House of Lords
Tuesday, 16 December 2014.
2.30 pm
Prayers—read by the Lord Bishop of Bristol.
Dog Licensing
Question
2.37 pm
To ask Her Majesty’s Government whether they have any plans to reintroduce a dog licensing fee.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley) (Con): My Lords, we have no plans to reintroduce the dog licence. The previous dog licensing scheme ceased in 1987 because it cost more to run than it took in revenue, due in part to the low compliance rate of around 40%.
Lord Hoyle (Lab): I thank the Minister for that reply, but I am sure he will agree with me that this is probably the right time to raise this Question, particularly when people get a dog or a puppy for Christmas, then find it very demanding and turn it out at a later date. I remind the noble Lord that in 2010 70% of those canvassed favoured a return to a dog licensing scheme. Does he know that there is one in Northern Ireland? It functions very well and almost 100% of dogs are microchipped? Dog wardens have more control over the people who own dangerous dogs. Why cannot we follow the example set by Northern Ireland?
Lord De Mauley: My Lords, I know that the noble Lord is a staunch campaigner on doggie matters. What we are doing—he referred to this—and which goes a long way to achieving what people want from a licensing scheme, is introducing compulsory microchipping under which the record of a dog’s ownership will be maintained on a database.
Baroness Oppenheim-Barnes (Con): My Lords, does my noble friend not agree—especially as it comes from someone he would describe as a doggie person—that microchipping is particularly important where dangerous dogs are involved, such as dogs listed in the recent Dangerous Dogs Act?
Lord De Mauley: My noble friend is absolutely right.
Lord Renton of Mount Harry (Con): Following on from what has just been said, may I say how delighted I am at what I have just heard the Minister say? It has always seemed to me that there are those who particularly need dogs and who love them dearly. They go out and buy food for them and take them to the vet; the dog is their regular company. I declare an interest; I have a lurcher who is five years old. If I fall asleep after lunch he always wakes me up precisely at 3.30 pm. That shows what a good dog does.
Lord De Mauley: My noble friend has given me the opportunity to declare an interest as a dog owner.
The Lord Bishop of Chester: My Lords, I am one of those who wear a dog collar in this House—and for the privilege of doing so I have to be licensed. But as far as I am aware, no fees have been paid. Might I suggest that enough is enough?
Lord Mackenzie of Framwellgate (Non-Afl): My Lords, the right reverend Prelate has stolen my thunder, in a sense. I was going to ask: because of the increasing number of dangerous dog incidents, would it not be worth having a look at licensing the owners?
Lord De Mauley: The noble Lord raises an important point. This is why we have legislated this year to tighten up on the dangerous dogs legislation. Now is not the moment to go into detail, but he has a very important point and the new legislation goes to the particular problems that have arisen in recent years.
Lord Redesdale (LD): My Lords, following on from that point, this is a time of year when the number of postal workers attacked by dogs rises quite considerably. We should not underestimate the number of hospital admissions that also take place due to dangerous dogs. Having campaigned on this issue for a number of years, I was encouraged when the Minister said that the Government were looking at further measures to link the owner to the dog through a microchip. Will he say what measures they might well bring forward to reduce the number of dog attacks?
Lord De Mauley: My Lords, we have worked with the Post Office, Royal Mail and the unions on the legislation that went through this year. Largely, they were extremely happy with what we did and are very pleased that microchipping is coming in.
Lord Lexden (Con): Does my noble friend agree that perhaps in retrospect he was a little dismissive of our long-standing and much loved dog licensing scheme? Disraeli introduced it in 1874 and the cost—7s 6d—was exactly the same 113 years later. Of how many government schemes can this be said?
Lord De Mauley: My Lords, perish the thought that I should be dismissive. My noble friend put his finger on the problem, which was that the price had not gone up and therefore it became uneconomic to continue the scheme.
Lord Harris of Haringey (Lab): My Lords, if it is acceptable to microchip dogs, why is it not acceptable to have a simple identity card system for humans?
Lord De Mauley: I think the noble Lord will accept that that is somewhat wide of the Question.
Baroness Fookes (Con): My Lords, I sought in vain to introduce a dog registration scheme allied to microchipping in the mid-1980s. Can my noble friend expand on exactly what the Government plan to do now? He referred to it only briefly.
