. Moreover, the reasons for exempting pension schemes from the rule apply to approved and unapproved schemes alike. Why should unapproved schemes to which the perpetuities rule currently applies have to be wound up on a date that is entirely arbitrary?
The approach to reform adopted by the Law Commission in its 1998 report is inclusionary. The commissioners defined those interests to which the rule should apply rather than those to which it should not. Your Lordships will be relieved to hear that I do not intend to comment on the Bill clause by clause this afternoon; otherwise what is the point of hearing evidence on it? This exercise is best left to a later stage in the procedure, following the evidential hearings. However, I have already noted the observations that the Charity Law Association made when responding to the Law Commission consultations in September
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The provisions, with one or two mildly controversial exceptions, appear to have achieved the objective of narrowing the scope for the perpetuities rule by excluding from its grasp pension arrangements and commercial transactions. Moreover, the introduction of an exclusive period for those matters that remain subject to the rule is a welcome simplification; and the extension of time from 80 to 125 years appears unlikely to inhibit the objectives of future settlors, except in the most unusual circumstances.
As far as the law relating to accumulations is concerned, the six options open to settlors until now are to be abolished and replaced by a single period of 21 years, which applies only to charities. If I may respectfully say so to the Government—as yet I have not heard the evidence—this is the one component part of the Bill on which I have hesitations; so I might as well express them now. I wonder whether it would have been wiser to permit, as an alternative to 21 years, the life of the settlor. Given the important role that charitable grants play in our society, I should have thought that we ought to give as much encouragement to settlors as possible.
4.52 pm
The Parliamentary Under-Secretary of State, Ministry of Justice (Lord Bach): I thank all noble Lords who have spoken in the debate. I do not expect that this Second Reading Committee will make the headlines tonight or tomorrow—actually, I hope it does not—but perhaps it will help to make the law simpler and help to keep our trust industry competitive with overseas jurisdictions. I hope that House will be pleased to hear that I do not intend to make a long speech in response. The Special Public Bill Committee is the place for many of the matters raised today to be debated, under the chairmanship of the noble and learned Lord, Lord Lloyd of Berwick. I am delighted not only that he was in his place, but that he contributed to the debate today. The whole House will be grateful to him for taking on what may turn out to be a slightly more onerous role than it might have appeared about an hour and a half ago.
I will respond by letter to a number of the issues that have been raised today. I think that is probably a more appropriate way to do it in this case. Listening to the fantastic expertise shown in this debate, I now rather wish I had read law at the university where the noble Baroness, Lady Deech, taught. If I had been to one of her lectures—I am probably too old to have done so—I would feel much more confident about being able to deal with the points that she made.
I would like to say a couple of things about the noble Baroness’s contribution. I very much hope that she will play a part in the Committee stage. It would be a terrific disappointment if she was not able to in one way or another. We must see how that can best be done. Her speech was of great interest and some of her comments obviously hit home as far as some noble Lords were concerned. I hope she will forgive me if I
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My noble and learned friend Lord Archer made a fascinating contribution with historical references and great enthusiasm for the way we are conducting this Bill and, I think, for its contents broadly. I am grateful to him. The noble Lord, Lord Hodgson, showed his expertise in the field of charities and companies in particular. I am grateful to him and he will get answers to some of the more detailed questions that he raised. Of course I am grateful to the noble Lords, Lord Goodhart and Lord Kingsland, for what they had to say.
We hope to meet again not before long in the Special Public Bill Committee to get on with the detail. We have had a good afternoon’s work today. If the House will forgive me, that is where I will end my response to today’s debate.
European Communities (Definition of Treaties) (United Nations Convention on the Rights of Persons with Disabilities) Order 2009
Copy of the Order
10th Report from JCSI
Considered in Grand Committee
4.57 pm
Moved By Lord McKenzie of Luton
That the Committee do report to the House that it has considered the European Communities (Definition of Treaties) (United Nations Convention on the Rights of Persons with Disabilities) Order 2009.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord McKenzie of Luton): In speaking to this, I will cover the basis on which the Government propose to ratify this important convention, including the reservations and the interpretative declaration. These are issues that have been covered in the recent report of the Joint Committee on Human Rights, which is the subject of the Motion to be moved by the noble Lord, Lord Lester of Herne Hill. I shall turn to these points shortly.
The order specifies the United Nations Convention on the Rights of Persons with Disabilities as a Community treaty for the purposes of the European Communities Act 1972. The provisions of Section 2 of the Act, which provide for the general implementation of Community treaties, will apply in relation to the UN Convention and will be available for implementation of its provisions should the need arise.
In my view the provisions of this order are compatible with the rights in the European Convention on Human Rights.
