From the DHSS, I went to the Co-operative movement and simultaneously spent four years on the pre-Livingstone GLC where, for a time, I was responsible, as chair of housing development, for building houses for Londoners and in many areas outside. It was in that capacity that I learnt the full meaning of the word “nimby” and the extent to which specious community arguments could be deployed in support of personal gain. Then, for 25 years, I was in the European Parliament. I am sure that that will be of relevance to other areas of my life in this Chamber. However, it does not form part of today’s narrative, other than to say that I acquired a reasonable knowledge of European trade unionism and was privileged to be in Bournemouth on 8 September 1988 when, in a single speech, Jacques Delors turned around the TUC to face and befriend the European project. That was indeed a memorable day; my good friend, the late Clive Jenkins, was in the chair at that congress.

From 2004 to today I have been a directoral trustee of a number of European pension funds and have done various things on the European pensions circuit. Having succeeded—as a lot of people have since succeeded—in being expelled from the Labour Party, I re-evaluated my life and joined the Conservative Party, where I am extremely happy. In 2007, however, the

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present Prime Minister, as leader of the Opposition, signed me up as his adviser on trade unions and co-operatives. That is how I come to be in your Lordships’ House. I believe I am the first Conservative Peer ever to have had in his citation from a Conservative Prime Minister’s office:

“Envoy to the Trade Unions and Cooperative movement”.

I broadly welcome the Bill that is before us tonight. It is a tribute to my honourable friend the Minister for Pensions, Steve Webb, that this measure has a wide degree of support. I also welcome the stability of ministerial appointments that this coalition has introduced. After, I believe, 12 Pensions Ministers during the 13 years of the previous Government, the fact that the present Minister has been in office since 2010 is welcomed by all sides of the pensions industry. Again, I am sure that there is room for a debate on the stability of ministerial posts, but it has certainly benefited decision-making. I wonder whether that stability has lead to the current position. When I asked the TUC for its views on the Bill it was able to tell me:

“I am afraid we are not in a position to provide briefing on the Pensions Bill, as we currently have a staffing gap and are not likely to have a pensions policy specialist covering the role until the New Year”.

I put it to noble Lords that if there were major difficulties, the TUC would have found the capacity to cover the issue. The Minister has clearly achieved a degree of consensus.

I will briefly raise some points for consideration in the time ahead. The first picks up on a matter referred to earlier in this speech and in other speeches. Clause 26 makes provision for a periodic review by the Secretary of State of the pensionable age in the light of changes in life expectancy and other relevant factors. I referred earlier to differential mortality. It is now known beyond all reasonable doubt that there is a wide variation in mortality and that life experience is a key factor in that. What is often referred to as “postcode mortality” conceals a much deeper area. The Government have promised a review. It is envisaged that that review will be conducted by the Government Actuary’s Department. In addition to that, the Government must appoint a panel of one or more persons to consider factors relevant to the pensionable age. I ask my noble friend to consider appointing more than one person and, in particular, to appoint at least one person who, if not nominated by the TUC is at least acceptable to it.

I do not seek to speak at length on that, and realise that we do not enter into any controversy in maiden speeches. I look forward to taking part in the next stages of the Bill. However, I hope that we can get some stability and cross-party agreement on this issue, which lasts so much longer than pensions. I end with a quote from CERN, which noble Lords will know is the nuclear research institute. They say there, “It takes 50 years to decommission a nuclear reactor, but 60 years to pay out all the pensions in our fund”. I thank noble Lords.

5.19 pm

Lord Whitty (Lab): My Lords, it gives me considerable pleasure to follow and welcome the maiden speech of the noble Lord, Lord Balfe, in this House. He has described the slightly circuitous political route that he

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has taken through his life, whereby he has ended up sitting on the government Benches. I have long and, by and large, fond memories of his activities when he was, perhaps, in a slightly different political place. When I was in south London, in the early 1970s, he was already a force in the London Co-operative and Labour movement. Eventually, he became my Member of the European Parliament. He probably does not mention it that much to his colleagues these days but, during my period as general secretary of the party and his time as an officer of the British Labour group, or the EPLP, as we now call it—for some reason, whoever was in control of the EPLP, whether it was the right or the left, pro-Europeans or anti-Europeans, Richard was always an officer—he was extremely helpful to me. I shall put it no more strongly than that. When I did a European job in Brussels and Strasbourg, he was extremely helpful to me, personally, and I am very grateful for that.

Obviously, the road to Damascus is dangerous, and the noble Lord has had a bit of a conversion, the full political and spiritual aspects of which I am not entirely clear on. I suspect that the noble Lord, Lord Plumb, is a bit unsure himself, given the past history. But it is clear that he has retained some of his early interests and commitments, particularly in relation to the trade union movement. I recognise the Prime Minister’s wisdom in giving him his remit. I have two regrets. On the one hand, not all leaders of trade unions were prepared to talk to him on the subject; on the other, it is clear that the leader of the Conservative Party has not entirely followed his wise advice. However, he maintains an unashamed interest in that field, I am very pleased to say.

In reference to this Bill, the noble Lord’s experience with the pension scheme of European Members of Parliament is instructive. If he can make improvements to this Bill that render similar conditions for the bulk of the population, I think that we will all be seriously grateful. I extend a very good welcome to him.

As regards the Bill, I share the general consensus of the overall direction and, in particular, the concept of a single-tier pension scheme, but I do have a number of concerns. My main concern is about the impact on employee members and employers who run occupational pension schemes, both private and public. I have concern for certain other groups, as well, which may well come up in Committee—for example, the cohort of women born in the early 1950s, who seem to miss out on both counts, as well as those who would have got a better pension under the old system than they will with this one. We can deal with those issues in Committee.

My main concern at the outset is about the cost that these provisions will impose on all existing occupational schemes. I spent an early part of my youth getting large swathes of manual workers and others into occupational pension schemes, and it is one of my great regrets in life that the security that that seemed to provide them with for the first time has disappeared in the private sector to a large extent and has been diluted even within the public sector.

As the noble Lord, Lord German, said, all occupational schemes will, as a result of this Bill, face increased costs of approximately 1.4% for employees and 3.4% for employers as a result of the national insurance

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implications. I have a special interest in the local government scheme, and I declare an interest as a vice-president of the LGA and a member of the GMB. In neither capacity do I receive any pecuniary benefit, but nevertheless I have taken an interest, until recently being a chair of one of the member schemes of the local government scheme.

As the noble Lord, Lord German, said, in the case of private sector occupational schemes, Clause 24 allows for the overriding of existing rules and benefits which had previously been negotiated or provided by the trustees of a scheme, in order to offset these costs. I think that that is quite a dangerous move and will cause difficulties in a whole range of private sector occupational schemes. I certainly do not propose that the Government should extend that to public sector schemes. However, there has to be some recognition of the size of the impact on public sector occupational schemes. I think that the local government scheme in particular is likely to suffer from this. Some public sector trade unions and scheme members have been given a bit of a nod and a wink and been told that departmental budgets will adjust to cover these schemes. I suspect that that assurance is not worth the paper on which it is not written, but they have been given some assurance in that regard.

However, no such assurance has been given in relation to the settlement with local government. The cost increase of the local government scheme for the average employee earning about £27,000 per annum will be £25 a month over a lifetime. The cost to the employers is an additional £700 million. For a small Welsh council, that would mean charging an extra £33 in council tax. For a typical northern metropolitan district council, it would mean withdrawing £2.5 million per annum from expenditure on public services. That is not an inconsiderable cost and the Government need to face up to it. The speed with which local authorities are expected to adjust their pension schemes is also an important factor. These provisions are to be brought in almost immediately. Local authority finance directors are already budgeting for 2016-17. To have such additional costs imposed on them, with the accompanying uncertainty, gives them a real problem.

Obviously, every local authority scheme and every local authority fund will suffer as a result of this measure, but it is not only local authorities: a very large number of private bodies—several hundred—are also admitted members to the local government scheme. They vary from outsourced companies as big as Serco, Mitie and Sodexo to relatively small charities such as the North London Hospice, the Norfolk Heritage Fleet Trust and various museums, and to bigger charities such as the Alzheimer’s Society, the Children’s Society and Barnardo’s. They include all sorts of bodies such as museums, the local citizens advice bureaux and parish councils with full-time employees and so forth. So this is a cost issue that hits many large and small private bodies and charities as well as local government itself. It is important that the Government, including the Minister’s department, CLG and the Treasury, face up to this cost.

There are other complications. For example, under the Bill, LGPS funds will suffer significantly from the fact that the payment of pensions increases in members’

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guaranteed minimum pensions, which currently the Government pay, will be shifted on to the employers and the public sector pension schemes directly. So there are significant additional costs which fall on the Local Government Pension Scheme and all the participants therein.

I do not have a solution to this problem but the Government need to have one. We took the then Public Service Pensions Bill through this House with some difficulty. However, the employers and the trade unions very responsibly sat down and agreed on how it should be effectively implemented in the LGPS area. These new costs, as well as the possible knock-on effects on the level of contracting out, particularly for low-income employees but more generally as well, and the costs for the employer of running the scheme are likely to tear up that agreement very quickly. At the very minimum, we need more time to ensure that there is an effective answer to this.

Given the scale of the potential financial impact on public services and local government in particular, today I simply ask the Minister to commit with his colleagues to meeting the LGA at some point during the course of the Bill so that they can discuss this matter. A number of potential ameliorations, if not total solutions, need to be considered. The one thing that I therefore ask the Minister today is that he and his colleagues commit themselves to such a meeting.

5.30 pm

Baroness Donaghy (Lab): My Lords, I believe that some humility is required when we consider people’s pensions. Trust in the pensions industry is low for a very good reason. What is decided in this Bill in 2014 has a 40-year horizon—that is, up to 2054. Does anyone really believe that this legislation will last for 40 years?

There are two things that I am absolutely certain about: Governments will tinker and the financial services industry will get away with whatever it is allowed to. The Government have said that their aim is to,

“better support people to save for their retirement”,

and that is surely welcome. I have no idea whether the proposals in the Bill will do that, although auto-enrolment is a very good start.

When SERPS was established in 1978 as an addition to the basic state pension, the thinking of the day was that those earning slightly more would expect a better pension. When SERPS was replaced by the state second pension, or S2P, no doubt the thinking was the same. If it all disappears next year, the additional state pension will have existed for 36 years, so it nearly qualifies for the 40-year time horizon but not quite. Does anyone really believe that a flat-rate state pension will last for more than 10 years? I very much doubt it. That is not to say that clarity and simplicity are not welcome, but they are only two ingredients. If someone realises that they are clearly and simply going to be poor in retirement, it does not take us very far.

My first encounter with pensions was in 1970 when, as a NALGO branch secretary, I campaigned for an occupational pension for university non-teaching staff at the University of London. The existing schemes were college-based and run by insurance companies

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with very high administration costs. It took five years to establish the Superannuation Arrangements of the University of London—or SAUL, as they are called—and it now has assets of more than £1 billion. It was an uphill climb because the majority of staff were women. The assumption was that women were not going to stay in the job very long and would probably get married, so why would they want an occupational pension? Those on the lowest grade and part-timers were not even allowed into the college-based pension scheme, presumably because it was felt that they would not stay at work for very long.

That was the era when men could ask, “What’s a nice girl like you doing being passionate about pensions?”—I am trying to make it interesting—and suggesting alternative ways of expending that energy. It was the era of smiling through gritted teeth. It is where the 700,000 women born between 6 April 1951 and 5 April 1953 started their working lives. They probably had to struggle to join an occupational pension scheme, and they were probably advised to pay the lower national insurance stamp and rely on their husband’s pension. They had to fight every step of the way for employment equality, and now they are told that they are not eligible for the single-tier pension.

To give the Pensions Minister, Steve Webb, some credit, he did try to construct an argument as to why the 700,000 women would not receive the new pension. He compared them as a group to those who reached state pension age before April 2010 and those who will do so after April 2016. The Minister weighed up the good and the bad news and the “somewhere in the middle”, and argued that, on balance, the 1951-53 group was not being disadvantaged. That may look good on paper but, for a generation of women who have experienced every form of pension discrimination, it must look like more of the same. I ask the Minister to reconsider this decision. It he agrees to reconsider it, he will have the satisfaction of having 700,000 pleased and extremely surprised women on his hands.

I want to turn to the impact of increased national insurance contributions on public service pensions. I shall keep my remarks short because the noble Lord, Lord German, and my noble friend Lord Whitty have covered this area very well. Are the Government planning to pay these unbudgeted extra costs, which, if not met, could unravel a series of delicate negotiations with public sector workers? Is the Minister able to give us some assurance on this issue at this stage? If not, it will certainly come back in Committee.

I now turn to the issue of trust and transparency. The recommendations of the Workplace Retirement Income Commission, chaired by my noble friend Lord McFall of Alcluith, in 2011 really say it all:

“For consumers to have more trust in the pensions system, the industry needs to show it can reform itself to be trustworthy. An industry-led drive around disclosure, transparency, clear communication, and driving down costs and charges will help to achieve this … the Government and the Pensions Regulator should make it a priority to promote strong and consistent governance and employer engagement with workplace pension schemes, whether trust or contract-based”.

It is a good report and, in my view, it deserves further consideration.

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A lack of transparency and overcharging, if not dealt with, will scupper this legislation or its potential good reputation. The Centre for Policy Studies said:

“In 2010, the City extracted some £7.3 billion in implicit charges, about which investors were told … nothing”.

The Royal Society of Arts, of which I am a fellow, referred to written evidence to the Work and Pensions Select Committee stating that from the time when the new Pensions Act is introduced,

“we can expect that many will be sold pensions where 50% or more of their potential pension disappears in charges”.

I am sure that we will come back to this in Committee, but limiting the “wrapper” charges is only a quarter of the story. It is the hidden charges for investing where the costs add up.

I have been a board member of two pension schemes—one as an employee representative and one as an employer representative, although not at the same time, I hasten to add. I lost count of the number of times I listened to presentations by investment companies which were trying to win the contract for investing the pension fund. You were drowned in glossy charts and sales-speak, and I would have liked a hot dinner for every time I heard, “And we aim to be in the upper quartile of returns”. If everybody was in the upper quartile, it would not be the upper quartile. Of course that was their aim, but if only the delivery had been as glossy and promising we would not be so apprehensive now.

Finally, I look forward to the Committee stage when we will have the opportunity to consider this wide-ranging Bill in detail.