Lord De Mauley: My Lords, with effect from April 2016, it will be a legal requirement that every dog is microchipped and that its owner’s details will be maintained on a database. What is encouraging is that since the time we announced the consultation, when about 58% of dogs were microchipped, the figure has already risen to 70%.
Lord Greaves (LD): My Lords, does my noble friend agree that compulsory microchipping actually achieves the main purpose of dog licensing, which is to know who the owners are of all dogs? Does he also agree that nuisance from dogs, on the street in town centres or wherever, requires quite intensive action by local authorities, which they are increasingly unable to provide because of the draconian spending cuts that are being enforced on them?
Lord De Mauley: I agree with the first half of my noble friend’s contention. In terms of addressing the second half, that is why we introduced the measures that we did in the Anti-social Behaviour, Crime and Policing Act, which we explained in a manual to authorities to make it easier for them to enforce action against irresponsible owners of dogs.
Abortion (Sex-Selection) Bill
Question
2.44 pm
Asked by Baroness Knight of Collingtree
To ask Her Majesty’s Government what action they intend to take following the First Reading of the Abortion (Sex-Selection) Bill in the House of Commons on 4 November.
The Parliamentary Under-Secretary of State, Department of Health (Earl Howe) (Con): My Lords, abortion is traditionally an area where there is a free vote on Private Members’ Bills. We have made it clear on numerous occasions that abortion on the grounds of gender alone is illegal. We take this issue very seriously and will continue to monitor birth ratios and consider any evidence that comes to light.
Baroness Knight of Collingtree (Con): My Lords, did my noble friend note that at the end of the First Reading debate on the Bill 181 MPs voted for it and only one voted against it and the tellers counting the vote against insisted that their votes be counted in favour of the Bill? Does he consider that this indicates acceptance of the evidence that abortion for gender reasons is going on and is causing very grave concern? Even a Minister saying in this House that this is illegal does not make it so: only a parliamentary Bill can do that. If gender equality means anything at all, surely the protection of the lives of baby girls is a matter of urgency.
Earl Howe: My Lords, the legal position is not in doubt. It is illegal to abort a foetus based solely on its gender. The Abortion Act states that two practitioners have to be,
“of the opinion formed in good faith”,
that the woman had grounds for an abortion. It is for doctors, in line with any guidance from their professional bodies, to satisfy themselves that they are in a position
to give the opinion and to defend it if challenged. We refreshed the guidance in May of this year to make the position crystal clear.
Baroness Thornton (Lab): My Lords, anyone who seeks an abortion on the basis of wrong gender is perpetuating a practice that is not only morally repugnant but illegal, as the noble Earl said. Sex-selection abortion is banned in the UK under the Abortion Act 1967. Does the noble Earl agree that because this practice happens in certain places in the world it may be taking place illegally in those communities in the UK? What are Her Majesty’s Government doing to identify whether this is the case?
Earl Howe: My Lords, our latest analysis of data by country of birth and ethnicity, which we have done for a second year running, found no evidence of sex selection taking place in the UK. Without exception, the wide variation in birth ratios was within the bounds expected. Any termination wilfully failing to meet the requirements of the Abortion Act will render those performing such procedures liable to prosecution under other legislation.
The Lord Bishop of St Albans: My Lords, given that many are concerned that we may not be protecting the most vulnerable in our society in this area, we need to understand the full extent of sex-selection abortion in this country, if indeed it is taking place. We need to collect and collate data. In the light of that, will the Minister tell the House what Her Majesty’s Government are doing to require the registration of the gender of foetuses using forms such as HSA4 or something similar so that we can actually have the evidence?
Earl Howe: My Lords, we are not moving in that direction partly because it is frequently not possible to determine the sex of the foetus after an abortion.
Lord Steel of Aikwood (LD): Does the Minister agree that sex-selection abortion is not just illegal, as he says, but totally abhorrent? Does he further agree that, as the BMA has said that in some rare medical cases it may be necessary, it is really up to his department to issue clearer guidance as the Bill to which my noble friend referred is a 10-minute rule Bill that is not going anywhere? It is up to the department to issue guidance on this matter.
Earl Howe: My Lords, we issued guidance in May of this year. It sets out the expectations around the procedure to be adopted by the two doctors involved: certifying that an abortion meets the criteria set out in the Act by considering the individual circumstances of the woman and how they reached their decision. The guidance also reaffirms our position that abortion on the grounds of gender alone is illegal.
