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Baroness Royall of Blaisdon: My Lords, first, I pay tribute to the noble Lord for his persistent questioning in the specific area of cross-border policing. Thanks to that questioning, the Government are making progress on those matters and in Northern Ireland. I am not entirely sure whether the criminal jurisdiction Acts are on the agenda for tomorrow. Work continues to establish

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which offences are not covered by the Criminal Jurisdiction Act 1975 and how best to fill the gaps. The Irish Attorney-General has confirmed that he is content that their own Act should be amended to include additional offences.

Baroness Harris of Richmond: My Lords, both the Garda Siochana and the PSNI would certainly agree with a five-mile buffer zone either side of the border to enable cross-jurisdictional handover during hot pursuits. Will the noble Baroness ensure that this is put on the agenda?

Baroness Royall of Blaisdon: My Lords, it is not for me to suggest what should be on the agenda, but for the parties participating; that is, the prosecutors and the police from Northern Ireland and the Republic. I will seek to find out whether it is on the agenda and inform the noble Baroness accordingly.

Lord Kilclooney: My Lords, does the Minister really believe that the people of the Republic of Ireland would support the involvement of a United Kingdom police force five miles inside the Republic of Ireland?

Baroness Royall of Blaisdon: My Lords, it is not a question of what I believe but of whether this is on the table for the talks. It is up to the people in the talks, who best know the people of the Irish Republic and of Northern Ireland, to decide whether to pursue this further.

Lord Glentoran: My Lords, I know that the Attorney-General recently visited the Province to try to sort out a lot of the bureaucracy in the prosecutor's office, and she assured me privately that she believed she was making progress. Is the noble Baroness able to tell me, when policing and justice are devolved-we hope they soon will be-where the authority, or responsibility, will reside for sorting out the problem of the collection of prisoners and criminals from either side and prosecution? Will it be devolved? Will it reside here or with a devolved Government in Stormont?

Baroness Royall of Blaisdon: My Lords, I, too, hope that there will be devolution of policing and justice in the very near future. In response to the noble Lord's question about responsibility for the transfer of prisoners, I do not wish to mislead him in any way. I do not have a definitive answer and I will respond to him in writing.

Lord Alderdice: My Lords, can the Minister clarify whether there is any legal difficulty in joint PSNI/Garda Siochana teams operating on either side of the border, with the relevant police officers sustaining their capacity to arrest and interrogate and being accompanied by a police officer from the other side of the border? Is there any legal difficulty about such joint teams operating?

Baroness Royall of Blaisdon: My Lords, there are limitations to the extent to which the police can operate outside their own jurisdiction. This is a consequence of the PSNI and AGS operating in different sovereign states under separate legislative provisions. The cross-border working group is currently examining this issue and will be looking at it at the meeting tomorrow. If there were a legal impediment to this happening, I cannot imagine that it would be on the agenda for that meeting.

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Lord Swinfen: I think the noble Baroness misunderstood the last question. The noble Lord was asking about police officers acting in their own jurisdiction, accompanied by officers from the neighbouring state, so that each acts in its own jurisdiction. Could she enlarge on what she said?

Baroness Royall of Blaisdon: My Lords, I confess that I am totally confused now. As I said in answer to the earlier question, there are limitations to the extent to which the police can operate outside their own jurisdiction. Of course, the police can operate within their own jurisdiction accompanied by police officers from the other jurisdiction. There is absolutely no impediment to that.

Banking: Bonuses


3.28 pm

Moved By Lord Dykes

The Financial Services Secretary to the Treasury (Lord Myners): Both domestically and internationally, the Government have led the field in reforming remuneration practices in the banking sector and have a structured reform agenda underway that will ensure bonuses are consistent with effective risk management.

Lord Dykes: My Lords, I thank the Minister and HMG for their commendable efforts to try to get a much more civilised regime here. We are now armed with a much more robust and alert FSA. We have the Walker proposals. We have the EU getting stuck in with its wider framework. We have Stephen Green of the HSBC and BBA with his interesting revelations on dodgy practices to have artificially structured bonuses. Then along comes Goldman Sachs with around 300 £1 million snouts in the trough-that is just the leading partners and leaves aside the traders and what they will get-completely undermining the official effort to get civilisation in this whole regime, and other bankers now, privately and with their cronies, the traders, once again quietly preparing to unleash excessive bonuses when the time comes-

Noble Lords: Question!

Lord Dykes: This is a very important matter. I know the Tories have different views. It is a complete free-for-all. They do not mind at all. Can the Government at long last persuade the big institutions in this country really to insist on proper behaviour?

Lord Myners: I am grateful to the noble Lord, Lord Dykes, for his pertinent and correct observations about many aspects of the culture of bonus payments in banks. I, too, was very struck by the comments of Stephen Green, the chairman of HSBC and the British Bankers' Association. He described inflated and distorted structures of bonuses and argued for lower and more rationally calculated figures in the future. The Government's perspective is that bonuses

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must, first, be a matter for the shareholders, subject to the banks being adequately capitalised. Secondly, the bonus system should not contribute to unmanageable risk. Then it falls to the shareholders. I am afraid that the shareholders, notwithstanding the comments from their trade associations, appear to have been less than fully engaged with that matter.