5.39 pm

Lord Paddick (LD): My Lords, perhaps I may start by declaring a couple of interests. I am already in receipt of a police pension and I thought that I would be in receipt of the state pension in 10 years’ time until I received a letter from the DWP telling me that it will now be 11 years. Some noble Lords may be intrigued as to why, as a former police officer, I am contributing to this debate. My main concerns are about the reforms to welfare that this Government have introduced. However, I am slightly less concerned about this Bill. Noble Lords also may wonder why I am contributing when there has been such a big build-up in terms of how interesting this subject is. I have to say that the contribution of the noble Lord, Lord Hutton of Furness, was fascinating more than interesting. I congratulate my noble friend Lord Balfe on his maiden speech, which may sound a bit cheeky coming from someone who made his only five minutes ago, but his wealth of experience will be very valuable in this House.

I support this Bill and pay tribute, as others have done, to my honourable friend the Pensions Minister, Steve Webb, and his team. This is a difficult subject for any government to tackle. It is to his and his team’s credit that they have taken it on. As the noble Baroness, Lady Sherlock, has said, there are three tests; namely, that pensions must be fair, sustainable and provide a decent standard of living. I believe that that is what this Bill does. Of course, it is up to your Lordships to test that during our debates at this stage, in Committee and on Report.

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When the state pension was introduced in 1926, only half of those who reached the age of 15 were expected to live to the age of 65. On average, people would spend just over 11 years collecting their state pension. In 2013, 93% of 15 year-olds are expected to live to 65 and 32%, almost one-third, have a chance of reaching 100. Clearly, in terms of sustainability, things need to change. The level at which the new single-tier state pension is set appears to be reasonable, as has been said by the Minister, and is above the current state pension means test. It allows people to plan for their future on the basis of understanding what, at least in today’s money, they are likely to expect when they reach pensionable age.

The automatic enrolment of workers in pension schemes requires safeguards. This Government appear to have worked hard to ensure that those safeguards, including, as has been said, the very welcome capping of fees, are in place. I will talk about the “pot follows member” issue at the end of my remarks. The noble Baronesses, Lady Donaghy and Lady Sherlock, expressed concern about women born between 1951 and 1953 who will not be eligible for the single-tier pension whereas men of the same age will be. My understanding is that these women need to make only 30 years of national insurance contributions, as opposed to 35 years for their male colleagues. In addition, those women will be able to draw their state pension earlier than men, at some time between the age of 61 and 63. Men in the same age group will not be able to draw their pension until they are somewhere between the age of 63 and 68. Clearly, that is not a straightforward issue. Swings and roundabouts are involved.

As someone who has more than 30 but less than 35 years of qualifying national insurance contributions, I also might be concerned that I do not appear to qualify for a single-tier pension, which is currently set to be £144. However, I am reassured that, if the new system gives me more than the current £110, I will get that amount. If I would have received more under the old system, I will receive that amount. In short, while others may be better off than me under the new scheme, at least I will not be worse off. I ask whether these changes are to be brought about because of the need to be sustainable.

Clause 25 in Part 2 would increase the age at which the state pension becomes payable from 66 to 67 between 2026 and 2028 instead of between 2034 and 2036, as set out in the Pensions Act 2007. That is eight years earlier than previously planned but it still gives a lead time of 13 years, which will enable people to make provision for it. Surely, this makes sense when one takes into account the fact that, at the moment, life expectancy, I am reliably told, increases by four hours for men and six hours for women every day.

Clause 26 introduces a review of the state pension age, taking into account life expectancy and other relevant factors, every five years or, allowing for some leeway, every six years as stated in the legislation. These are difficult but necessary decisions from which previous Governments have shied away. This legislation ensures that future Governments will not be able to duck that responsibility. The first report would be in 2017. The Secretary of State will have to commission

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reports from the Government Actuary’s Department on life expectancy and from an independent, appointed panel on other factors to be specified by the Secretary of State. This Government have indicated that the panel will be similar in nature to the Hutton inquiry. It seems eminently sensible that not only life expectancy but other factors that may arise or change over the years are considered by an independent panel, provided there is sufficient lead time to enable those affected by such changes to plan for their retirement.

As noble Lords have said, differences in life expectancy in different parts of the country or among different socioeconomic groups need to be addressed. Surely those matters should be addressed by other means to try to equalise life expectancy in these different areas, rather than trying to equalise through pensions legislation. Most importantly, these reforms will ensure that the state pension remains available not just for my nephews and nieces but for their children as well.

On whether “pot follows member” would be the right system, my understanding is that Australia, a country that is held up as an example of good practice as regards pensions, now considers that it should have introduced such a system. The suggestion that this is the way that the country will go is encouraging. As regards ensuring that there are caps on fees charged by pensions providers, it is hoped that the minimum standards to be applied should ensure that if pot does follow member to a new employer, the new scheme will be as good as the one from which the money is being moved. Clearly, employees will have to consider into what pension scheme their money would be moved when they consider all other aspects of the remuneration package provided by the new employer.

5.48 pm

Baroness Hollis of Heigham (Lab): My Lords, I declare an interest as a board member of the Pensions Advisory Service. In that capacity perhaps, I suggest to the noble Lord, Lord Paddick, that he should consider buying some voluntary NICs to make good his shortfall and he will get a 25% return on his capital.

Private DC pensions are deeply problematic. Most people, especially poorer women, do not understand them. They do not trust them; they cannot afford them; they cannot access them; and they do not know what income they would get from them. Pensions for them are high risk. I think the Minister once said that the poor can better cope with risk as they have less to lose. In my view, the exact opposite is true: when you are a week’s wages away from going hungry, you cannot afford any risk at all.

For me, the great virtue of the new state pension, unlike private pensions, is that it removes risk. So my test of the Bill, not dissimilar to that of my noble friend Lady Sherlock, is: does it make pensions simpler, easier to understand and more transparent? Will it produce an adequate replacement income in retirement while being affordable both to individuals and society? Is the Bill fair, recognising women’s unpaid as well as conventionally paid work, and not leaving groups of women unfairly outside the system? Is it also fair in its assumptions about retirement age? Does it encourage

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savings where possible by removing means-testing, which inhibits them? My acronym is SAFER. The Bill must make pensions: simple; adequate and affordable; and fair; encouraging savings; and removing means-testing. Does it do so?

Is it simpler? Yes, although it is not yet simple. By bringing together the state retirement pension, S2P and pension credit into one single state pension, people can predict their state pension if they have full contributions. But they still have to work out whether their mix of contributions and credits will cover 35 years. Over time, it should do so given a full working age life, but it may not.

Is it adequate and affordable? Will the new state pension continue to address pensioner poverty? S2P, which redistributes to poorer earners, and pension credit, which especially helps older widowed women, were both in Bills that I took through this House. Together, they targeted pensioner poverty and succeeded. Since 1998, pensions have increased three times faster than wages. In 1997, pensioners were the poorest group of our society—the poorest of the poor. When we left, they were less likely to be poor than any other group in society.

But helping existing poor pensioners through means-testing has potentially the perverse effect of deterring future pensioners from saving. By building a stronger state platform, as the Bill does, we both target poverty and support saving. Is it adequate? A middle-aged couple, he on average earnings and she on a modest part-time job, might expect a replacement state pension in future of around 70%—adequate for them, yes. On top may come NEST, its value depending on their age, contributions and the markets.

Is it affordable for us? Given the raising of the state pension age, the capping of S2P and the overall £5.5 billion of NICs windfall from ending contracting out, which will go to HMRC, then, yes. Indeed, HMRC will make such a profit, no wonder we are bringing forward the new Bill by at least a year. In that case, some small fraction could be available for decent transitional arrangements.

Is the Bill fair? For me, that raises two questions. First, will all those who should do so get the new pension? No, it is not that fair. If I were the Minister I would want as inclusive a structure as possible. Those left out of the new single pension will continue to get pension credit, and the cost and confusion of running two systems for a further 40 years is clearly undesirable. Obviously, pension credit will remain as a residual safety net, but we want as few people as possible to fall into it. Who gets left out? Service wives do, possibly, depending on their age, and I will table an amendment on that. Women with several mini-jobs will also be left if they perhaps work 20 hours a week yet are not building their own state pension and are denied a future married women’s pension.

The problem in the past was the employers’ contribution and how we divvied it up. In 2007, the Government thought that there might be 15,000 affected women. We now think that it is almost three times that—40,000 women and 10,000 men—working above the lower earnings limit but still not coming within the

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NI system to give them a state pension. With real-time information—one of the bonuses of UC—and treated as self-employed as this Bill rightly does for all other self-employed people, we can and must bring those 50,000 people into the new pension.

Steve Webb said in the other place, in a slightly male way, that such women would not thank us for paying £2.70 a week NICs. How does he know? Has he asked them? He also believed that their situation was short-lived and that they should have enough contributing years. How does he know? Has he asked them? He said that they could pay voluntary NICs, but that costs five times as much and might not cover early missing years—that, we do know. I am not myself willing to see 50,000 or so excluded on the beliefs—not facts—offered by the DWP. Those 50,000 should be treated as self-employed unless they opt out. It would allow them to move seamlessly between mini-jobs and a longer-hours job, as we want them to do, as their caring responsibilities require.

The second question of fairness is around the state pension age. I am pretty fed up with people, usually in well paid, interesting, salubrious and physically undemanding jobs, pronouncing that as we are now living longer we must all work longer and what is more—the final insult—it is good for us. This House will know that we have three stages of older age. Most of us who reach 65 in good health can expect another decade of healthy retirement. From our mid-70s, we develop functional disability—mobility, sight, hearing and reach—which increasingly limits what we can do for the next decade. We need support. Then, in the last three to five years of life in our upper 80s, we need care. As the Government’s analysis in the ONS stats shows, between 2000-02 and 2008-10, male life expectancy rose by over two years. But—and this is key—only a third of that was healthy life expectancy. It was 0.7 of one year by the Government’s own stats. So we gain, as the noble Lord, Lord Paddick, said, three to four months every year, but only one month of that may be healthy.

Between 2007 and 2010, the most deprived fifth of the population had a healthy life expectancy of just 55 years—15 years less than the most affluent. The gender gap is narrowing, but the class gap is now widening. So those extra years that we are living are not, alas, years extending healthy retirement but additional years of increased disability and dependency, especially if you are poorer off. Every year that we raise the state pension age is deeply unfair on those who have had hard lives. They start work five years earlier than those who enjoy higher education, and they can expect 10 to 15 years less of overall life expectancy and of healthy life expectancy. By raising the state retirement age, we eat into and reduce their few healthy retirement years even further, all to subsidise the pensions of people such as me—the longer lived, healthier, better educated and better off, including those of us in your Lordships’ House. Our single-age retirement policy—one size fits all—is regressive and unfair. We do not need to shrug this off as Borisconi tough luck. We can do better than that, and I welcome the proposed independent review.

I proceed along with my SAFER acronym: simple, adequate, fair. Will the new state pension—E—encourage savings? Will it—R—reduce means-testing? Yes it should.

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It will do so by removing the perceived disincentive that having savings costs you benefit. Savings credit actually supported small savings, but under half of those entitled claimed. Its value is eroding and overall the doorstep line I always encountered when canvassing was, “I’m not any better off for saving”. There is one point here about AIPs—assessed income periods. We should not add to yet more means-testing for those on pension credit, which is what the Government propose, while stripping it out, rightly, for those on the new pension. I implore the Government to leave it alone.

The sums saved will be small—I calculate them to be £60 million a year net at best. The stress for older pensioners will rise. The implications for funding social care from equity release for the over-75s—over half of whom are owner-occupiers—on which the social care bill is premised will be catastrophic, overwhelming any savings that the Government may get. Do not go there. What you may save in pension credit, you will overwhelmingly lose in people not being able to co-fund social care. It is really not worth it.

Importantly, under the new state pension, auto-enrolment will be safe. Without the platform of a non-means-tested predictable pension we could, with some justice, be accused of mis-selling NEST. However, NEST was meant for women with low earnings. It originally kicked in at £5,700; from April it is £10,000. Every time you raise the tax threshold, another tranche—mainly women—drop out of auto-enrolment. There are 420,000 in 2013-14. Of course, consultation exercises show that employers like it. What is not to like? The last lift saved them £6.4 million. The losers—poor women—do not know and do not complain.

At the 2017 review we must reconsider NEST’s trigger, perhaps the PTT, and in the mean time strengthen opt-in arrangements. Some 1.1 million women have already lost the opportunity of auto-enrolment. Next spring, still more women will be excluded. Unless we intervene, NEST will lose the very group for whom it was designed.

I want also to register my disquiet at the proposed new bereavement benefit; the loss—proper stats, please—of the state pension lump sum; the interaction with other benefits, especially HB, after five years; the transitional arrangements for married women relying on the 60% pension; divorcees; and widows’ inherited rights. We can pursue all that in Committee.

Do I support this Bill? Yes. On the state pensions front, indeed I do. I even wrote a pamphlet calling for something similar before the last election, and was delighted to corral Steve Webb, then a Back-Bencher, into contributing to said pamphlet. All credit to him and the DWP team behind him for delivering the SAFER pension; I am really pleased. It will continue to reduce pensioner poverty; it will eradicate for very many the snakes and ladders of means-testing; it moves us closer to a decent state pension for all, but one rightly clothed in a contributory system. It will make it safe to save. Those are really valuable contributions. However, it can be improved. The Minister will be delighted to learn that there will be quite a few amendments in Committee. I look forward to them; I hope that he does, too.

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6.02 pm

Lord Monks (Lab): My Lords, I start by declaring an interest: I am a trustee of NOW:Pensions, which is a subsidiary of the Danish pensions institute, ATP. Those noble Lords who know about pensions internationally will know that Denmark has an enviable record in pensions.

Pensions in this country have become an area where successive Governments in the main have sought a degree of continuity with their predecessors. From time to time, there has been an impressive degree of cross-party agreement; my noble friend Lady Hollis has just reminded us of one or two significant contributions made by the current Pensions Minister. There is a recognition that this is a long-term problem and that long-term approaches need to be taken to pensions. They should be taken rather more in other areas, which are perhaps more politically controversial. Given the uneven nature of pension provision in Britain, we certainly need a continuous effort to tackle some of the more glaring inequalities that abound. Still, the degree of agreement has been impressive. That stems from a report by the Pensions Commission, which the noble Lord, Lord Turner, chaired and of which my noble friend Lady Drake was a member.

Despite a general welcome for the main pillars of the Bill, there are problems that I want to touch on briefly. I will look first at the statutory override in Clause 24 and Schedule 14, which provides that private sector employers must make changes in their schemes that are commensurate with the higher national insurance costs that arise from the end of contracting out, and for that be done without trustee or member consent. Because the calculation will be done at the aggregate level, not per individual, many scheme members may well lose out. Despite the requirement in Schedule 14 for actuarial certification of scheme changes, we believe that these protections are not solid enough to make sure that people do not lose out significantly.