Lord Alton of Liverpool (CB): My Lords, is the noble Earl aware that in China there have been 34 million abortions on the grounds of the one-child policy and that that has led to a distortion in the population of 34 million more males than females? Similar policies
in India using ultrasound scanning tests have also led to the targeting of little girls. Given that some of these policies have been financed directly or indirectly through development funds from our own Department for International Development, will the noble Earl undertake to speak to his colleagues in that department to ensure that no British taxpayers’ money is used for these purposes?
Earl Howe: I am sure that noble Lords around the House will form their own conclusions on the information provided by the noble Lord, Lord Alton, but I do give that undertaking.
Baroness Scotland of Asthal (Lab): My Lords, is not one of the difficulties being faced by the practitioner the fact that the guidance talks about “alone”, whereas we know that the psychological issues which arise among women who are put under pressure to have only boys may count towards the rationale that produces the abortion? What, if anything, do the Government intend to do to address this issue?
Earl Howe: My Lords, coercion and violence is of course an issue that is taken very seriously. Every woman who is being seen for a possible abortion has the opportunity to speak to a healthcare professional on her own. Those healthcare professionals are trained to be alert to the signs of coercion and violence and will take appropriate action.
Lord Anderson of Swansea (Lab): My Lords, it is clearly counterintuitive to say that there is no linkage of the practice to certain ethnic communities. As the practice is clearly illegal, can the noble Earl tell us how many prosecutions there have been, how many of them were successful, and whether he believes that any sanctions are sufficient?
Earl Howe: My Lords, to my knowledge there have not been any successful prosecutions in this area, but the decision by the Crown Prosecution Service not to prosecute two doctors involved in recent allegations led to the call for my department to reissue the guidance on this matter, which, as I have said, we did earlier this year.
Academies: Special Educational Needs
Question
2.53 pm
To ask Her Majesty’s Government what assessment they have made of the impact of academies on the education of children with special educational needs.
The Parliamentary Under-Secretary of State for Schools (Lord Nash) (Con): My Lords, the Academies Annual Report sets out how academies cater for vulnerable and disadvantaged pupils, including those with special educational needs. In 2013, the results for SEN pupils in primary sponsored academies improved at a faster
rate than in local authority maintained schools. In secondary sponsored academies, the results improved at a similar rate to those of local authority maintained schools. The results for SEN pupils in primary and secondary converter academies remained well above those for SEN pupils in local authority maintained schools.
Baroness King of Bow (Lab): I thank the noble Lord for that reply. Is he shocked by the refusal of some academies to admit pupils with special educational needs on the basis that they do not contribute to the,
“efficient education of other pupils”?
One such excluded SEN pupil was an 11 year-old boy with cerebral palsy who already had passed his maths GCSE with an A* grade and was a prefect and reading mentor at his primary school. Will the Minister take another look at academies’ admissions policies towards SEN pupils because if gifted pupils like the one I have described can be selected out, what hope is there for other children with special educational needs?
Lord Nash: I do not recognise the point that the noble Baroness is making. There is a clear appeals procedure in relation to SEN admissions which is followed most rigorously for all pupils with SEN.
Baroness Evans of Bowes Park (Con): My Lords, I declare an interest as the director of the New Schools Network. Under this Government, more than 1,800 new places have been created in free schools for children aged up to 18 with special educational needs. In light of the education, health and care plans, can the Minister tell us what consideration is being given to ensure that vulnerable young people up to the age of 25 have access to appropriate education to ensure that they are best prepared for their adult lives?
Lord Nash: My Lords, I am delighted to be able to answer my noble friend’s first question in your Lordships’ House. We know that some young people with SEN need longer to complete and consolidate their learning. That is why our reforms extend SEN provision to young people aged 18 to 25. Where needed, they can now get EHC plans from their local authority and receive the tailored support they need to remain in formal education. The code makes it clear that these plans should reflect their ambitions and enable them to make a successful transition into adulthood.
Lord Storey (LD): My noble friend will note that there has been an increase in the number of children with special educational needs in academies to 12.5%. However, in 16-19 academies there is no requirement to have a special educational needs co-ordinator—the person in charge. Therefore, how does he envisage that those pupils who are on an old statement—or now an education, health and care plan—can navigate the transition and be provided with the support that they need?
Lord Nash: The schools to which my noble friend refers must make clear what their offer is for SEN pupils. They must provide for SEN pupils, and they must publish their plans on their website very carefully.