The need for specification arises due to the involvement of the European Community which, as noble Lords will be aware, is a signatory to the UN Convention and proposes to become a party to it, in accordance
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Matters covered by the UN Convention lie partly within the competence of the European Community by virtue of, for example, Community law on discrimination, and partly within the competence of member states. It is accepted practice, agreed with the European Commission, that mixed agreements such as the UN Convention, which may give rise to directly effective rights, are specified as Community treaties.
The order therefore ensures that the UK is in a position to give effect to Community obligations falling on it as a result of the UN Convention’s incorporation into the Community legal order. Specification enables the provisions of Section 2 of the European Communities Act 1972 to be used to implement any Community obligations which may arise as a result of the convention’s incorporation into the Community legal system and enables expenditure to be incurred out of the Consolidated Fund for that purpose.
While no implementation measures under the powers conferred by specification are at present required, the order must be in place before the UN Convention can be ratified. The order is, therefore, a technical but crucial step in achieving our shared aim of UK ratification of the UN Convention, and I beg to move that it should be approved.
I will move on to discuss the UN Convention, more generally. We are reaching the end of the process leading up to ratification, and will soon be looking to the more exciting journey of implementation. At this point, I would like to pay particular tribute to all those who have campaigned on behalf of disabled people and have helped us to reach this point. These include, of course, my noble friend Lord Morris of Manchester, whose work in the field of disability rights in both the domestic and international arenas is universally recognised. My noble friend specifically asked me to say that he may be unable to join us today because he is, characteristically, moving an amendment on the Health Bill, but he would join us if he could. Of course, there are others as well, such as the noble Baroness, Lady Campbell, and the noble Lord, Lord Ashley. The work of my noble friend Lord Morris on Rehabilitation International’s Charter for the Third Millennium was in many ways the origin of the call for a UN convention on disability rights, a call which culminated in the adoption by the UN General Assembly of the UN Convention on the Rights of Persons with Disabilities.
I also want to pay tribute to the work of Lady Darcy de Knayth, who is sadly no longer with us. For it was the noble Baroness who, on 14 July 2000, opened the first debate here on the case for a UN convention on the rights of disabled people.
As I have said, we are close to being able to ratify this convention and, subject to consideration of our debate today and the Government’s consideration of the JCHR’s recommendations, I hope that it will be possible to make an announcement next month—May—about the basis on which we will do so.
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Let me now talk about the proposals that we have put forward. The basis on which we propose to ratify was set out in the Explanatory Memorandum that was laid before Parliament on 3 March. As I have said, our proposals have now been the subject of a report by the JCHR. The Government are currently considering the detail of that report’s recommendations and will respond in full in due course. I cannot prejudge the outcome of that consideration today, but I will rehearse briefly the rationale for the position we adopted.
I know that all noble Lords will share the Government’s view of the importance of this convention. It is a powerful statement of the human rights of disabled people in the UK and internationally. While it does not confer new rights, it is an explicit statement that the estimated 650 million disabled people across the world have, and should enjoy, the same human rights as others.
The convention is very wide-ranging in its application and covers all areas of life. In government we have always been very clear about the benefits of the convention. That is why we supported the negotiations leading up to its adoption, why we signed it as soon as it was possible to do so on 30 March 2007, and why we believe that it is important that the UK ratifies it at the earliest opportunity. We have been working hard to achieve this ambition.
There should be no doubt about the UK’s continued commitment to human rights for disabled people at home and abroad. The convention sets international standards for human rights, and it will be incumbent on the UN member states that ratify it to act consistently with its obligations when it comes into force.
The UK already has extensive legislation that outlaws discrimination against disabled people; yet it is undeniable that they still face complex and diverse threats to their rights. Disabled people can too often be easily dismissed or undervalued. The Government’s pledge is that by 2025 disabled people should have the same opportunities and choices as non-disabled people, and should be respected and included as equal members of society. Our firm commitment to the convention is part and parcel of our commitment to the achievement of this equality. I might add that our signature of the optional protocol to this convention, which we also intend to ratify, is further demonstration of our commitment.
As the Government set out in the Explanatory Memorandum, we are proposing to ratify the convention on the basis of a handful of reservations and one interpretative declaration. I recognise that these have been the subject of considerable discussion, and that there is a body of opinion that argues that some or all are not needed.
With regard to education, the Government are proposing to enter an interpretative declaration to make clear that the UK general education system includes both mainstream and special schools, thereby clarifying how the UK Government interpret the convention.