On the state second pension itself, the concern has to be that the majority of future pensioners could well be worse off under the single tier, because its accrual rate is lower than the current system for people not contracted out. Those retiring later are more likely to lose out and to lose out more. It is not fair that people close to retirement and not contracted out of the state second pension will be unable to accrue a state pension above the single-tier starting rate, despite continuing to pay full national insurance contributions.

There are also problems with the accelerated timetable for increasing the state pension age to 67 in Clause 25. My noble friend Lady Hollis has just spoken eloquently along the same lines. There has not been enough time to address some of the inherent inequalities that exist both regionally and between manual and professional workers. It seems that you have won the jackpot if you are a professional worker in Dorset; if you are a manual worker in one of the old industrial areas, you are in trouble. Yet it is “one size fits all”, and that one size does not fit some, for whom, in the years after retirement, the forecasts are pretty poor. I hope that these will be considered. Certainly, if the state pension age is to be changed again, I hope that

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this review will lead to some independent process, to give people confidence in the judgment about retirement ages.

Of course, there are some obvious losers in the changes. In particular, dependent relatives look as though they are getting a pretty hard deal. As we go through the Bill, I hope that we can take a good look at their position.

On private pensions and auto-enrolment, Clause 35 extends government powers to cap pension scheme charges. Lower charges are very important. From my Danish knowledge, the contrast between low charges there and high charges here, historically, has been extremely marked and I welcome what is being done to bring down the British level. The principle is good, but the worry is that the changes over a single year can distort the benefits that come with long-term saving. We ask that the Minister and the House take a look at perhaps having a cap over the lifetime of the scheme, which would offer greater flexibility. In the current consultation exercise, it is important that we do not rush this fence too fast, without looking at the longer period over which to compute the appropriate cap.

On the “pot follows member” principle, several speakers have already questioned whether there is a problem with making that totally automatic, when a person could be transferred to an inferior scheme—and there are plenty of inferior schemes around. What about the costs for workers who change jobs frequently? They are often the lowest paid, on insecure contracts, and will be vulnerable to this kind of process.

My next issue concerns Clause 34 and the extremely broad power to create exceptions from the employer duty to auto-enrol staff into a workplace pension scheme. For our part, we are worried about the risk of abuse and are looking for strong safeguards to be built into this part of the Bill.

It is a useful Bill, but I hope that we will find the energy and time, and make the effort, to see whether we can make it better as it progresses through the House.

6.08 pm

Viscount Eccles (Con): My Lords, as we consider the detail of the Bill—many of those who have spoken have made very good points about the detail—I hope we will remember two things. First, a great deal of what actually happens will depend on secondary legislation. In essence, this is a framework Bill, and much will emerge as the regulations are produced. Secondly, as we go through the Bill, I want, from long private sector experience, to think a bit about other things that come on top of state provision.

Along with all other noble Lords, I fully welcome the move to a single-tier pension, which is an excellent thing to do. If I may venture an opinion, I would do it, in the end, with the smallest possible consideration of the difference between people and their experiences. I would eliminate, if I could, the idea that certain things should be taken into account, so that it would be a well established and very simple “that is what we are going to get” pension. As has been said before, pension legislation is a dense thicket, into which we venture sometimes but probably as little as we need to. We do

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not get very far and come out all scratched without really understanding the detail. Anything that simplifies what is going on out there must be welcome.

The departmental brief took us back to Beveridge and 1942. I remember the excitement when that report was produced. The terminology in Beveridge is very different from the terminology we use today. He referred to want, a subsistence minimum, savings on top and the avoidance of an intolerable financial burden. On that last point, we are probably in some form of denial, in that there is nothing which could be rightly described as an intolerable financial burden. Beveridge also said that we should do nothing that discourages the individual from doing the best he can for himself and his family. He was determined, in what he wrote, to make his progressive, reforming recommendations but, he hoped, without perverse incentives being contained in what was done.

Of course, between 1942 and today, very great changes have taken place. The brief refers, as all noble Lords have, to demography. In Beveridge’s time, 10 years of retirement would have been a pretty long time. I fully admit that this is a very theoretical point, but if we were, 10 years from now, to put up the retirement age to 70, we would probably be looking at more like 15 or maybe 20 years of retirement, which is a very big change. Because life is very uneven and unfair, that is only an average. I fully concede that averages can be very deceptive.

The brief referred to the much increased employment of women, something that has been completely transformed from what applied before the Second World War. However, other things are not in the brief which I think are very important and go to the point on confidence and trust, which has also been referred to many times this afternoon. There is the relative prosperity—real incomes today are probably three times what they were in 1942—but of course, alongside that, financial services have become immensely more sophisticated and much more difficult to understand.

Then there have been the rapid changes to the economy, including the disappearance of enormous industries. I come from the north-east of England, where there is not a deep coal mine left, which is almost unthinkable. ICI has disappeared, which is, again, almost unthinkable. Some of these changes have been created by the incredibly rapid progress of technology. Completely unimaginable things have happened, even in stable, long-running companies. British Telecom, for example, suffered the split from Royal Mail and the Post Office. When we were younger, all the equipment was electro-mechanical, but of course it is now digital and a completely different employment pattern is involved in looking after all the equipment in that business. Even in long-running and apparently very stable businesses, there have been enormous changes in the pattern of employment.

There has also been social change, with people wanting different types of career. The idea was certainly prevalent in the days of Beveridge that you joined a company and there you were: that was your life from coming out of school or university until you retired. That now is the exception and not the rule. In trying to deal with all these changes, we have tended to muddle

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the distinction between provision by the state and the top-up that Beveridge referred to, which is acquired privately. We have not thought carefully about the limits of state intervention or carefully enough about doing nothing that discourages individuals from doing the best they can for themselves and their family. Instead, we have got into a situation where there is an impenetrable thicket, which is not understood by many people and in which, therefore, very few people have confidence and trust. We desperately need to simplify wherever we can—not only in state provision but in private provision.

I turn to one or two examples. The linchpin of private provision was always the defined benefit system, which related to salary and service. Such schemes are dying on their feet. Company after company has gone out of defined benefit schemes after finding them impossible to retain. The promises made in those schemes were so long that the actuaries were unable to match their view of contributions and assets to the potential liabilities, and they kept getting the sums wrong. That is not at all surprising if you set that against the differences that have occurred in society and in business and commerce.

My own experience is of working for 27 years for an engineering company in the north-east, which was taken over, in a deal brokered by the Government of the day, by another engineering company in the north-east. That was in turn taken over by a big construction company, which was then taken over by a big shipbuilding company based in Norway with lots of other engineering industries. That company went bust. I am a pensioner—I should declare that as an interest—of a closed scheme where there are problems. There is now a separate, independent, ring-fenced company with all the funds that came from those different companies. If I told you all the companies that were in the current ring-fenced scheme, you would be amazed. It is nothing like four, and probably closer to 20. It is very difficult to maintain trust and confidence in schemes that are very long-term, if they are subject to such enormous change.

Moving from defined benefit to money purchase schemes, which of course is the solution in many cases, has also proved very difficult, because of the same sort of considerations. Promises have been made to the people in the defined benefit scheme, which is closed, under the contracts entered into with them, but newly employed people are put into a different mode. That creates two classes of employee. Many people have thought about some of these difficulties, and there are many others.

Just the other day, I was asked by quite a young self-employed person, “Why is it wise for me to have a pension?”. I said, “Is anybody else going to contribute to it or are you going to do it all on your own?”. That is the first question you should ask yourself. The second is: what are the tax advantages of putting whatever you save into a pension scheme, personal or otherwise? If you really think about it, the two reasons why we are so keen on pensions as a method of saving are: first, somebody else is going to contribute as well as myself; and secondly, it gives me tax capacity. For a lot of people, other forms of saving, provided that they have the tax capacity, may well be a better way of going about it than joining schemes.

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Finally, I have a thought about fees. Of course, if a system is extremely complicated, I am afraid the fees will be high. They become high for two reasons: first, the complexity means that they will be high; and secondly, if you do not think through your own position as a member of a scheme, you contract it out to somebody else and do not pay close interest. In addition, there could be many regulations and rules. It was no surprise to get a letter from somebody involved in my self-invested pension plan saying, “Given everything that is happening now, you should expect fees of 2.5% per year”. I can tell your Lordships that I have been trying to ensure that that did not happen and it is not going to.

6.21 pm

Baroness Turner of Camden (Lab): My Lords, this is a very important piece of legislation. It changes the way in which we shall have to think about retirement.

Of course, we all know that we are living very much longer, and the Government already insist that everyone will need to work longer before collecting the basic state pension. The Bill proposes a single-tier pension for those retiring from 2016 and, of course, contains provisions under which men and women will work to the same age—67—by 2026. The single-tier pension will be £144 per week above the basic level of means-tested support. As indicated, the pack provided by the Government sets out the ways in which it is proposed to transfer people to the new arrangements. That could turn out to be really quite complicated.

How does all this affect people, poorer people in particular? Many people in well paid jobs are quite happy to work for longer before retiring. Some actually want to do so. Things are often very different for those who have spent a lifetime in employment such as manual labour or cleaning, often very low paid work. A woman who has done that kind of work, such as hospital cleaning, over the years is very anxious to be able to give it all up at a reasonable retirement age.

Then there are workers in strenuous or difficult, sometimes dangerous, work. We should remember the fire service staff who threatened industrial action if their retirement age was raised, who were successful in getting what they wanted. Of course, there are other industries in which people will want to retire early. There should be provision for them to do so. A single-tier payment may be easier to administer but people are different and work patterns are different, and a good scheme should take account of that.

The Bill also deals with the effect of private pensions. These have changed over the years, as many people have said. I well recall my years as a trade union official, when we all aimed to have members in what were then called final salary schemes—now known as defined benefit schemes. These have to some extent disappeared, except in cases where there is strong enough union organisation to prevent that from happening. My own union, Unite, has had several successes in that direction. But generally speaking, the number of employees saving in workplace pension schemes has declined.

The previous Labour Government sought to deal with that through the introduction of workplace pensions with automatic enrolment. Many of us welcome that

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development and the information pack tells us that this is proving successful, with far fewer opt-outs than was at first imagined. The Government clearly accept that the state pension, even in the new guise of the single-tier pension, is not going to be sufficient to provide a reasonable living standard. People must be encouraged to save for retirement.

As we know, the reform of the state scheme is intended to provide a platform for private saving. It is accepted that the new workplace schemes with automatic enrolment must give people confidence to save. Therefore, the schemes must be good; hence the Bill provides for the establishment of a Pensions Regulator, presumably with the power to intervene in order to protect workers’ savings.

Then there is the matter of pension pots. People change jobs and could perhaps lose track of pensions from former employment. The Government propose a system of voluntary transfers—pot follows member. This was criticised in the Commons and a different system was proposed—the establishment of a sort of separate aggregator—but unfortunately this was not accepted. This was discussed earlier in the debate, particularly by my noble friend Lady Drake, who referred to the pots and what happens to them. There was, however, general agreement that the security of the funds—mostly money purchase, of course—was absolutely paramount.

It is clear that the Government’s view is that a good pension entitlement for the average individual would consist of the single-tier pension plus whatever is derived from the pot or pots from the workplace schemes under automatic enrolment. Therefore, the way in which this money is managed is crucial. How is it to be invested? Can it be left to the market? I think not. Then there is the possibility of annuities; again, these are not popular. This is a very important aspect of what happens to the money that is provided under these schemes.

As we know, wages have been virtually stagnant in recent years. There is evidence that many families are struggling to make ends meet between paydays. Workers on low pay may have periods of unemployment. Saving of any kind may be difficult for them. The last thing people think about in such circumstances is retirement schemes and saving for them. Low pay can possibly indicate penury during retirement—I hope not—and this we have to avoid.

The provisions in the Bill appear to provide some improvements in certain directions—on bereavement, for example—but this seems to be on a short-term basis and there could therefore be losers. I note that the present restrictions on the payment of state pensions outside the UK will remain in place for single-tier pensions. The provision is strongly objected to by people who paid their contributions while they were in this country but who have retired to countries where there is no reciprocal arrangement. This was also raised in the recent debate in the Commons, but again, no change was agreed.

There is little in the Bill about the disabled, except a reference in the information pack which seems to indicate that there will be no change in entitlement. However, some of it also indicates that you would have

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to be rather heavily disabled before that happened. That is very unfortunate and something that we ought to explore further because disablement is expensive and people who are disabled deserve special acknowledgement and special treatment.

As I have already said, there are a number of issues that must be further explored in Committee. The impact on poorer people, many of them women, must be examined. As indicated, many find saving very difficult, if not impossible. Schemes that rely on individual savings are unlikely to be acceptable to future generations. This is a very important Bill and we must spend a great deal of time in Committee looking at the issues we have raised this afternoon.

6.29 pm

Lord McKenzie of Luton (Lab): My Lords, as my noble friend Lady Turner has just said, this is an important Bill which covers a major area of public policy: how we provide for and treat our citizens in retirement, the extent to which we expect them to make provision themselves through their lifetime and how we value contributions made otherwise than through formal work by way of caring or nurturing future generations. It is about the intergenerational bargain.

As a number of noble Lords have recognised, despite major and progressive changes to the pension environment in recent years, we cannot claim that the state pension construct has yet reached steady state. We know that the proportion of women in Great Britain qualifying for a full state pension will not equalise with men for another six or seven years, and for S2P outcomes to equalise will take much longer. While the availability of means-tested benefits—pension credit, housing benefit and council tax support as it now is—has lifted millions of pensioners out of poverty, there remain problems of take-up and ongoing questions of the extent to which their potential availability undermines incentives to save. Despite progress, we have not eliminated pensioner poverty, but neither does the Bill—all this, of course, in an environment where life expectancy for men and women continues to increase at an accelerating rate. As my noble friend Lady Hollis said, we should look at healthy years.

The introduction of a single-tier pension pitched above the rate—just, in the illustrations—of the guaranteed credit is therefore an important development. It is built on the foundation of auto-enrolment which grew out of the Pensions Commission work on which my noble friend Lady Drake was so influential. It was the report of this commission which clearly concluded that the then state and private pensions regime would not deliver adequate incomes in retirement through changes to the state system alone. Reform to make it simpler to understand and less means-tested were essential to provide clear incentives for individuals and employers to build additional private provision.