The Countess of Mar (CB): My Lords, does the noble Lord agree that virtual academies provide a very valuable service for children who are unable to attend school by giving them online and blended learning? Perhaps I may also say how grateful I am to his department for incorporating this in the latest Bill.
Lord Nash: The noble Countess is quite right in that regard: for certain pupils, virtual learning is very appropriate.
Baroness Uddin (Non-Afl): My Lords, the Equality Act talks of the need to make “reasonable adjustments” for disabled people, while the Special Educational Needs and Disability Act enshrines the right to access “mainstream education”. Does the Minister agree that all children with special educational needs, such as autism, whether at an academy, a maintained school or a further education college, should encounter a curriculum and qualifications that are accessible and adjusted to their needs?
Lord Nash: I agree entirely with the points the noble Baroness makes, particularly in relation to pupils with autism.
Baroness Farrington of Ribbleton (Lab): My Lords, the Minister gave the figures for percentage improvements. I did not hear any comparative figures between different bands of schools. I wonder whether he could make those figures available. A 13% improvement may lead to an equality of opportunity or may merely improve things. While he is writing about that, perhaps he will let me and the House know how many of those special needs improvement figures relate to the growing number of special needs pupils with behavioural problems who, in my experience, parents fear are being excluded on the grounds of the efficiency of the school, which has been referred to.
Lord Nash: I will write to the noble Baroness in the terms she requires. I can certainly tell her that she will find the headline figure she is looking for very reassuring.
Lord Elton (Con): My Lords, in light of the importance for the progress of SEN children of the role of SEN co-ordinators, both by focusing the attention of any school in which they are placed on the needs of those children and in advising parents and children on appropriate placement, will the Minister tell us why, as I now understand is the case, some schools are exempted from the duty of having such a co-ordinator?
Lord Nash: I have already answered the point in relation to 16-19 academies but all other schools must have a SENCO, and we have funded more than 10,000 new SENCOs since 2009. We have funded more than 1,000 teachers to get postgraduate SEN qualifications. We are also investing heavily in the Achievement for All programme, which is reaching many schools, to help leaders improve their SEN provision.
Baroness King of Bow: The Minister said that he did not recognise the case that I set out of the disabled child who was rejected on the basis of his disability. That is a well known tribunal case. There are others like it, which I will write to the Minister with details of.
In the light of those cases, will the Minister review the Government’s policy in this area, as well as the fact that parents want redress at a local level when they cannot get their kids into school? They do not want to have to write to the Secretary of State.
Lord Nash: I will of course look at any points the noble Baroness writes to me about, but I think it is fair to say that this Government have done more than any other Government in recent generations to reform the whole provision for SEN, as demonstrated by the Children and Families Act that came through your Lordships’ House earlier this year.
CIA: Torture
Question
2.59 pm
To ask Her Majesty’s Government what is their assessment of the report prepared by the United States Congress on CIA involvement in torture.
Lord Wallace of Saltaire (LD): My Lords, the Senate committee’s account of the treatment of some detainees by the CIA is troubling. After 9/11, things happened that were clearly wrong. In Britain, we have made clear our determination to address allegations of UK complicity in the alleged mistreatment of detainees by others overseas. Her Majesty’s Government stand firmly against torture and cruel, inhuman and degrading treatment or punishment.
Lord Sheikh (Con): My Lords, I thank my noble friend for that reply. Will our Government undertake an independent, judge-led inquiry to examine possible British complicity in the programme of torture, secret detention and rendition? Will our Government also provide all suitable help and assistance to UK citizens and residents who have been detained to enable them to seek justice and remedies? I point out that Shaker Aamer is still in detention and needs help to be released. He has apparently been very badly treated.
Lord Wallace of Saltaire: My Lords, the Government set up the Gibson inquiry in July 2010. It was asked to produce an interim report when police investigations into a number of potential criminal charges were instituted in 2012. The Gibson committee’s interim report raised 27 questions for further investigation. They have been taken up by the Intelligence and Security Committee, which has now been working for a year with some additional staff on that inquiry. When that inquiry is complete, it will be for the next Government to decide whether a further judicial inquiry is necessary. On the question of Shaker Aamer, the Government are engaged at the highest levels for his release as a matter of urgency.
Lord Campbell-Savours (Lab): My Lords—
Lord Campbell-Savours: My Lords, I think that the Back-Benchers come first.