We are also proposing to enter a reservation to allow for circumstances where disabled children’s needs may be best met through specialist provision, which may be some way from their home, and which means that they will need to be educated outside their local community. This also maintains parental choice for
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On freedom of movement, a general reservation is proposed in order to retain the right to apply Immigration Rules and to retain the right to introduce wider health screening for applicants entering or seeking to remain in the UK, particularly in the event of a global health emergency, if this is considered necessary to protect public health. However, the Government are committed to reviewing that reservation 12 months after the UK has ratified the convention, in order to assess whether there is a continued need for it in practice. Disabled people and their organisations will be consulted at an early stage to ascertain how they can be involved in formulating the review.
The Explanatory Memorandum explained that the UK’s reservation in respect of service in the Armed Forces and a complementary one proposed by the European Commission in respect of its proposals for European Community conclusion—that is, ratification—would be the subject of discussion. Following, and reflecting, discussion with the European Commission, the Government propose to enter a reservation in respect of the Armed Forces in the following terms:
“The United Kingdom accepts the provisions of the Convention, subject to the understanding that none of its obligations relating to equal treatment in employment and occupation, shall apply to the admission into or service in any of the naval, military or air forces of the Crown”.
That is a slight change of wording, but the substance and rationale for the reservation have not changed. We believe that these provisions are required to preserve the combat effectiveness of the Armed Forces. The Armed Forces are called on to perform a wide range of different tasks, and great damage would be done if the base requirement for physical fitness was abandoned.
Lastly, a reservation is proposed in respect of arrangements for social security benefit appointees. In looking at the relevant article in the convention, my department has been carefully considering the arrangements whereby a person may be appointed to claim and collect benefits on behalf of another person who for the time being is unable to act due to physical or mental incapacity. At present, those arrangements are not subject to the safeguard of regular review. We believe that the convention requires that they should be, so my department is now actively working towards a proportionate system of review. We propose to withdraw the reservation as soon as the arrangements are in place. It is important that we address this issue, and we are engaging with relevant stakeholders, including disabled people and their organisations, as our work on the review of the arrangements progresses.
As I said earlier, I recognise that there is a body of opinion that believes that the UK should not have any reservations or interpretative declarations, or should reduce their number. It has been suggested that by entering them we will undermine the UK’s reputation as a leader in the field of disability rights. We will continue to consider the views expressed by the Joint Committee on Human Rights and others before we make a final decision on how to proceed. The Government’s view, however, is that it is better to ratify the convention
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To those who suggest that we are undermining our reputation, I argue that our approach must be seen in the wider context of our achievements in respect of disabled people. For example, the Independent Living Strategy details over 50 government commitments that seek to deliver real choice and control for disabled people, along with greater access to housing, health, education and training, employment, transport and participation in community and family life. The Welfare Reform Bill, which, I hope, will get its Second Reading tomorrow, includes provision to give disabled people a right to control certain services that they use and will pilot how that right will work.
Ratification of the convention is key if we are to send the very strong and clear message to both disabled and non-disabled people that disabled people have, and should be able to enjoy, the same human rights as others. Specification of the UN Convention on the Rights of Persons with Disabilities as a Community treaty for the purposes of the European Communities Act 1972 is a prerequisite to achieving that ambition, and I therefore commend the order to the House. I beg to move.
Lord Lester of Herne Hill: I will move that the Grand Committee has considered the report of the Joint Committee on Human Rights, United Nations Convention on the Rights of Persons with Disabilities: Reservations and Interpretative Declarations. This is the 12th report, HL Paper 70.
The JCHR has previously published a full report on the convention—HL Paper 9 of 4 January 2009—and on the Government’s response to that report—HL Paper 46 of 6 March 2009. We warmly welcome the Government’s decision to ratify the convention and to sign the optional protocol. As the Equality and Human Rights Commission has said, the convention represents a major milestone on disabled people’s journey from being treated largely as objects of welfare and charity to being respected as full citizens, with the rights and responsibilities that this status confers.
However, we do not welcome the Government’s refusal to consult publicly about the reservations that they intend to make, or the unnecessary breadth of those reservations. I am grateful to the Minister for his helpful introductory speech and for the indication that the Government’s mind is still ajar and not firmly closed to some of the issues that I shall be raising. I have given notice in advance of some of the questions that I will ask, in so far as they are not clear already.
I am delighted that the noble Lord, Lord Hannay, and my noble friend Lord Maclennan are taking part in this debate, because of their particular experience and concern about the role of Parliament in scrutinising treaties. This is a subject that I have frequently raised in Private Member’s Bills and evidence to the Wakeham committee on Lords reform. I persuaded the previous Conservative Government to enhance parliamentary scrutiny by publishing Explanatory Memorandums when laying conventions to Parliament prior to their ratification, as was done in this case on 3 March, but,
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- “intended to rebalance power between Parliament and Government, and give Parliament more ability to hold Government to account”.
It looks more and more likely that that will not be part of this Government’s legacy.
5.15 pm
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