In analysing the reforms necessary to the state system to underpin private saving, it was clear that abolishing S2P before establishing the success of auto-enrolment and a national pensions saving scheme would be risky. Since then, things have moved on. We legislated for auto-enrolment—my noble friend Lord Hutton was Secretary of State at the DWP at the time—and for NEST, and the coalition Government have brought

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them into being. It is still early days, but opt-out rates look to be below expectations, which is encouraging. While continuing to acknowledge that the coalition Government have broadly followed the consensus, we should continue to express concerns about raising the bar to automatic entry. Every time the Deputy Prime Minister talks to us about how many people have been taken out of income tax, he might complete the sentence and say how many—mostly lower paid women—have been denied auto-enrolment.

As my noble friend Lady Sherlock said in her sparkling opening speech, the introduction of a single-tier pension deserves our support—our long-term support. I know that it will be music to the ears of my noble friend Lady Hollis, who has long campaigned for this approach. Of course, as proposed, the detail will not be unwelcome news to the Treasury.

We do not reach the sunny uplands of a simplified single tier overnight. There are complications along the way and we will seek the assurances of the Minister in Committee about the communications strategy to be adopted to explain what is going on. We also need to be assured of the capacity of HMRC and DWP to build and maintain the necessary systems which will give effect to all this. Without putting too fine a point on it, I suggest that the DWP has not covered itself in glory in managing change in recent times. It is a sobering thought that the transition to everyone being in receipt of a single- tier pension will probably extend beyond my lifetime. In the interim, there will be two systems running side by side. Those retiring before the single tier could receive the basic state pension, possibly uprated by the triple lock; S2P, uprated by earnings during accrual and CPI in payment; and the guaranteed credit, possibly uprated by earnings. On the single tier, the Bill provides for uprating by at least earnings, although the impact assessment assumes the triple lock. Protected payments under the single tier are to be uprated by price inflation. So it is hardly all simple and straightforward.

There will also be different access to benefits. Those retiring into the new system will be denied savings credit but not the guaranteed credit. They might also be eligible for housing benefit and council tax support, although the former could be affected by the withdrawal of savings credit. Those retiring before 6 April 2016 will be able to access benefits as now. There are complexities here, too, compounded by how passporting is to work. For some benefits, it is the guaranteed credit of pension credit which is the passport; for others, it is either the guaranteed credit or the savings credit. We need more clarity around all this.

Individuals retiring before 6 April 2013 will be able to defer their state pension under the current rules, including taking a lump sum. Deferral under single tier cannot involve a lump sum and will be more actuarially based and restricted. Qualifying conditions will be different for the two regimes—we now know that it will be 10 years for single tier—and both these changes contribute to the savings for the Treasury.

Over time, those reaching state pension age before single tier will comprise a smaller proportion of the pensioner population and it is important that their interests, too, remain protected. Those retiring in the earlier years of single tier will be better off than under

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the existing system—notionally, that is—although this reverses for those retiring later. The position of women improves, particularly because single tier benefits lower paid and part-time work.

Transition is not only about two systems running side by side. Provision is necessary for those who retire after 6 April 2016 but who have a contribution record prior to this—hence the need to grapple, as we doubtless will in Committee, with new concepts of “foundation amounts”, “protected amounts” and “rebate-derived amounts”. We should also test the transitional proposals for derived and inherited entitlement.

Perhaps a surprising fact to emerge from the various analyses that we have been sent is the extent to which means-testing will remain within the new system. While the amounts may have declined, the percentage of pensioners receiving housing benefit or council tax support in comparison to what would have happened under existing arrangements hardly changes. There is a significant fall-off of pension credit entitlement, but even 5% of those reaching pension age in 2060 will qualify. Overall, there is a reduction in benefit claimants of just 3%. Nevertheless, there is an improvement in the number having low marginal deduction rates, which is important for saving incentives.

In these circumstances, take-up remains an issue. If the rationale for the assessed income period—a degree of stability in the incomes and capital of pensioners—has not proved to be the reality, it could be difficult to argue for its retention, although I take the point that my noble friend Lady Hollis has just made. However, we think that the Government have done the right thing in retaining the current indefinite awards. Given the still significant scope of benefits within the system and the fact that take-up of pension credit is not high, the need for more regular reporting will bring its challenges. What assurances can the Minister give us about the support proposed for pensioners having to reconnect with the reporting system?

We should be clear that, because of this Bill, the state is going to do less than is currently planned. Over time, the share of GDP going to pensions will be smaller than currently predicted. At 2060, it will be 0.6% less—some £30 billion—but assuming the triple lock for uprating. Should uprating be as provided in the Bill, by earnings, the reduction is 1.5%. On top of those savings are the increased national insurance contributions which accrue to the Treasury from the abolition of contracting out—some £5 billion a year in the early years. More than 80% of that will be borne by public sector employers and employees. An additional 1.4% national insurance contribution is unwelcome news for scheme members at a time when incomes are being squeezed and household costs are rising. Costs have risen faster than wages in 39 of the 40 months since this Government came to power.

Notwithstanding the override given to private sector employers to recoup the loss of the 3.4% national insurance rebate—I share the concerns of my noble friend Lord Whitty about that—there is the risk that all of this will accelerate the decline in defined benefit provision. Public sector schemes will not be able to recoup the loss in that fashion. Following on from questions already asked, perhaps the Minister will say

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something specific about how those costs are to be met. On the local government schemes, specifically dealt with by my noble friend, as he said, the LGA estimates employer costs in the region of £700 million a year. Given the savaging of local authority budgets by the coalition, how does the Minister think that those costs can be found? Does he think that the new burdens policy should apply and that they should be met centrally? What analysis has been undertaken of the concerns expressed by the LGA that the Bill could undermine the agreement of the reform of the local government pension schemes due to be implemented next April?

The Bill is not only about state pension provision. It includes a raft of other measures, and it should be supported in its attempts to tackle some long-standing problems in the private pensions industry, including the prohibition on offering incentives and removal of short-service refunds. Although the focus on tackling small pension pots is to be applauded, like others, I regret that the proposed solution cannot be supported. The technical amendments to auto-enrolment look supportable, but is it not time to remove some of the historic constraints on NEST?

Finally, I have observed with admiration the work done by Gregg McClymont, the shadow Pensions Minister, aided and abetted by my noble friend Lady Drake, on the urgent need to restructure the UK pensions market, including the annuities market, to forge greater transparency and drive down costs for savers. Once again, we see the Labour Party, just as on energy prices, leading the way, standing on the side of consumers against the vested interests of dysfunctional markets.

Given the scope of the Bill, I hope that the Government will yet be able to pick up some of the amendments that will undoubtedly be moved. As for what is in the Bill, it should, sensibly amended, receive our agreement. I look forward to supporting my Front Bench to that end.

6.42 pm

Baroness Dean of Thornton-le-Fylde (Lab): My Lords, as a number of fellow Peers have said, this is a substantial and important Bill. It deals with the state pension fund, but it also covers elements of private pension funds. After buying their home, most people’s biggest investment in their life is their pension scheme. The Bill will be important for the quality of life of the whole nation at the end of their working life, so it is important that we get it right. We have a chance to get it right because it is very much cross-party; the single-tier pension has general consensus. Compliments have been passed. The Minister was generous enough to recognise the work done by my noble friends Lady Drake and Lord Hutton.

So the Bill has a very good start with a lot of cross-party support. I would like to be the first to sign up for the campaign of my noble friend Lady Sherlock to make pensions interesting. They are very important but, unfortunately, when you mention pensions, people’s eyes go to the ceiling—until they find out just what is wrong with their pension. Then, their interest is alerted but it is too late.

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What we are considering today is important, but the Bill is inferior in some respects to the Green Paper which the Government issued. The Green Paper said that the changes would be cost-neutral, but the Institute for Fiscal Studies stated that,

“these proposals imply a cut in pension entitlement for most people in the long run”.

I would welcome the Minister’s comments on that when he responds.

The Bill covers a whole range of issues, all of them in their individual ways important, but I shall concentrate my remarks on its impact on women. There is no doubt that the change to a single-tier pension is one of the biggest and best changes to state pensions for women in this country. In my view, the women who will benefit from it do not want to get those improvements on the back of the women whom the Bill does not treat fairly in the transitional stage. That is where my real concerns arise. I hope that we will propose to amend the Bill to deal with those anomalies.

It is established and generally accepted that women make up by far the largest number of those on pensions living in poverty. The number is substantially different; far more women than men are in poverty on pensions. The Bill does not change that for a whole group of women. It is also true that women pensioners have a lower income than men. The Bill does not change that in the transitional period. We must deal with those issues.

For instance, currently, a woman who has been married or in a civil partnership may be able to use their partner’s record to receive a state pension or increase the amount they receive of their own accord. There are some transitional protections in the Bill, but they do not cover everyone. For instance, in the years ahead, some would reasonably expect to receive either a married woman’s pension or a full basic pension, if they were widowed, or would not have had the time before retirement age to make up the contributions. Are the Government going to change the Bill to protect those people?

The Government said that in 2020, there will be between 20,000 and 40,000 married and widowed individuals affected by a pensions loss. I find that unacceptable. Given the magnitude of what we are dealing with, we could amend the Bill to deal with that. I am joined in that view by the Work and Pensions Select Committee in another place. The committee has asked the Government to conclude a solution by allowing individuals within 15 years of state pension age to be allowed to retain that right. That would be a transitional measure and, in the nature of things, would not be hugely expensive. Will the Government accept the Select Committee’s recommendations?

Another group of women has been mentioned in this debate several times: those born between April 1951 and April 1953. Those women feel that they are being subjected to a double disadvantage. First, their state pension retirement age will increase. That is an issue that would have faced any Government. Any Government would have had the unpalatable task of changing the retirement age; I fully accept that. However, this group of women will face a later retirement age but will not go on to the single-tier pension, as I understand it. Will amendments be brought forward to rectify that situation?

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Another issue has come up several times. Because an element in the Bill deals with private pensions, I feel able to raise it. That is the issue of part-time workers. We had a long debate on the previous Pensions Bill about the fact that although part-time workers who do not earn up to the national insurance level cannot join a pension scheme, they may have two jobs which, put together, would take them through that barrier and they would qualify for a pension. Those in that category are predominantly women. It is grossly unfair that we are having a major pensions change in this country which, I think, will put it on the right path for the future—although I think that we will have to make further changes later—without dealing with that issue.

Indeed, the Department for Work and Pensions showed in its own analysis that in 2012-13, some 50,000 employees fell into that category of having more than one part-time job but not being able to have a pension cover because both jobs, or three or whatever it was, fell below that level. Of that 50,000 people, again, 40,000 were women. In a Bill which marks a substantial and improved change on pensions for women in this country, there are those anomalies which I believe we should deal with. It will be our responsibility to try and do that. They are all transitional issues, not issues which will last for ever and a day, and we should be about to deal with them in the nature of things.

There are other aspects of the Bill which obviously cause concern. On the bereavement provision, it is a bit cack-handed to withdraw the pension on the first anniversary of the death of the spouse. After the bereavement of your spouse, the first year is always the most difficult. We need to consider what it would be like to be reminded of it. There are also the pension charges. I congratulate the Government on their announcement this week that they are looking at those. It may be that we will have something to discuss on pension charges during consideration of this Bill. I look forward to taking part in debates on this Bill which, if we get it right, will be a landmark for British citizens.

Baroness Sherlock: Before my noble friend rises, my Lords, I should say that I realised after I sat down from speaking earlier, with something of a sinking heart, that I had forgotten to draw the attention of the House to my interests in the register. I am the senior independent director of the Financial Ombudsman Service—a remunerated position. In an unremunerated position, I also chair a charity which has employees in pension schemes that could be affected by the Bill. I apologise to the House both for that omission and for interrupting the debate now to have to rectify it.

6.51 pm

Lord Browne of Ladyton (Lab): My Lords, I am delighted to follow my noble friend Lady Dean and I learnt a considerable amount from her contribution to this debate, some of which I shall draw on in my few remarks. I think most noble Lords will understand that I rise to the Dispatch Box with the words of my noble friend Lady Donaghy ringing in my ears, not just because she is sitting behind me but because she urged us in her opening remarks to approach this subject with a degree of humility. I do just that, as this is the first time in 16 years in one part of this building

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or another that I have had the lack of wisdom to debate pensions, and to do so from the Dispatch Box is a daunting prospect.

I open my remarks by thanking the Minister for his introduction. I thought that he laid out in a helpful way what this Bill seeks to achieve and I look forward to hearing him build on that in his response to the debate and throughout further consideration of the Bill. I have some experience of engaging with him in debate in your Lordships’ House and I know that he will do his best to assist the House to understand and, if necessary, improve this legislation. I thank him, too, for engaging with Members in all parts of this House in preparation for this debate and for his promise of further briefings. I join him in commending the noble Lord, Lord Turner, my noble friend Lady Drake and Sir John Hills for the work they have done; I add to that my thanks to my noble friend Lord Hutton and the noble Baroness, Lady Hollis of Heigham. I was privileged to work with her for a short time when I was the Minister for Employment in the Department for Work and Pensions.

If all those who deserve some recognition for their contributions to this debate will excuse me, while I hope to give them some recognition during these remarks I single out my noble friend Lady Drake. With an economy of words that was a model, she went through the Bill in a way that identified almost all the issues that many months of my trying to understand it had identified, if not understood, and some others that I had not even thought of. I can appreciate why she was on the commission led by the noble Lord, Lord Turner, and why she has had such a significant effect on the direction of travel. I also commend my noble friend Lady Sherlock, whom I am privileged to serve in this cobbled-together team for this purpose. She knows how much I admire her and I thought that she made a sparkling and excellent speech.

I congratulate the noble Lord, Lord Balfe, on an accomplished maiden speech. I have no doubt that the House will value greatly what appears to have been his long and varied journey since the age of 16. It took him all the way from 4 Millbank, which is just across the road, to your Lordships’ House. He referred to Millbank and the noble Viscount, Lord Eccles, referred to the Imperial Chemical Industries, or ICI, in his contribution. Since I am the survivor of a man who was an employee and then, for a short period, a pensioner of the ICI—my mother, who was widowed, was a pensioner of it for a significant period—I recognised the Millbank address as being very significant to the ICI. Those buildings are still there and at least the noble Lord, Lord Balfe, is still with us although the ICI is not. That just occurred to me as a relevant coincidence in the debate before your Lordships.