Lord Bach: My Lords, I thank the Minister for his original Answer to this Question. Will he set out whether Her Majesty’s Government believe that the Intelligence and Security Committee has the capacity and the resources that it needs to investigate these matters?
Lord Wallace of Saltaire: My Lords, I already said that the Intelligence and Security Committee has taken on additional staff to cope with this inquiry. I recognise that there are some considerations as to how open the report of the Intelligence and Security Committee will be. We have to wait to see how much it will be able to publish. I think we all recognise that this is all an extremely delicate area in terms of how much one can publish. I wish I could give an assurance that the next Government, whoever they may be, will do their utmost to ensure that as much as possible is published.
Lord Deben (Con): Does not my noble friend accept that, however delicate these matters are, there is widespread concern that this Government should show themselves utterly open on these issues? It is therefore very important that the answers to questions such as this are rather clearer, so that people can see exactly what we are doing to ensure that the reputation of this country should no longer be besmirched by such allegations.
Lord Wallace of Saltaire: My Lords, I entirely accept that. We are talking about allegations of behaviour undertaken between 2001 and 2005, in most instances. The Government are doing their utmost to ensure that they are fully investigated.
Lord Singh of Wimbledon (CB): My Lords, does the Minister agree that reacting to terrorism by brutally torturing suspects can induce revenge terrorism in a never-ending cycle? Will he condemn torture in those terms?
Lord Wallace of Saltaire: My Lords, the Geneva Convention condemns torture; that is very clearly set out in the Geneva Convention. We certainly condemn torture, and we will watch with interest the response of public opinion in the United States to the Senate committee’s report, including that within the Senate, where there are very divided opinions.
Lord Campbell-Savours: My Lords—
Lord Thomas of Gresford (LD): My Lords—
The Lord Privy Seal (Baroness Stowell of Beeston): The noble Lord, Lord Campbell-Savours, has been very patient. We will allow him to ask his question and then we should have time for at least one more noble Lord.
Lord Campbell-Savours: My Lords, does this difficult question not take us back to the problem that stands at the heart of the operation of the Intelligence and Security Committee? A witness before that committee who does not tell the truth cannot be held in contempt
of Parliament because that committee, while it is described as a committee of Parliament, is not a full Select Committee and does not enjoy parliamentary privileges.
Lord Wallace of Saltaire: My Lords, I take the noble Lord’s point and I encourage him to read the short 500-page executive summary of the US Senate committee’s report which has, from the summary of the summary that I have read, some rather shocking things in it. We very much hope that British officials were in no way associated with some of those actions.
Lord Avebury: How can my noble friend promise to address the claims of British complicity in acts of torture when those allegations have been redacted from the report, presumably at the request of the British Government themselves?
Lord Wallace of Saltaire: My Lords, the Government are clear that the question of the presence or participation of British officials in some of the acts that are alleged is one of the things that must be investigated.
Lord Goldsmith (Lab): My Lords, does the Minister agree that at the moment we have the worst of both worlds? The interim report of the Gibson committee was published, which listed a number of questions that were taken by the media as being findings and therefore we do not know what the truth is. I do not say this because I want to see anything hidden—quite the opposite, as I was one of those who called for that inquiry. However, at the moment we have the problem that things are believed to be true about the British security services, maybe about British people involved in political life, but because we have not got to the bottom of them and have not got a report, they are being condemned without it being properly investigated and heard. I am hopeful that the noble Lord will do what he has said, which is to make sure that the ISC, or whoever it is going to be, reports as soon as possible and we actually know what the truth is in the interests of everybody.
Lord Wallace of Saltaire: My Lords, we are all entirely clear that we need to get to the bottom of this and to spell out the involvement of British officials, in so far as it took place, as publicly as possible. I stress that will be a matter for the next Government. It is not therefore a partisan issue. We are all concerned about the reputation of Her Majesty’s Government.
Privileges and Conduct Committee
Motion to Agree
3.08 pm
That the 2nd Report from the Select Committee (The conduct of Lord Redesdale) (HL Paper 78) be agreed to.
The Chairman of Committees (Lord Sewel): My Lords, this report follows an investigation by the Commissioner for Standards into the conduct of the noble Lord, Lord Redesdale. The commissioner received a complaint alleging that the noble Lord, Lord Redesdale, breached
the Code of Conduct by not registering certain interests in the
Register of Lords’ Interests
and by registering certain other interests more than one month after those interests came about.