I intend to write to the chief investment officers of the major UK institutions in the next few days, asking them to share with me the actions they have taken to ensure that boards of directors are aware of their position on the payment of bonuses. It seems extraordinary that, over 10 years, an investor in UK banks will not have had a positive return at all. Clearly, the traders and senior executives of these banks have earned huge amounts. This is a distortion of the consequences of trade to the employees, away from the owners. The owners need to be more concerned and the pension funds need to ask their fund managers, "What are you doing to stop this process?"

Lord Bilimoria: My Lords, the Government propose a co-ordinated global solution to the banking crisis. Recently, President Obama announced his reforms in the United States. It is reported that the Shadow Chancellor, George Osborne, agrees with President Obama's proposals for reform. Do the Government also agree with President Obama's reforms and do they intend to implement them?

Lord Myners: I always welcome the comments of the noble Lord, Lord Bilimoria, from the Cross Benches. I hesitate to correct him but last Thursday evening Mr George Osborne welcomed President Obama's statement and by Friday morning he had decided that he no longer welcomed it. We must tune in regularly to our wirelesses to ensure that we are up to date with the Tory thinking on this and so many other matters.

There are aspects of the Obama proposals which clearly make a considerable degree of sense for the American situation with large investment banks. There are also concepts around the levy which are commendable and on which we and other G7 countries are working to ensure that in the future the banking system is more resilient and, if there is failure, that failure is borne by the shareholders, the subordinated creditors and the management of the banks. However, the Obama proposal is not necessary in this country; we have already taken the appropriate actions.

Lord Clinton-Davis: What discussions have taken place between the Obama Administration and the Government to ensure that there is an international response to the banking crisis?

Lord Myners: Banking resilience, regulation and capitalisation are high on the agenda for the G20. We are in regular contact with G20 countries. I met officials from the Obama Administration on Monday to talk about this and other matters.

Lord Roberts of Conwy: Does the noble Lord agree that some of the banks have their priorities totally wrong? They give management top priority, deal last with the customer and God help the shareholder in between.

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Lord Myners: The noble Lord says something very perceptive and correct. Last week I suggested in the House that banks which follow policies on bonuses that were perceived to be reckless would risk alienating their customers, who would choose to move their business. I urge UK banks, in particular, to be able to evidence that they have exercised real restraint and that bonuses reward smart decisions made by good people, with the overall prosperity of the franchise in mind, rather than rewarding reckless gambling or entirely fortuitous external circumstances.

The Lord Bishop of Chester: My Lords, is the Minister confident that those banks in which the Government have a very large shareholding have entirely complied in their own decisions with what he has said to us?

Lord Myners: The decisions about bonuses at Lloyds Banking Group and RBS have not been made but we have already been very clear that UK Financial Investments on behalf of the taxpayer will take a very active interest in this area. I am much encouraged by the comments of Mr Stephen Hester, who I think is doing a very good job at Royal Bank of Scotland, that he will not recommend or seek any bonus payments beyond those which he believes are absolutely necessary to protect the bank, and in so doing protect the value of the taxpayer's investment in his bank.

Lord Newby: The Minister has just said that the Government have already taken appropriate action in respect of the banks but yesterday, speaking to the Treasury Select Committee, the Governor of the Bank of England said:

"We cannot allow ourselves to be kept hostage to institutions that are so big",

and he appeared to support the Obama proposals. Why do the Government think the governor is wrong?

Lord Myners: The governor said many things yesterday with which we are in complete agreement and he is supporting the moves we are taking to improve the strengths of the banking system. There is no evidence that size in itself was the source of individual bank failures. Large banks failed, but so did small banks. We need to ensure that the totality of the banking system is strong and that will be addressed by higher capital, requirements for much higher levels of liquidity and the concept of living wills, which will require banks to put in place arrangements that will allow the failing part of a bank to be isolated and separated from the remainder of the bank without imposing consequential claim on the taxpayer. The taxpayer should never, ever again be expected to bail out the folly and mischief of bad decisions made by bankers.

Lord Burnett: My Lords-

Lord Davies of Oldham: I am sorry, my Lords, but our time is up.

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Equality Bill

Bill Main Page
Copy of the Bill
Explanatory Notes
2nd Report from the Delegated Powers Committee
3rd Report from the Delegated Powers Committee

Committee (5th Day)

3.37 pm

Schedule 9 : Work: exceptions

Amendment 102

Moved by Lord Lester of Herne Hill

102: Schedule 9, page 167, line 2, leave out paragraph 8

Lord Lester of Herne Hill: My Lords, may I begin by declaring a professional interest and dealing with one or two other matters? I was counsel for the Equality and Human Rights Commission, intervening on its behalf in the case in which Age UK sought to challenge the default retirement age of 65. I need to declare that interest since I will refer to this judgment very briefly.