Turning to the issues raised in the debate, I start with my noble friend Lady Sherlock’s first question to the Minister, which challenged him to confirm the level at which the STP—the simple pension which we are all discussing—will be set. I do that because it seems to be the essence of our understanding of whether this significant reform of the pension system will meet the challenges that the Minister and others have set for it. There seems to be agreement that it needs to be high enough to provide an adequate

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platform for saving and to reduce means-testing. The problem is that, as we understand it, these reforms will reduce means-testing only if the flat rate pension is set above the pension credit level. Indeed, the Select Committee recommended that there should be some clear blue water between one and the other and argued further that that principle should be built into the Bill. None of us will be able to get a handle on whether this will, over time, consistently meet that condition unless we have some idea of the rate at which it is to be set.

Perhaps I may say in passing, and with all humility, to the noble Lord, Lord German, that this is assuredly not a citizen’s pension. A pension that requires 35 years of national insurance contributions cannot be described as a citizen’s pension.

Moving on, I am encouraged to draw the Minister’s attention to the questions asked by a number of noble Lords, including my noble friend Lord McKenzie, about the fact that all the documentation we have before us, set in the context of the impact assessment, assumes that the single-tier pension will be uprated by the triple lock. Of course, we know that the triple lock is in place only until the end of this Parliament and I am not suggesting that it is reasonable to expect the Government, or indeed any party aspiring to government, to promise the triple lock going forward. One does not know what financial circumstances or degree of growth there will be in the economy in those times. However, I would argue that if we are to understand fully the implications of this policy, and whether it meets the tests that we are all generating for it, we have to have some information against which we can compare the performance of this policy going forward. It would be much more helpful if the Minister could provide us with additional information, other than that which is in the impact assessment and has that assumption underpinning it. If there were alternative calculations provided to us that showed the other ways in which could it be uprated, or not uprated at all, that would give us some sense of whether this policy is dependent on the triple lock or whether, on its own terms, it can be sustainable into the future.

I turn to the question of the continued review of pensionable age, which was raised by my noble friends Lady Turner of Camden, Lady Hollis of Heigham, Lord Whitty and Lord Hutton of Furness. The noble Lord, Lord Balfe, also raised it in his maiden speech. I make it clear that we on these Benches recognise that, as life expectancy increases, it is reasonable to consider extending working lives. However, along with many other Members of your Lordships’ House, we believe that it is very important to consider a range of factors. One of those is that there are differences in healthy life expectancy between different groups and varying employment opportunities for continued working in later life. A number of noble Lords made reference to that.

It is our argument that the Bill needs to provide greater clarity about that process. It is also essential that people have sufficient notice of any changes in state pension age in order to make or revise their plans for retirement. To meet the first objective, we proposed consistently in the House of Commons an amendment that would have ensured that the panel set up to assess

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rises in longevity included representatives from opposition parties and trade unions. We also have concerns about the methods of periodic reviews.

On the second of these objectives, I point out to the Minister that only this month the Government themselves published a document entitled Reshaping Workplace Pensions for Future Generations, in which they conceded that:

“Our current thinking is that employers would not be able to adjust the”,

normal pension age,

“of anyone within 10 years of the existing NPA in the scheme”.

That concession—that advice—that they published in their own document brings into question a five-yearly review and the consequences of such a review. At this stage I am not seeking to argue beyond the amendment that we tabled in the Commons, and will probably repeat here in Committee and perhaps on Report, but it raises a question about the consistency of the Government’s thinking when that document, published just last month, can strongly make that point while the Government expect that the review of pensionable age will be every five years.

My noble friend Lady Hollis of Heigham made reference to part-time workers—I think she called them people in mini-jobs. As she identified, there is a group of people, mainly women, who have more than one part-time job but are below the national earnings limit in each job, so are not building up the rights to a future pension. In fact, as she pointed out, recent analysis found that in 2012-13 50,000 people—40,000 women and 10,000 men—had two jobs with a combined income above the lower earnings limit but were not accruing qualifying years towards their pensions. My noble friend argues, I think with some authority, that this is unfair and could prejudice hard working people who are doing everything possible to provide for themselves and their families at a time when full- time jobs are acknowledged to be in short supply. Characteristically, she has an innovative solution, which, as I understand it, is essentially that they be treated as self-employed. That would ensure that all those in work with total earnings above the lower earnings limit were building up rights to a state pension. I commend this approach to the Minister, and we will be interested, as I think other Members of the House will be, in the Government’s position regarding this. I suggest that the arguments that have been put forward thus far do not meet the challenge that my noble friend has set out.

My noble friend and others have concerns about the phasing out of the assessed income period. She makes the very good point that the phasing out of this period generates challenges relating to equity release to pay for care and its impact on pension credit when changes to capital are taken into account. While I am not arguing that the release of equity should be dependent on administrative easement that was meant for other purposes and may not be sustainable in the long term, we on the Front Bench do not disagree with the phased abolition of an assessed income period but we wish to use Committee to probe the evidence base for this change. We know that some elderly people struggle with correspondence, particularly official communications,

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and we wish to be assured that there is support in place for those who need it, with the additional burden that these provisions impose.

A number of noble Lords raised issues reflecting the dysfunctionality of the private pensions market. It is at the heart of this reform that, from a base of a single-tier pension, people are encouraged to save. As my honourable friend Greg McClymont has made perfectly clear, this will work only if they are saving into pension funds in which people have trust and confidence. At the Bill’s Second Reading in June, Greg made clear that our focus on the Bill would be on the half of the Bill that was missing—essentially, the part that would make private pensions value for money for the saver. The Pensions Minister responded throughout the deliberations on the Bill in the Commons in a relatively dismissive way to these suggestions—the Minister smiles; I think that he recognises some of the phraseology that was used—and resisted all our amendments throughout Committee, despite the fact that he recognised consistently that they were relevant to existing serious problems. Throughout that time, he was able to take advantage of the alibi that the OFT report had not been concluded. However, as many noble Lords have said, the OFT reported in a devastating fashion, confirming all our criticisms of the dysfunctional pensions market and raising the sword of a market investigation reference, which is still hanging over the pensions market pending Parliament’s completion of the Bill.

In response to that and the fact that the report expressly, or by implication, supported every one of our amendments, the Government performed a U-turn, but only in response to a part of the problem with charges. The Government have listened to the OFT report on charges and have done a U-turn, and that is welcome, but perhaps now they should listen to the other OFT recommendations, which include the areas that we have tabled amendments on. Indeed, the OFT has gone further than we did to make our pensions industry value for money for savers. We encourage the Minister to consider some of these issues in relation to transparency and governance of the pensions industry, which we will continue to urge.

In anticipation of this debate, I wrote myself a set of notes that said, “No one supports the Government’s line on pot follows member except possibly the ABI”. That was before I heard the speech from the noble Lord, Lord Paddick. I think that he was the lone voice in this debate supporting pot follows member. I say to him, again with some humility, that the Australian example that he encouraged us to follow comes from an entirely different environment. In Australia, as I understand it, there are several hundred pension schemes, whereas there are over 200,000 pension schemes in this country. This is an entirely different environment and the Australian analogy does not quite work.

I am conscious of my time and I shall endeavour not to go through all this now, saving some of these arguments for Committee. However, I am sure that the Minister knows the arguments that have been put forward by many, including the Centre for Policy Studies, as my noble friend Lord Hutton identified. Reading carefully the briefing we all received from the

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ABI, I am not entirely sure that it is still as supportive of pot follows member as it was at the outset of the debates on this issue.

I commend the right reverend Prelate the Bishop of Derby for a measured and informed speech in relation to bereavement benefits. He made a very powerful argument for consideration of the effect that bereavement can have on children and the importance of the support of parents. I do not intend to go into any more detail on this other than to commend to the Minister the questions that were asked by noble Lords who also made this point. It is an issue that we will to return to in Committee and later during the passage of the Bill.

There are issues about the consequences of the phasing out of contracting out. There are significant potential impacts on public sector and local government pension schemes. There is a related but not directly analogous issue in relation to protected pensions. I also commend to the Minister the observation made by my noble friend on this Front Bench and by the noble Viscount, Lord Eccles, that this is a framework Bill and encourage him to give us some indication about when we will see some of the regulations that inform the Bill.

Unusually, I want to refer to an issue that was not raised, but I promised my noble friend Lord Dubs, who is well respected in this House, that I would indicate to the Minister that my noble friend will raise in Committee the issue of Jarvis and the small number of employees who have lost out very badly in its pensions.

My noble friend set three tests in her opening speech. However, there is a series of other tests that the Government have set that we will measure this Bill and these reforms against, because the Government claim substantial consistent consequences for them. I think the Minister has comprehensive notice of them, particularly from the informed contributions by my honourable friend Greg McClymont, who went over the detail of this with some care. I think he can expect interesting and engaged debates in Committee and on Report. I was very struck by the number of times the Minister used the phrase “very complicated” or “very complex” when I was speaking to him earlier and he and his officials were giving me an explanation of what we can expect in the Bill. He is right about that. I stand before your Lordships’ House confident that behind me I have a significant number of Members who are comfortable with that complexity. One or two of them will be talking to me quite a lot before the later stages of the passage of the Bill. This is a reform that we broadly support, but we will challenge it every step of the way.

7.13 pm

Lord Freud: My Lords, I expected an interesting and valuable debate and I got one. I congratulate my noble friend Lord Balfe on his remarkable maiden speech, which I know we all enjoyed. I hope we provided him with adequate intellectual stimulation this evening of a kind he will remember. Whether we met the challenge set by the noble Baroness, Lady Sherlock, in making the topic interesting, at least we will, as my noble friend Lord Paddick pointed out, have all gained an extra hour in our lives during this debate.

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I shall focus first on the transition which many noble Lords rightly focused on. There are some tough issues around it. People who have contributed to or been credited into the national insurance system have expectations, so we cannot switch to the new system overnight. I assure the noble Baroness, Lady Sherlock, that this is not a hard, fast transition. It is pretty difficult to design a transition that strikes the right balance and takes account of people’s expectations as far as possible while also ensuring that those who are part of the transition—in other words, those who will retire over the next 50 years—will see the benefits of the single-tier pension. I believe this Bill has been successful in this difficult endeavour, and for that reason I expect it to outlast by a considerable factor the 10 years predicted by the noble Baroness, Lady Donaghy.

The foundation amount allows people to see the value of their pre-2016 national insurance record in one figure, which gives simplicity to the single tier but also recognises past contributions. It is a smooth transition. For the vast majority of people reaching state pension age in the years after single-tier is introduced, their outcomes are similar to what they would have got under the old system. Nearly three-quarters of those reaching state pension age in the first five years will see a change in their state pension of less than £5 a week. Of those who see a larger change, five times as many gain as lose. Those who see this boost are likely to be those who have traditionally been badly served by the state pension system: women, carers and the self-employed.

While moving to a modern system based purely on individual entitlement, the transition provides, for example, for inheritance of additional state pension where one member of the couple is in the current system. There is also transitional protection for those who paid the married woman’s stamp. Difficult decisions and trade-offs have been necessary to redesign the state pension within its cost-neutral envelope, and inevitably this means that while some people get more than they would have done under the current system had it continued into the future, some people get less.

I shall move on to as many of the specific points as I can—there were a lot. The noble Baroness, Lady Donaghy, said I would delight the 1951 to 1953 generation of women by moving. I think I might delight them a little bit. Ninety per cent of these women will get more in state pension and other benefits over their lives by drawing their pension in the current system at their state pension age than they would if we gave them a state pension at 65 and single-tier pension. The women in this cohort will reach state pension age between two and four years before a man born on the same day, which means that they will get between £13,000 and £26,000 more state pension than a man of equivalent age. To correct the point made by the noble Baroness, Lady Dean, it is not a double whammy. They have not seen their state pension age rise, except for the equalisation under the 1995 Act. The only change this group has seen recently is in the triple lock.

The noble Baroness, Lady Sherlock, raised derived entitlement. We will clearly go into this in some detail, but we estimate that in 2020 fewer than 30,000 married

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and widowed women—less than 5% of single-tier pensioners—will be affected by loss of derived entitlement to a basic state pension based on their spouse’s national insurance record. I know this is an area we will debate in great detail.

Baroness Hollis of Heigham: This is an area of some concern to a lot of us. Will the Minister be kind enough to give us all the stats he has, including how many of those getting the married women’s 60% were born or live overseas, do not have UK residence and so on, which was the argument in the Commons? We are very short of detail on this.

Lord Freud: My Lords, as I hope everyone in the Chamber knows, I have arranged to run a series of briefings at the appropriate time—about a week ahead of every Committee session—particularly to try to go through this detail. It really is extraordinarily complex, to reuse a tired word. One needs to go through it with examples and graphs and so on, which is much better. We will get all the information that we can, but we will do it in that context and will then be able to look at it in Committee on the basis of that process.

The noble Baroness, Lady Sherlock, and the noble Lord, Lord Browne, asked what the start rate will be. We will need to decide that closer to implementation when the level of the pension credit standard minimum guarantee for 2016-17 is known. I am afraid that I cannot reveal all tonight.

The noble Baroness, Lady Dean, asked about cost-neutrality. The reforms are designed to be cost-neutral in terms of spending on persons. The spending on the single tier should be within 1% of projected spend on pensions until the late 2030s. In the longer term, after that, the single tier will slow the rate of increase in pension spending, helping to make it a sustainable system.

The noble Baroness, Lady Sherlock, raised the savings credit. One of the things that the single tier does is to clarify savings incentives, so that people will know what pension to expect from the state and be able to plan the additional provision that they want. The issue of passporting was raised by the noble Baroness and the noble Lord, Lord McKenzie. Clearly, passporting will be through the guarantee credit, not the savings credit, although in practice the numbers are not that different. On the difference between being on the single tier and being on a credit, and whether you get various passporting, that is always the case when you have a system of passporting. However, it is worth bearing in mind that when you look at the relative rates for members of a couple, the single-tier rate is much higher than the credit guarantee rate; the single tier comes out at £288 for a couple in 2012-13 prices, against £216.55 at 2012-13 prices. So there is a very big gap for couples on that passporting issue.

My noble friend Lord German asked me for the latest correspondence on bilateral agreements. I regret that I just do not have that information to hand right now. I will search the cellars of the DWP to see if I can do any better and write; it is probably very heavily buried there.

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Several noble Lords—the noble Lord, Lord Whitty, my noble friend Lord German and the noble Baroness, Lady Donaghy—raised the abolition of the rebate and the costs that would go to the public sector employers. The noble Lord, Lord Whitty, asked whether we would talk to the LGA. The Chief Secretary to the Treasury has met with the LGA and I can confirm that Her Majesty’s Treasury is happy to meet with them.