The commissioner considered nine allegations of non-registration and eight allegations of late registration. He upheld seven of the allegations of non-registration and six of the allegations of late registration. In respect of those findings, the noble Lord, Lord Redesdale, admitted to the commissioner that he had been in breach; he has corrected the register so far as it can be. In addition, the noble Lord, Lord Redesdale, drew the commissioner’s attention to a further interest which he had discovered he had neglected to register.
In accordance with paragraphs 129 and 130 of the Guide to the Code of Conduct, the Sub-Committee on Lords’ Conduct had to decide the appropriate sanction. The sub-committee recommended that the noble Lord, Lord Redesdale, be required to make a personal statement of apology to the House in terms approved by the chairman of the sub-committee. The noble Lord, Lord Redesdale, accepted the findings of the commissioner and the sanction recommended by the sub-committee and he did not appeal.
Paragraph 132 of the Guide to the Code of Conduct states:
“If the Member does not appeal to the Committee for Privileges and Conduct in the event of a complaint being upheld, the Committee reports forthwith to the House in the terms recommended by the Sub-Committee”.
I therefore report the findings of the commissioner and the sub-committee to the House. If this report is agreed today, the noble Lord, Lord Redesdale, will make his personal statement, which has been agreed in advance with the chairman of the sub-committee, immediately after the report has been agreed. I beg to move.
Personal Statement
3.10 pm
Lord Redesdale (LD): My Lords, I rise to apologise to the House for breaching the Code of Conduct. The Commissioner for Standards found that I breached the code on 13 occasions, with seven instances of non- registration of interests and six instances of late registration of interests. In addition, I drew the commissioner’s attention to an interest that I discovered during the course of his investigation I had neglected to register.
I fully accept the commissioner’s findings. I recognise that 14 instances of breach demonstrate that I have fallen significantly below the standards expected by the House. Although the commissioner finds that some of the breaches were minor and that there was no evidence of my attempting to evade the registration requirements, I accept that the accumulation of breaches shows inattentiveness on my part about my obligations under the Code of Conduct. I will be much more careful in future and will ensure that I register all my interests punctually. I deeply regret having breached the code and offer the House my sincere apology.
Mutuals’ Deferred Shares Bill [HL]
Mutuals’ Deferred Shares Bill [HL]
Third Reading
3.11 pm
Bill passed and sent to the Commons.
Implications of Devolution for England
Statement
3.12 pm
The Lord Privy Seal (Baroness Stowell of Beeston) (Con): My Lords, with the leave of the House, I will repeat a Statement made by my right honourable friend the Leader of the Commons.
“With permission, Mr Speaker, I would like to make a Statement on the Command Paper on the implications of devolution for England, which the Government are publishing today. The House will recall that on 19 September my right honourable friend the Prime Minister announced the establishment of a commission, chaired by the noble Lord, Lord Smith of Kelvin, to take forward the commitments to further devolution in Scotland made by all three UK pro-union parties during the referendum campaign.
On 27 November, after the publication of the Smith commission’s report, my right honourable friend the Secretary of State for Scotland announced to the House that draft legislation to implement its recommendations would be prepared by 25 January and presented in a Bill to Parliament following the general election. The Prime Minister also said that a new and fair settlement for Scotland must be accompanied by an equivalent settlement for all parts of the United Kingdom. This is a fundamental issue of fairness for all the people of the United Kingdom. Just as the people of Scotland will have more power over their affairs, so it follows that the people of England, Wales and Northern Ireland must have the opportunity to have a bigger say over theirs.
The Wales Bill has completed its final stages in Parliament, and the Secretary of State for Wales is leading a cross-party process to move towards a fair and lasting devolution settlement for Wales. The Northern Ireland Secretary is hosting talks on a number of issues, including reforms to make the devolved institutions work more effectively. Depending on progress, in particular putting the Executive’s finances on a sustainable long-term footing, the Government stand ready to introduce legislation to devolve corporation tax, with a view to seeing it on the statute book during this Parliament.
Today’s Command Paper covers proposals on decentralisation within England and proposals on English votes on English laws. It sets out the position of each of the coalition parties, just as the Command Paper on Scotland did for the three parties. We invited the Labour Party to submit its own proposals for publication, but it declined to do so.