Secondly, I do not think I have to declare an interest about my age because my amendments would benefit only those below the age of 65 and, since the average age of this House is probably a bit above that, I doubt whether I need to declare any collective interest.

Thirdly, in order to curry favour with the Committee, I should say that I had one success that will appeal to every man here with a Freedom Pass. I did a case in Strasbourg where I established that it was discrimination against men to require them to wait till the age of 65 before they could get a Freedom Pass whereas women could get it at 60.

Noble Lords: Oh!

Lord Lester of Herne Hill: I am very glad that there are some who were young enough to benefit; I was not.

The purpose of my amendments is to remove the provisions that make it lawful to dismiss an employee on grounds of retirement and not to offer employment to a person where, at the time of the person's application, he is over the employer's normal retirement age, or over 65 if the employer does not have a normal retirement age. If my amendments were accepted, they would abolish the current default retirement age and related provisions from the time the Bill is brought into effect.

This matter has a longish history. As we want to get the Bill through and waste as little speaking time as possible, I will take this as quickly as I can. The object of my amendments is supported by the report on the Bill of the Joint Committee on Human Rights-noble Lords can see paragraphs 183-185, which I do not need to read-and by the Equality and Human Rights Commission. Many of your Lordships may not know that the matter was carefully considered by a committee of this House, chaired by the noble Lord, Lord Burns. The Select Committee on Economic Affairs report, Aspects of the Economics of an Ageing Population, wrote as far back as 2003, at paragraph 6.42:

"We also recognise the legitimacy of arguments for retention of a normal retirement age, but on balance we believe that any such retirement age may impose restrictions on the efficient functioning of the labour market in our ageing society. We believe it is for firms and their employees to devise their own retirement systems, and we further believe that these systems should be

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based on performance criteria rather than chronological age. ... We therefore recommend that the Government should not permit the continued use of a normal retirement age by employers, whether at age 65 or 70 or 75, unless the employer can provide a reasoned and objective justification for the use of age rather than performance criteria in the determination of employability. We further recommend that the Government set an example of good practice by explicitly removing upper age limits in all public-sector employment in advance of the implementation of the forthcoming legislation on age discrimination".

In the case of Heyday in 2009, which I have just mentioned, objections were taken-on behalf of, I think, the Crown-to referring to that report on the grounds that it would breach parliamentary privilege for judges ever to read the reports of a Select Committee for the purpose of making choices about how to construe Community law. That objection, I am glad to say, was overruled and the High Court, in the form of Mr Justice Blake, looked at all the evidence before that Select Committee, some of which was relevant because it concerned what Ministers had told the committee. The court felt that it could not strike down the default age of retirement of 65 under Community law for reasons to do with what had happened when it came into force under the directive. However, at the end of his long judgment, Mr Blake said that if the relevant provision; that is, the default age of retirement,

He continued:

"If the selection of age 65 is not necessary it cannot therefore be justified. I would, accordingly, have granted relief requiring it to be reconsidered as a disproportionate measure and not capable of objective and reasonable justification in the light of all the information available to government".

In other words, the learned judge was saying that, because there was an imminent review, he would not go any further but he regarded the present default retirement age of 65 as disproportionate and essentially against the public interest.

I have already quoted what happened with regard to the Select Committee on Economic Affairs but it might interest the Committee to know that the matter went further. Both officials and Ministers from the Department for Work and Pensions gave evidence to the Select Committee on behalf of the Treasury and the Department for Work and Pensions, all of which indicated that the direction in which they were heading was to abolish the compulsory retirement age of 65. The right honourable Andrew Smith MP, for example, as Secretary of State for Work and Pensions, and the official supporting him gave such evidence. The noble Lord, Lord Burns, asked whether it was expected that when we had the legislation against discrimination it would not be possible for companies to have a normal retirement age, even if they wished to have one, as that was going to become illegal. He asked whether he had understood that correctly. Mr Smith replied:

"There is an option in the consultation that you could retain an age limit of 70, but the basic answer to your question is yes, we would not be expecting to allow firms to operate at a lower

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mandatory age limit than that. There could be other perfectly good reasons for terminating a contract but age would not be one of them".

Other interesting advice was then given by employers, trade unions and the Chartered Institute of Personnel and Development, which suggested that the idea that you needed a rigid age discrimination provision of that kind was old-fashioned.

Then, what used to be called the Department for Trade and Industry, led at the time, I think, by the right honourable Patricia Hewitt, won the argument against the Department for Work and Pensions, as a result of which it was decided that such a provision would be retained, as some of the employers had asked. So the predecessor but one or two of the noble Lord, Lord Mandelson, came to a conclusion, which no doubt still prevails among business Ministers, reflecting the views of some of the employers. That is the background, and I perfectly appreciate that there has been a consultation which will come to an end on, I think, 1 February.

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