We will spend a lot of time on multi-jobs in Committee. One point to make is that the effect of welfare reforms will naturally be to improve coverage. All adults on universal credit, many of whom will be the lower paid that the noble Baroness, Lady Hollis, is rightly concerned about, will get their pension correctly that way. In that way, the crediting system is extremely comprehensive. By the 2040s, more than 80% of people will receive the full single-tier amount based on the 35 qualifying years. Clearly, we will be reviewing the crediting arrangements in the light of reforms and will look at the position of these people as part of the review. The noble Baroness is as familiar as I am with the quite revolutionary opportunities which Governments can look at, now or in the future, around RTI when that is built in. I know that we will spend a lot of time on that.

A lot of noble Lords raised the age review and some of the relevant issues: the noble Baronesses, Lady Sherlock and Lady Hollis, and my noble friend Lord Paddick. Clearly, one point of having a review is that longevity on its own is not the only factor. That is exactly what is being realised here. We have debated that in the past, and I know that we will debate it further.

On equity release and the AIP change, income-related benefits take account of any income and capital generated by liquidating assets. However, equity release may not necessarily result in a reduction in eligibility for means-tested benefits and will depend on overall income and capital.

The right reverend Prelate the Bishop of Derby and the noble Baroness, Lady Sherlock, raised bereavement support. This is clearly driven substantially by the change in the welfare system when you have universal credit as a basic bedrock for people. Bereavement benefits were another way of producing that kind of income in an entirely different way. We are now targeting this support for the period of financial need, as we heard that it was required; we did a survey on that. One therefore needs to separate it from bereavement, and maybe the right reverend Prelate’s point about what we call it is relevant there. It is a financial support which is underpinned by the universal credit but, clearly, we do not offset it against universal credit which, if it went on for a long time, we would do. By not offsetting it, we are targeting help at those with the greatest need, whether they are a widow or parent or not. It is a very progressive structure in that way. It means that 62% of the very poorest are actually better off. We will go into this in great detail in Committee; I will not do so now. However, that is the structure and the thinking behind it.

The noble Baroness, Lady Sherlock, and my noble friend Lord German raised conditionality. The structure is that all recipients of bereavement benefits—not just partners, but also if you lose a child—have access to

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Jobcentre Plus, purely on a voluntary basis, for the first three months; no conditionality for the next three months; and at the end of the six months, advisers will use their discretion to ensure that individuals’ capability and requirements are taken into account.

We will have a major debate in Committee and, I suspect, beyond on the pot-follows-member approach versus the aggregator approach. At this stage I will make a few minor protests about why we have chosen the former rather than the latter. However, I will make an impassioned defence as we go through it in great detail. The pot-follows-member approach maximises the consolidation, is in the best interests of savers and will reduce by half the number of dormant pots by 2050. We estimate that an aggregator approach would achieve just half the cumulative administrative savings for the industry by 2050. We will spend more time on that.

The question from my noble friend Lord Brooke is a suitable last question: what more is there on which to legislate? We will probably have some open questions left after the Bill on how much people are saving. Quite a few noble Lords suggested that perhaps people are not saving quite enough for what they anticipate they will want to spend when they retire. There is also the nature of the savings vehicles—we talked about defined ambition. Those are the two big areas in pensions. I suspect that there are probably several more, but perhaps I would pick those two.

I close by thanking all noble Lords who contributed to the debate, which was informed, measured and interesting. As I said, we will hold a number of briefing sessions. I am keen that in this debate we deal with the real issues on an informed basis and do not waste time. That is what these sessions are for—so that we have full information. I will endeavour to make sure that noble Lords have all the information they need to make the contributions they want to make. In particular, I want to make sure that the noble Baroness, Lady Hollis, is able to table all the many amendments that we all look forward to.

The Bill does a remarkable job of creating a pension system fit for the 21st century—nine times as long as the noble Baroness, Lady Donaghy, thinks. It is a return to the simplicity of Beveridge’s model for the state pension, it strengthens the private pension system, and it will enable today’s and tomorrow’s working-age population to plan for and build towards a secure retirement income. I commend the Bill to the House and ask for it to be given a Second Reading.

Bill read a second time and committed to a Grand Committee.

Northern Ireland (Miscellaneous Provisions) Bill

Second Reading

7.33 pm

Moved by Baroness Randerson

That the Bill be read a second time.

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The Parliamentary Under-Secretary of State, Wales Office (Baroness Randerson) (LD): My Lords, there can be little doubt that the political settlement in Northern Ireland has delivered huge benefits, both for the people of Northern Ireland and for the wider United Kingdom. Many noble Lords present today are far better placed than I am to describe the changes we have seen since the dark days of the Troubles.

So much is now happening that would not have been considered possible even 10 years ago. Whether we look at big events like the G8 summit, the World Police and Fire Games, or the first Fleadh to be held in Northern Ireland, or important milestones in the process, such as the end of the first full Assembly term in 2011, or indicators of wider attitudes towards institutions, such as the almost 2,300 Catholics who applied to join PSNI this year, it is clear that enormous progress has been made. However, alongside those markers of progress, we have also seen violence and political tensions linked to issues such as flags. It is today exactly one year since violence broke out over flags issues.

We are all aware that there is still a long way to go before Northern Ireland has the prosperous economy and stronger society which I know all of us in this House would like to see. Sectarian division carries great risks to the economy, to security, and to the general well-being of Northern Ireland’s people. Without economic success, peace is less well rooted. There is much to do in Northern Ireland to bring us on from the legacy of decades of troubles, but it seems to the Government that the two challenges of community division and rebalancing the economy are ones that are critical for the future.

Of course, other questions are being considered in Northern Ireland at present. The all-party group chaired by Dr Richard Haass is considering parades, flags and emblems and the past. Those are some of the most deeply rooted problems that Northern Ireland faces, so that is important work. It is very welcome that that group is undertaking it, first, because the devolved institutions have taken up the challenge of dealing with these issues—not, as would have happened in the past, leaving the lead to the Government. It is welcome also because the Northern Ireland authorities secured to chair the talks someone of the eminence of Dr Haass, who has earned universal respect in Northern Ireland for his grasp of the issues and his energetic dedication to the task. I am aware that some noble Lords in the House will take a close interest in those issues, and we will have to consider when we see the report how we can best give opportunity for those views to be expressed, bearing in mind that the process and the report are owned in Belfast rather than here.

Few would argue that the institutions established under the agreements are beyond improvement, but let us remember that they have given us the relatively stable politics that no other approach in the past 40 years has been able to do. There may come a time when significant change is considered. However, the Government have been very clear that major changes to the institutions established by the agreements can go ahead only if they have broad support across the community in Northern Ireland. It is also essential that any such change is consistent with the principles

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of power-sharing and inclusivity that are at the heart of the Belfast agreement. At present it is clear that there is no consensus around fundamental changes, and the Bill does not seek to make any. The imperative in Northern Ireland at present is, as I have suggested, to tackle the issues around sectarianism and around strengthening the economy.

I therefore readily acknowledge that the Bill does not make radical changes, but it does make important ones. It is a Bill for more normal times. It reflects progress in Northern Ireland, making changes which remove some of the special measures which have been implemented because of Northern Ireland’s unique situation, and which bring the system in Northern Ireland closer to Great Britain. However, it also acknowledges that there are areas where institutions in Northern Ireland might benefit from further reform. I know that some noble Lords look forward to a day when there might be scope for more substantial changes to the institutions. I hope that debates during the passage of the Bill in this House will give us the opportunity to reflect on these possibilities, always bearing in mind the need to proceed by agreement.

I turn to the contents of the Bill, which amends the regime governing political donations and loans to make more information available to voters in Northern Ireland about the funding of political parties. This matter has been debated on several occasions in this Chamber and I know that noble Lords take the issue very seriously. I hope we can all agree that it is right to protect the names of those who made donations in the past. These individuals made donations in the belief that they would remain confidential, and it would be wrong to change this retrospectively. I hope we can also agree that future political donations in Northern Ireland should be published as soon as the security situation allows. What we may not agree on is whether that time has already arrived.

The provisions in the Bill take a cautious approach. They set a date after which permanent anonymity will not be guaranteed, and they give the Government the power to increase transparency incrementally. For the moment, we believe the security situation does not justify publication of donor names, but it is important to ensure we have the flexibility to move towards the goal of bringing Northern Ireland’s transparency rules into line with the rest of the UK. If the Bill proceeds successfully to the statute book, we intend to move as swiftly as possible thereafter to draft secondary legislation on transparency. We would, of course, consult on these provisions, but we can confirm that our intention is that information about donations and loans made to political parties since 2007 which does not identify the donor would be made public—for example, the type of donor, its value, the date on which it was received and whether it was from an Irish source. We will look to use the power to increase transparency in the Bill to bring Northern Ireland closer to the system which operates in Great Britain as soon as possible, taking into account the security situation.

The Bill will also bring about the end of dual mandates between the Northern Ireland Assembly and the House of Commons, or the Dáil, by the time of the next Assembly elections in 2016. The practice has long been a matter of concern. Indeed, the Committee

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on the Preparation for Government, formed prior to the talks at St Andrews in 2006, debated the issue of dual mandates and agreed that the practice should be phased out. Even though good progress towards ending dual mandates has been made since 2010, half of Northern Ireland MPs were also MLAs following the Assembly elections in 2011. Of course, some have now given up one seat or the other, but it is important to ensure that double-jobbing ceases permanently to be a feature of political life.

Over the years, many Members have served with distinction in the House of Commons and at the Assembly. While the institutions in Northern Ireland were not stable, it was understandable that double-jobbing was a feature of political life. But times have changed; the stable operation of the Assembly seems set to continue. Being an MLA is now a full-time job and it is therefore no longer appropriate for dual mandates to continue.

When the Fixed-term Parliaments Bill was debated in late 2010, concern was expressed in Scotland and Wales that a general election would overshadow the devolved one and cause voter confusion if held on the same day. The decision was taken in early 2011 to extend the terms of the Scottish Parliament and Welsh Assembly to avoid their elections coinciding with a Commons election. As regards Northern Ireland, my noble and learned friend Lord Wallace indicated during the course of the debate on the Fixed-term Parliaments Bill at that time that similar changes for the Northern Ireland Executive would be considered following the triple poll of May 2011. The Bill brings the position in relation to the Northern Ireland institutions into line with the approach in Scotland and Wales. By providing for a fixed five-year term for the Assembly, it will also permanently decouple Westminster and Assembly elections.

The Bill also makes changes to give the Justice Minister the same security of tenure as the other Executive Ministers. This is in response to a request from the First Minister and Deputy First Minister that followed inter-party discussions, after which the Assembly agreed the permanent method of selecting a Justice Minister. It is vital for the continued stability of the Northern Ireland institutions that the Assembly is able to elect an individual who commands cross-community support to the post of Justice Minister and that the allocation of ministerial posts between parties thereafter is fair. I hope that all Noble Lords will be able to support the changes set out in the Bill to achieve this.

Clause 6 gives the power to the Assembly to reduce the number of MLAs itself, subject to consent from Westminster. Unfortunately, it has not been possible to secure agreement among the parties on an actual reduction, but we hope that agreement will be forthcoming. Many now take the view that Northern Ireland has too many elected politicians. Long-awaited reforms of local government structures are addressing that level, but there is also clearly scope to reduce the size of the Assembly. To allow the reduction to take place without further primary legislation, the Bill makes this matter reserved, meaning that the Assembly could legislate on this matter, with the consent of the Secretary of State.

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This Bill also recognises that progress has been made in Northern Ireland that makes it appropriate for the Government to consider whether the Assembly and the Executive might take the lead on issues that have previously been excepted matters. The relationship between Stormont and this place is maturing, and the Executive are taking the lead on Northern Ireland’s future. In this context, we believe it right that we make provision that opens the way to devolving functions relating to the Civil Service Commissioners for Northern Ireland, the Northern Ireland Human Rights Commission and the District Electoral Areas Commissioner. By placing these matters in the reserved category, the Bill would enable devolution to take place, following a full consultation, a cross-community vote in the Assembly, and votes in both Houses here. The Government would also be ready to consider devolution of the Secretary of State’s appointment responsibilities for the Equality Commission. We hope to begin consultation on these issues shortly after Royal Assent.

The Bill also makes a number of other important, but more minor provisions, in relation to equality duties, court rules and electoral registration and administration, among others. We want to give effect to recommendations by the Electoral Commission and Chief Electoral Officer to improve the conduct of elections in Northern Ireland, and to reduce the special measures that have been applied to Northern Ireland in respect of elections, recognising that, while we must always be vigilant, past concerns about electoral fraud have been ameliorated.

The measures in this Bill do not make the kinds of sweeping changes to government in Northern Ireland that we have seen when considering Northern Ireland matters in the past. But although the changes made in the Bill are not radical, they are important. They would improve the functioning of Northern Ireland institutions and the way in which they function; they would open the way to changes in the powers of Stormont vis-à-vis Westminster; and they would improve democratic accountability and strengthen the electoral system. I hope that this Bill will play its part in helping to address the challenges faced by today’s Northern Ireland, and I commend the Bill to the House. I beg to move.

7.49 pm

Lord McAvoy (Lab): My Lords, I thank the Minister for her explanation in moving the Second Reading.

As was stated in the other place, this has been a momentous year for Northern Ireland and is an appropriate time to bring forward this Bill. With the visit of President Obama to Belfast and the G8 summit in County Fermanagh attended by the Heads of Government, Northern Ireland was on the world stage, and these events were a great boost to morale throughout the community. Two thousand young people from schools across the whole of Northern Ireland were given a vision of the role that they can and must play in the future of Northern Ireland. President Obama’s speech was inspirational not only to those present in the Waterfront Hall but throughout Northern Ireland. The G8 summit worked out very well and it is only right to congratulate the Prime Minister and the Secretary of State on their vision in locating such an important

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international event in the magnificent location of Lough Erne in County Fermanagh. I declare a personal interest in that my maternal grandmother came from the Enniskillen area.

Noble Lords: Oh!

Lord McAvoy: I will not say where my paternal grandfather came from.

The whole of the Northern Ireland community can be proud of the way that the G8 was organised, including especially the co-operation between the PSNI, police forces in the UK and An Garda Siochana, which resulted in protests being facilitated in an orderly way. The summit was a success and a source of pride in the United Kingdom and the island of Ireland. That is the background to this Bill—one of success and not confrontation.

We are all aware that danger remains and there is a lot to do. The flag protests testify to that, and the activities of dissident republican groups remain a severe challenge to the peace process. We can all be grateful for the work of the various security services in making sure that the peace process continues. The Opposition are committed to supporting the Government in a bipartisan way, where it is possible, and we will work very hard to do that. We also have a duty and responsibility to hold the Government to account when we disagree.