The Scottish Secretary has been able to work in Scotland on a cross-party basis. The talks held by the Secretary of State for Wales have been on a cross-party basis. It is only on matters concerning England that the leadership of the Opposition is hostile to cross-party talks. However, the contribution to our thinking by leaders of local authorities, including from the Labour Party, has been welcome and constructive.
There has been a significant shift in where power resides in the United Kingdom in recent years. Since 2010 the Government have undertaken the most radical programme of decentralisation within England in a generation. In addition to the significant new powers for local communities, there are now five combined authorities, 15 directly elected local authority mayors, a metro mayor in London, and plans for a metro mayor to be elected for Greater Manchester in 2017. The Regional Growth Fund, growth deals and the Growing Places Fund have been made available to all local areas. This summer the Government set out plans to create a ‘northern powerhouse’ and consulted on Northern Futures. Taken together with what we are doing on science and transport infrastructure, this Government have the most ambitious and substantial plan for the north of England of any Government in decades.
Both the parties of the coalition wish to continue this major progress towards decentralisation of power in England, and their ideas are set out in the Command Paper. The Liberal Democrat Party called in the Command Paper for a process of ‘devolution on demand’ to be delivered through an English devolution enabling Bill, under which areas would be able to demand powers from Westminster and Whitehall from a menu of options. This would include many powers devolved to the Welsh Assembly, although the exact powers available would be subject to cross-government confirmation, and the UK Government would retain a list of reserved powers. In order to claim powers, a given area would need to demonstrate that it met tests around geography, population, competence, local democratic mandate, a fair electoral system and a transparent and accountable governance structure.
For our part, the Conservative Party wishes in the next Parliament to continue with the empowerment of neighbourhoods and parishes in England, as well as to see the type of arrangements being created for Greater Manchester agreed elsewhere. This includes a large further increase in neighbourhood planning, greater local accountability and use of direct democracy, such as local referendums on local issues. In addition, Conservatives want to work with local enterprise partnerships and councils to promote jobs and growth, to help local authorities join up different public services, and to work with local business to support jobs and improve quality of life locally. We strongly believe that localism must not be a way of imposing new taxation, and we believe that the Westminster Parliament is and should remain the English lawmaking body.
Decentralisation within England cannot on its own create fairness for England as a whole on policies decided at the UK level but which apply only in England. On the crucial question of the implications for England of devolution in the rest of the UK, fairness for all the people of the UK now requires this issue to be addressed decisively.
Devolution to other parts of the United Kingdom has created the situation in which MPs representing constituencies outside England may vote on legislation which does not affect their constituents, while English MPs are not able to influence these policies in other nations where they are devolved. Both coalition parties
believe that this so-called West Lothian question needs to be addressed, and have put forward their proposals in the Command Paper.
The Liberal Democrat Party believes that English MPs at Westminster should have a stronger voice and a veto over English-only issues. Its preferred method of addressing this would be for there to be votes for Westminster elections using the single transferable vote. However, accepting that there is currently no cross- party consensus for this—which is certainly true—they instead propose that the composition of those serving on any new stage, for example a ‘Grand Committee of English MPs’, should reflect the votes of the electorate in England. The Liberal Democrats also believe that measures which unambiguously affect England only, and which are not devolved below the Westminster level, should be subject to a new parliamentary stage before Third Reading or equivalent, composed of MPs proportionately representing the votes cast in England to allow them to scrutinise proposals and employ a veto if they so wish.
The Conservative Party believes that equalised constituency sizes remains necessary to fairness for all voters. We have set out three options for resolving the West Lothian question in the Command Paper. All of them represent a stronger and more binding version of ‘English votes for English laws’ than the work of the McKay commission, but all rest on the guiding principle set out by McKay, that,
‘decisions at the United Kingdom level with a separate and distinct effect for England (or for England-and-Wales) should normally be taken only with the consent of a majority of MPs for constituencies in England (or England-and-Wales)’.
The first option is to reform consideration of Bills at all stages, and was put forward by the noble Lord, Lord Norton of Louth, in 2000. All stages of legislation relating only to England, or only to England and Wales, would be determined by MPs from England or from England and Wales. The key advantage of this proposal is its simplicity and the absence of any need for any new stages in the legislative process.