As an Opposition, we have to state that there is some disappointment attached to the Bill, not because of what it contains but more to do with the issues that are not dealt with. The use of the word “miscellaneous” is unfortunate as it gives the impression that a number of minor issues are being bundled together and dealt with. The Bill’s provisions have been discussed within the Northern Ireland parties and received general but not universal support. In principle, we support the ending of dual mandates; the extension of the Assembly’s term—temporarily and then permanently; giving security of tenure to the Justice Minister and devolving power on the size of the Assembly. We want to move to full transparency and accountability in political donations. Clearly, we will look at the detail of all the proposals in Committee, but by and large they make sense. However, the Minister will know that the Assembly and Executive Review Committee at Stormont is looking at the size of the Assembly, the number of executive departments, designation, the composition of the Executive, and provision for opposition. These are difficult and sensitive issues. The principles of power sharing and inclusivity are fundamental, but there is an acceptance that the system could be improved and there are demands for more accountability and more rigorous scrutiny of the Executive.

The previous Secretary of State last year launched a review of the operation of the Assembly during a speech in which he criticised the Assembly and the Executive. Vernon Coaker said at the time that that criticism was largely unwarranted and unnecessary and suggested that the Government work in partnership with the Executive and the Assembly to look at how they and the Northern Ireland Office could work more effectively, individually and collectively. To be fair to the current Secretary of State, she has taken an approach

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more in line with that thinking. However, Vernon Coaker worried that in some respects she has gone too far the other way and has not engaged with some of the issues. Vernon Coaker also said that devolution should not mean disengagement. The Bill gives the House a chance to put its views appropriately and constructively and we hope that, as the Bill goes through its stages in the House, the Government will reflect on how they could take that opportunity.

A lot of progress has taken place on policing and justice. Security of tenure for the Justice Minister has to be welcomed. David Ford continues to do a good job in very difficult circumstances. One issue which I must raise is the National Crime Agency’s inability to operate in Northern Ireland. We regret that, and I hope that as we go through the Bill, we will support the Secretary of State in her attempts to persuade the Home Secretary to work with the Northern Ireland Executive to get the legislative consent necessary for the agency’s remit to extend to Northern Ireland. My noble friend Lady Smith of Basildon has experience of this issue and I hope that she will enlarge on it later in the debate.

On the electoral registration provisions, Westminster still has a role in helping to build a shared future in Northern Ireland that is inclusive of all communities. However, we would like to urge some caution. There needs to be a balance between ensuring that as many people as are entitled to do so engage in the democratic process while protecting against the kind of electoral fraud that undermines the process. The history of violence is very difficult and painful to speak about, but we have had many difficult and painful conversations in Northern Ireland and made progress, and we need to have a conversation on the history of violence. Is there nothing we can propose in the Bill that would help this process and take it forward? The Government say that there is no consensus on the way forward, and therefore no possibility of agreement. We fundamentally disagree, as Members of your Lordships’ House will know.

Dealing with the past—the legacy of the Troubles—is expressly a responsibility of the Northern Ireland Office. It cannot act alone, of course, and we have consistently said that we need a comprehensive and inclusive process with victims and survivors at the centre. The last time that Northern Ireland was debated in the other place, Lady Hermon asked what was meant by that. I repeat today that the Government, in partnership with the Irish Government, and in full co-operation with the Assembly, have a duty to lead but not to prescribe. There has to be consensus all the way. It is very difficult but we must try to create a vehicle through which these issues can be discussed and resolved. Of course that will take time, and it will not be easy, but the prize will be worth it. Victims and survivors are not afraid to talk about the past; the Governments should not be either.

Having said that, the hurt, anger and pain in Northern Ireland which are a legacy of more than 40 years of the Troubles—40 years of killing, bombing and other events—cannot be overestimated. We do not underestimate that legacy but a start has to be made some time, and we think that could be now. We are a little disappointed that the Government cannot find

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a way in the Bill to allow the issues of the past to be discussed and addressed so that consensus may emerge. The legacy of the past has to be dealt with and the Government must consider the impact that it has on the victims, the survivors and everyone else in Northern Ireland. However, despite those criticisms, we give the Bill our support.

7.58 pm

Lord Trimble (Con): My Lords, this is a worthy Bill and I welcome it, but when we go through it in detail I would like us to deal generally with devolved matters as opposed to excepted and reserved matters. During the interparty talks that preceded the agreement of 1998, I raised this issue on a number of occasions. We were then using the devolution provisions in the Government of Ireland Act 1920, with minor changes, as the basic starting point. However, I thought—and still think—that some matters which were devolved in 1920 were no longer suitable for devolution in 1998. Unfortunately, this was considered to be a side issue, but I do not think that is any longer the case.

In those discussions I gave two examples. The first concerned commercial law. I am not sure whether it was seriously intended in 1920 that there could be regional variations in the law concerning commerce, but it is not a valid idea now. Now, commerce operates within a single EU-wide market, and there is no scope for any regional variation and no real function for the Assembly. However, because of its 1920 Act inheritance, the Assembly must pass legislation identical to that enacted here to give effect to European directives. To have this matter no longer devolved would relieve Stormont of drudgery and add to its resources to do something useful.

The second example which would relieve the Assembly of even more drudgery concerns social security, and that is because of the operation of the principle of parity. That principle flows from the existence of the unified tax and benefits system, which is at the heart of being part of the United Kingdom. I do not have to remind folk in Northern Ireland that that parity was hard won and is of huge importance to poor and unemployed persons. The Stormont Parliament stuck firmly, step by step, to UK national welfare policies, whether it liked them or not, and resisted opportunist suggestions from some within its own ranks to depart from parity. The Northern Ireland Executive have done that until now.

I am not going to debate the advantage or otherwise of recent changes to social security because those changes are not relevant. What we are dealing with here is a matter of principle. I say to those in Belfast who are seeking regional variation that they have to bear in mind the consequences that would flow from it. If the door was open to regional variation, it could be a two-way street, and it could apply to other things as well. What comes to mind immediately are things such as public sector pay. Therefore, I suggest to the Northern Ireland Executive that they should close this Pandora’s box as quickly as possible.

If one favours, as I do, a nationally unified tax and benefits system, it does not make sense for part of that system to be under Westminster and part to be devolved

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to Stormont. Both parts should be together, which is the case with regard to Wales and Scotland, where welfare is not devolved. The anomaly could be tolerated while Stormont adhered to parity, but now, when Stormont has departed from parity, the matter should be addressed properly. I am sure that the Government here would prefer to sort things out quietly, but so far that has not worked and, as noble Lords will know, a financial penalty has been imposed. That is scheduled to increase but one cannot be sure that that will be the end of the matter.

Westminster has the power to enact its new welfare policies over the head of Stormont. However, if there is to be legislation, there is a case for transferring welfare to Westminster as an excepted matter so that this issue will not recur in the future.

There is an instructive example in another part of the Bill, and it was mentioned by the Minister. After devolution in Wales and Scotland, the national parties were against dual mandates. Originally there was a suggestion of legislation, but a voluntary approach has been adopted and that works after a fashion. However, with regard to Northern Ireland the voluntary route is being abandoned and this Bill legislates to put an end to dual mandates. Therefore, that, in a sense, is a precedent for what I am suggesting in this case.

If there is legislation to transfer welfare, I doubt whether there will be serious opposition at Stormont. I suspect that Sinn Fein has raised the issue of these welfare changes because of its embarrassment at the contrast between its bitterly opposing austerity in Dublin while appearing to implement it in Belfast. I suspect that privately it would be relieved if this burden were removed. I am not sure what the DUP’s position would be, but parity is a unionist position.

It may be objected that this is swimming against the tide when one considers what Calman has suggested regarding a fresh commission in Scotland amid talk of devo-plus and devo-max. However, while there have been suggestions in Scotland that some relatively minor welfare powers might be devolved in the event of a no vote, there appears to be no inclination to devolve welfare as a whole, and I would advise caution on that matter. I look forward to returning to this issue in Committee.

8.04 pm

Lord Alderdice (LD): My Lords, when the notion of a Northern Ireland Bill was first discussed a couple of years ago, the Secretary of State at that time undoubtedly considered that the centrepiece of the Bill which he hoped to see through would be the devolution of corporation tax. I suspect that most noble Lords and indeed Members of the other place will see this as a very modest Bill because of the failure to be able to include that measure. I perfectly understand the concerns about the impact that such a proposal might have on Scotland. However, I think that that is mistaken: the argument for the devolution of corporation tax in relation to Northern Ireland is wholly different because of the existence of a land border, and that fundamentally changes the economic questions and challenges. Therefore, when the Minister says that there are no fundamental changes in the Bill, she is absolutely right, and that makes it a fairly modest provision.

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The measure which I guess was not considered when the Bill was first thought of a couple of years ago concerned the position of the Justice Minister. That really emerged only at a later stage. I very much welcome the regularising of this situation. I know that my former colleagues in the Alliance Party found themselves having more Ministers than would be justified by their votes, although not by their abilities. However, in all fairness, they, like others, would feel that it is better to regularise this and to give a degree of stability to the position of the Justice Minister. In the context of Northern Ireland the Department of Justice is even more important than it is in any other state, although it is always an important ministry. Indeed, today, with the results of the Smithwick tribunal being announced, we recognise and recall that issues of justice and policing have always been central, difficult and contentious. I pay tribute to my friend and colleague David Ford, who has, I think, fulfilled this role with considerable distinction. It is not an easy role but he has worked hard at it and deservedly has gained considerable respect for the work he has done.

The rest of the measures are relatively minor and some of them are wholly unobjectionable from my point of view. I declare an interest as a serving member of the Committee on Standards in Public Life. A number of these measures were recommended by the committee. I suspect that the current chairman, the noble Lord, Lord Bew of Donegore, probably will have something to say about that. I welcome the transparency of donations, although I feel that that could go considerably further. I have always been a bit sceptical of the degree of caution that there has been on this question over quite a number of years. The dangers are a lot less than people have claimed in recent years. It may not have been the case quite some time ago. Double-jobbing also was raised by the Committee on Standards in Public Life. I welcome too the relatively minor electoral measures brought forward.

One of the questions raised by the noble Lord, Lord McAvoy, is whether this Bill might have been made a bit more substantial by some kind of legislation on dealing with the past. Dealing with the past is a very difficult issue. I notice the noble and right reverend Lord, Lord Eames, in his place and no one needs to tell him about the difficulties in dealing with that issue. I am exerting myself considerably in thinking about it. I am not persuaded that lawyers or legislation will necessarily be the right way to deal with what is fundamentally a question of difficulties about identity. I hope that we find a way forward and that Dr Haass and his colleague Meghan O’Sullivan can assist us in that way, although I am not at all sure that we need more flags. We probably have enough of those in Northern Ireland.

However, there are two measures about which I would express a little caution. First, on the size of the Assembly, I know that in times of austerity the need for efficiency and care about money is important but there was a reason why the Assembly was larger than was justified by the number of electors. It is about dealing with a range of issues from a range of perspectives and having an Assembly large enough to make it function. For example, the Welsh Assembly is much smaller but there are substantial complaints about its size.

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A number of people are proposing that we probably need something like 100 Members because certain fundamental functions need to be carried out to make an Assembly viable. I have a concern with the proposal that it should effectively be given, albeit with the say-so of the Secretary of State, to the two large parties to determine the representation size in the Assembly. I could see a temptation on those parties to reduce the numbers and the numbers in the electoral areas in such a fashion that those who vote for it might benefit most from it. One reason why past measures were accepted was that there was always a danger that those who were in power might use them to their own advantage, which is the fundamental problem in the Northern Ireland situation. It is one of the limitations of democracy in a society which is bedevilled by the problems we know well.

I understand what is being proposed and certainly my former colleagues in the Alliance Party have been very supportive of this kind of proposition. I believe that they are concerned about efficiency, reasonableness and so on. I remain somewhat concerned. I just want to flag that up. I hope that my noble friend and her civil servants and officials will think seriously about this issue. One could be creating a problem for the future.

The same thing applies to the human rights commission. It needs to be able to speak truth to power. It needs to be able to challenge authority. One of the dangers of repatriating arrangements and appointments to the commission might well be to create a similar kind of problem. Whereas there is a feeling on this side of the water that, “They are all grown-up boys and girls over there and they should just get on with things”, I am not sure that we are quite at that stage in Northern Ireland. There are still some difficulties that we need to find our way through before having that degree of confidence. So I flag up those concerns.

Of course, I support the general thrust of the Bill and wish it well. I hope, too, that it might not be too long before we come back with a subsequent Bill that would fill out the more substantial things that perhaps should have been here in the first place.

8.11 pm

Lord Browne of Belmont (DUP): My Lords, I welcome this Bill, which provides the opportunity to give the Northern Ireland Assembly, the Executive and Northern Ireland politicians the tools that they need to continue to move forward as agreement allows. This will allow Northern Ireland to maintain the process of maturing and evolving politically as trust and confidence is built. The greatest challenge that we in Northern Ireland face daily is rebuilding our society after many years of division.

After the longest period of stable government in a generation, politics is changing. It is right that the regulation in relation to political donations should be adjusted to reflect that change. My party, the Democratic Unionist Party, supports Clauses 1 and 2, which provide for greater transparency concerning donations made after 1 January with the important proviso that a final decision will be made only when the security situation in Northern Ireland allows it. Those who donated to political parties under the current procedure did so

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with a full expectation to full and perpetual anonymity. We support the commitment not to retrospectively publish the names of donors who have given in the past.

Northern Ireland of course is a special case and I am sure that noble Lords will appreciate that, in this instance, there is a requirement for it to be afforded special status which does not exist elsewhere in the United Kingdom.

Many individuals and businesses are to be commended for stepping forward during the bad old days of the darkest of times in the history of Northern Ireland. Despite great personal risk to themselves and their businesses, these brave persons donated to political parties, standing up for democracy. As we move forward to a more normalised society and as we attempt to put our troubled past behind us, it is correct that we move towards the system of donations employed throughout the rest of the United Kingdom. We support the normalisation process for political donations as is outlined in the Bill.

With regard to setting a timetable for the removal of anonymity, sole responsibility for this process lies with the Secretary of State for Northern Ireland. Under the Bill as currently drafted, in assessing the security risk and potential future risks to commercial companies, the Secretary of State is obliged to consult only with the Northern Ireland Electoral Commission. It is certainly right for it to be consulted regarding the mechanics of changes, but as regards the security situation, surely the Secretary of State should also consult with those who have relevant experience and specialised knowledge of the subject. We also believe that provision should be made for consultation with political parties as political parties will have to live with the consequences of reduced funding if the Secretary of State gets the timing wrong.

One issue of concern is that the Bill will not close the sizeable loophole that at present permits political parties based outside the United Kingdom to be bankrolled by donations made abroad. Unfortunately, the Government have not so far seen fit to close that particular loophole, which should not be made available to any political party. Under the Political Parties, Elections and Referendums Act 2000, political parties registered in Great Britain are permitted to accept donations only from UK residents and bodies. That is a solid and sound principle. The same Act extends to parties in Northern Ireland. However, parties registered in Northern Ireland may accept donations from the Republic of Ireland. Unfortunately, in this particular instance, an exception has been made in relation to Northern Ireland. Certain political parties have raised substantial amounts of money outside the jurisdiction, and that money is used to influence the political and electoral process within the United Kingdom. That is wrong and it is an area that should be looked at.

In relation to Clause 3, dual mandates served a useful purpose in Northern Ireland during the period of the Troubles. It was important to have political leaders present in both the Northern Ireland Assembly and another place when negotiations and decisions around Northern Ireland's future were being made. Given that the Troubles as we knew them are now over, we hope, the constitutional debate has been won

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and we now have the longest and most stable period of devolved government in a generation, it is clear that dual mandates are something that have naturally come to an end. My party, the Democratic Unionist Party, has been actively phasing out dual mandates for a number of years and by 2015 all our dual mandates will have ended. This legislation change simply underscores and re-emphasises what has been happening already on a voluntary basis.

While dual mandates do indeed need to be addressed, the anomaly of non-representation must also be brought to an end. It is time for those persons from Northern Ireland elected to the other House to make a decision. If they want their expenses and office costs, they need to demonstrate that they are doing the work. That means taking their seat. They are free not to take their seat if they so wish. However, the situation that exists where people do not take their seat but are allowed to claim expenses must end. The issue of non-representation while still claiming expenses is an affront to democracy.

Regarding Clause 6, there is broad consensus within Northern Ireland that there should be a considerable reduction in the size of the Assembly. As Northern Ireland moves towards a more normalised society, this should be reflected in a more proportionate legislature. As the party that has most consistently sought to improve Assembly structures, we believe that it is right and proper that the Government should change the Northern Ireland Act 1998 to allow determination of the size of the Assembly to be a reserved matter. That will allow the Assembly to legislate for themselves following consultation and agreement with the Secretary of State.

However, an important point that could arise from the reduction in numbers in the Assembly is that, as it stands currently, a petition of concern requires 30 signatures. If the Assembly were to be reduced to 90 MLAs or fewer, as would be my preference, it would clearly be right, proper and sensible to reduce the number required to sign a petition of concern. This debate should take place between the parties of Northern Ireland at the same time as a discussion on the reduction of MLAs. Thus, I believe that the Bill should be amended to make petitions of concern a reserved matter upon which the Assembly may legislate following agreement.

I also welcome Clause 7, which will bring Northern Ireland into line with the rest of the United Kingdom. Holding elections for the Assembly and the other House on the same day leads only to confusion and does not allow for the issues pertaining to each body to be properly debated and considered. This change has been legislated for already in Scotland and Wales and is welcome for Northern Ireland as well. There is unanimity of support for the changes proposed in respect of the appointment of the Justice Minister. Those changes would permit that appointment to become normalised within the d’Hondt system.

As regards changes to the reform of electoral registration and voting, I welcome any proposals that will improve and simplify the current process. It is very important to compile an accurate and complete electoral register and I am glad to see that there has been a good uptake of people registering for voting, although some areas still need more work.

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I welcome this Bill: it addresses some incredibly important matters. As I have mentioned, I wish that it had contained further provisions concerning political party donations and, in particular, the loophole regarding donations from outside the United Kingdom; but I have no doubt that we will turn to that issue some other time. It is to be welcomed that elections for the Northern Ireland Assembly have now been brought into line with those for Scotland and Wales. I welcome the new arrangement in place for the Minister of Justice and the Assembly’s power to reduce the number of MLAs, which we certainly want to see. It is clear that there are far too many Assembly Members in Northern Ireland and they need to be reduced.

I recognise that there are many other issues that need to be debated and for which provision needs to be made. I hope that after the talks with Dr Richard Haass and further consideration in the Assembly and Executive Review Committee, we will be in a position to come forward with some consensus on these issues and debate them further. I believe that the Bill will help to keep politics moving forward in Northern Ireland and improve the working of the devolved Administration. Finally, in reply to the point made by the noble Lord, Lord Trimble, the DUP is fully in support of parity.

8.22 pm

Lord Brooke of Sutton Mandeville (Con): My Lords, I think this is the first time since I came to your Lordships’ House a dozen years ago that I have followed a Cross-Bencher who in Northern Ireland is a member of the Democratic Unionist Party. The noble Lord, Lord Browne of Belmont, has spoken well on this thoroughly useful and comparatively tidy Bill.

The Library’s briefing pack identified this Bill as the first piece of constitutional legislation in Northern Ireland that has undergone recent examination by Parliament without a background of crisis. During the pre-legislative scrutiny of this Bill, Lady Hermon MP even elicited from Raymond McCartney, a Sinn Fein MLA, that he did not see any reason why Sinn Fein would not respond to an invitation to give evidence at Westminster, dependent on the context. This was the first evidence from Sinn Fein to a Westminster committee given in public.

That is not to say that one can only have a useful measure in less critical times. A particularly striking instance of that was the Electoral Fraud (Northern Ireland) Bill, carried through your Lordships’ House early in the new millennium by the late, great Lord Williams of Mostyn, who, effectively, completely changed the Bill between Second and Third Reading, to its great improvement. My own absorption in Northern Ireland detail has diminished during the past score of years; but I am batting at number six among the 11 initial speakers in this Second Reading debate, which makes me its fulcrum and an apposite place to make the sort of remarks the chorus makes in a Greek tragedy.

I like the format of the Library’s briefing pack and I am delighted that the Northern Ireland Affairs Committee is now used to give pre-legislative scrutiny to new Bills. That House of Commons committee,

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which I chaired during the 1997-2001 Parliament, did not exercise that power, though we did, after ten years, review the working of the Fair Employment (Northern Ireland) Act 1989. Ken Livingstone, then an MP, who served on that Select Committee before he resigned to contest the mayoralty of London, suggested the review and agreed at first that it should be delayed until the end of 10 years. When we reached the time for the review, he acknowledged that he had originally suspected the legislation to be simply a sop to American critics, but that he now agreed it had made a real beneficial difference.

My only unease about the pre-legislative scrutiny was that it contained 29 recommendations whereas the Government’s response—they claimed that they had addressed each recommendation, as indeed they had—said that the report contained 24. On a day when the Government has made a Statement on, inter alia, UK arithmetic, the Northern Ireland educational establishment can still teach its colleagues in Great Britain something.

Having myself approved the title “National Lottery etc. Bill” in 1993, I suppose it is churlish of me to regard “Miscellaneous Provisions” as an inadequate substitute for,

“measures to improve the operation of the Northern Ireland Assembly”,

and separately,

“donations and loans to Northern Ireland political parties”.

Those were the subjects of consultations by the NIO in 2012 and 2010 respectively, which underlie the Bill and which both have a fine 17th-century timbre. My locus is all the more insubstantial to make these comments when I know even less about d’Hondt than I do about the Duckworth-Lewis scoring method in limited-overs cricket matches. Selfishly, I must say that I hope amendments about d’Hondt will not trouble us in Committee. As it is, there is clear evidence of progress on the size of the Assembly, the dual mandate and the transparency of donations—even if history takes a meandering course and it is less well known than it should be that there was a fall-off in Irish-American donations after Mrs Thatcher gave authority for the United States Air Force to fly bombing raids from British airfields to Libya in the mid-1980s, when France and Germany had declined to do so.

I profoundly welcome the Bill’s attention to detail over the year 2016, not just because of the centenary of the Easter Rising but because of that of the opening salvoes of the Battle of the Somme. I had no role in the Anglo-Irish agreement, the Downing Street declaration, the IRA’s ceasefire in August 1994 or the Belfast agreement, but I did have a role in the 75th anniversary of the first day of the Battle of the Somme. I represented the Cabinet on behalf of Her Majesty’s Government, accompanied by the late Alan Clark, who was representing the Ministry of Defence. The noble Lords, Lord Bannside and Lord Molyneaux, were also present. It was a memorable day, not least because of accidents in the arrangements on the battlefield in both the morning and the afternoon.

In the morning, the local Catholic priest was passed over for his planned prayers, which were then taken at the end of the service at the Lutyens memorial. In the

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afternoon, under a light but wetting rain at the commemoration of the 36th (Ulster) Division at Helen’s Tower, mishaps were happily overcome. The first happened when the Minister from the Ministre des Anciens Combattants, representing the French Government, having returned to Paris after an excellent local lunch, was therefore not available to take up the tray of fleur-de-lys, which were refused in turn by the lady Mayor of Thiepval—population 86—and the British ambassador and were eventually accepted by me. The second was because of the ambiguity in a sentence in the service sheet to the effect that a piper, “will play a lament. Wreaths will be laid”. The latter phrase could have made the actions either simultaneous or consecutive.

The truly memorable event of 1 July 1991 was that, back in Belfast, the inter-party talks of that summer continued under the chairmanship of my noble friend Lord Mawhinney, who during the day negotiated an agreement that the talks had now run their course and should be brought to a gentle close. It was agreed that the close should be temporary and that the gentleness should bind everyone not to get into the blame game, so that the talks could be peacefully resumed in due course, as indeed they were, to the long-term benefit of the peace process. If useful Bills go well, the climate improves and we must hope that this is true this time too.

8.28 pm

Lord Shutt of Greetland (LD): My Lords, I have to follow that slot. I thank my noble friend Lady Randerson for explaining the Bill to us. For me, the starting point in considering the Bill is, indeed, the Belfast agreement of 1998, which was of course endorsed by 69% of those who voted in that May 1998 referendum. It is perhaps right that we are considering this 15 years on. We are looking at the revision of two Acts of Parliament —the Northern Ireland Act 1998 and the much earlier Act, the Northern Ireland Assembly Disqualification Act 1975.

I support much of the miscellany that is before us in connection with the transparency of donations and loans to political parties, the ending of the dual mandate and the new method of appointing a Justice Minister. But I would like to highlight one or two areas of reservation. I am concerned about the size of the Assembly. The Bill suggests that this could change, and we have heard noble Lords speak about reducing the number of Members in a constituency from six to five.

I looked at the results of the most recent Assembly election. Of course, in looking at results one is not to know exactly how people would behave if there were only five elected rather than six. However, after studying that election, it is my view that the losers would not be the DUP or Sinn Fein but other Members of the Assembly, and there would be fewer people from minority causes serving in the Assembly. That would result in a loss of plurality, which is embedded in the Belfast agreement as to how Northern Ireland should go forward. Indeed, if we were to reduce the number from six to four, it would be even worse. If there were to be reductions under the present system, I would sooner reduce the number of constituencies from 18 to 12 and stick with the six Members.

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One also has to take into account the fact that there will be a reduction in the number of those who serve in local government—it seems that the legislation is there for 2015. The folks in Northern Ireland would be well advised to think through what that will mean in terms of the number of public representatives who are available to serve the people there. I caution against that and wonder whether that clause ought to be supported in the Bill.

The Northern Ireland Assembly Disqualification Act 1975 has not been referred to by anyone else but I would like to refer to it. It is interesting that it sets out those who are disqualified. Of course, those who are disqualified are justice officers, and there are 17 different sorts of justice officer specified; there are also civil servants, Armed Forces, police, national criminal intelligence people, the National Crime Squad, any member of a legislature of any place outside the Commonwealth, and other offices in Parts 2 and 3 of Schedule 1.

There are 105 offices listed in Part 2 and 136 in Part 3. For example, if you happened to be a member of the Football Licensing Authority, which is in Part 2, you are not able to stand for the Northern Ireland Assembly. If you are chairman of the Plant Varieties and Seeds Tribunal, you are not able to stand for the Northern Ireland Assembly. Northern Ireland is quite a small place and if you think of those who are serving on these 241 bodies, you are reducing the gene pool from which candidates can come. I think that needs looking at.

If this issue is not looked at in itself, it can be looked at in another way. The Minister will be aware that there was a little local difficulty in Wales a couple of years ago in terms of people standing for the Welsh Assembly and the problems that were caused. There could well be a situation where on nomination day you could stand down from the office of profit, and if you are not elected you resume after polling day. Of course, the specific reason that I am able to speak on this is that the Civil Service Commissioner for Northern Ireland is to be so listed, so there are 242 rather than 241 appointments that exclude people from standing.

As I said, it is important to look back at the Belfast agreement. Strand One of that agreement sets out:

“A consultative Civic Forum will be established. It will comprise representatives of the business, trade union and voluntary sectors, and such other sectors as agreed by the First Minister and the Deputy First Minister”.

Furthermore, Clause 56 of the Northern Ireland Act 1998 sets out:

“The First Minister and the deputy First Minister acting jointly shall make arrangements for obtaining from the Forum its views on social, economic and cultural matters … ‘the Forum’ means the consultative Civic Forum established in pursuance of paragraph 34 of Strand One”.

Where is the forum today? It is not there. I do not know whether legislation will help, but again this is about plurality—about everybody being in this together for Northern Ireland. We should look again at that Belfast agreement. That is the test that we have as we take this Bill into Committee. Is there anything else that needs adding to the miscellany that is before us? Of course, I welcome the Bill, but I wonder whether there are some changes that we should be making.

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8.36 pm

Lord Empey (UUP): My Lords, as we discuss this Bill this evening, we have to measure its provisions against the strengths and weaknesses of devolution as it has operated now for nearly 10 years. Do these provisions help or do they largely ignore developments and avoid the many problems that need to be resolved?

It is true that Northern Ireland has progressed in the years since the Belfast agreement was ratified. I say to the noble Lord, Lord Shutt, that the percentage in the referendum was 71.2%, if I recall correctly. As has already been referred to, the visit of the President Obama and other world leaders ahead of the very successful G8 summit held in County Fermanagh in June signified just how far the Northern Ireland political process has come after many false starts. The noble Lord, Lord McAvoy, indicated his antecedence from that district—it is as well that that information was not freely available when the Prime Minister took his decision to go to County Fermanagh—and I join him in saying to the Prime Minister that he took a very brave decision which put the Province on the world stage in the most favourable possible circumstances.