The second option is to reform the amending stages of Bills, as proposed by my right honourable friend the Member for Rushcliffe in 2008. Under this proposal, all amending stages of legislation relating only to England, or only to England and Wales, would be determined by MPs from England and Wales. Committees would be in proportion to party strength in those countries. The key advantage of this proposal is that it allows MPs from England, or from England and Wales, to have the decisive say over the content of legislation while not excluding other MPs from other stages and not introducing any new stages to the legislative process.
The third and final option is to introduce a reformed Committee stage and legislative consent Motion, providing an effective veto. Under this option, the Committee stage of legislation relating only to England, or only to England and Wales, would be considered only by MPs from those parts of the United Kingdom. Report stage would be taken as normal by all MPs. An English Grand Committee would then vote after Report stage but prior to Third Reading on a legislative consent Motion. English or English and Welsh MPs would therefore be able to grant their consent to or
veto a Bill, or relevant parts of it. Such decisions would have the same status as those of the Scottish Parliament on devolved matters. The key advantage of this proposal is that it would give English, or English and Welsh MPs, a crucial say over the content of legislation and a secure veto over its passing, while not excluding other MPs from its consideration in the full House of Commons. The Conservatives and Liberal Democrats both invite comment and views on all the options in the Command Paper.
For hundreds of years, the constitutional arrangements of the UK have evolved successfully through taking account of the needs in each century and decade for the giving or withholding of consent. The pursuit of devolution in recent years has been based on the importance of establishing the consent of parts of the UK for the policies particular to them. The next stage of our constitutional evolution must involve that principle of consent being applied to all parts of the United Kingdom.
Whichever of these options is ultimately decided on must be clear and effective in producing fairness for the whole United Kingdom. The Government encourage debate so that this matter can be fully considered and resolved, for the long-term strength of the UK. It is an issue that too many people have avoided for too long, and that can no longer be put aside”.
3.24 pm
Baroness Royall of Blaisdon (Lab): My Lords, I am grateful to the Leader for repeating the Statement made by the Leader of the House of Commons. It is good to hear that the coalition is alive and well: this was an intriguing government statement with a series of options between the parties. I think it is rather a pick-and-mix coalition—but hell.
September’s referendum was momentous, not only for the fantastic turnout and the decisive way that the Scottish people voted to stay in the United Kingdom, but also for the way in which it unleashed a devolutionary vigour up and down the country. This is something that Labour, as a party with an unequalled record on devolution, embraces—and it is a debate that we seek to lead. We welcome Westminster further releasing its grip on the levers that run this country—and despite the Prime Minister’s 7 am jitters on the morning after the referendum, all sides of the Chamber will, I hope, welcome the fact that the vow to the Scottish people through the Smith commission is being delivered.
But this is only the beginning of the change that we need to the way in which the country is run. In England, cities and towns are demanding a greater say in the running of their affairs. Labour has responded to these demands, committing to introduce an English devolution Act in our first Queen’s Speech. This will involve skills, transport and economic development. In Wales, we will place Welsh devolution on a stronger statutory footing. It is also right that we look at how Parliament works, as more power is shifted away from Westminster—and yes, we do need to consider ways in which English MPs, or English and Welsh MPs, can have a greater say over legislation that affects only England, or only England and Wales.
What we must not do, only months after the Scottish people voted to keep our kingdom united, is allow our country to be divided by the back door. Nothing we do should jeopardise the future of the union. Last year the government commission led by Sir William McKay looked at this very issue. Its report included the option of a change in the way legislation is dealt with at Westminster: a Committee stage for only English MPs, who would scrutinise and amend legislation that applied only to England. We should look at Sir William’s approach involving an English—or English and Welsh—Committee stage, because it is right that English MPs should have a key role in considering such legislation.
We will study the Command Paper published today by the Government. But our criteria will not be what is in the interest of a political party, but what is in the interests of our country. Ultimately, the way we go about constitutional reform has to change; it must not be done for political advantage. The old “Westminster knows best” approach will not wash any more. Labour, like the Liberal Democrats, the Greens and others, is prepared to put aside tribalism and put our faith in a constitutional convention—a bold and new way of delivering political reform. This will not be made up just of elected representatives, but will give members of the public the loudest voice. The convention should consider the McKay commission approach of an English Committee stage. We hope that the Conservative Party will also support the constitutional convention approach, helping us to achieve the cross-party consensus that the convention idea merits.
Many questions arise as a consequence of the Statement, and today I will pose but a few. Does the Leader agree that it is no longer acceptable for long-lasting constitutional reform to result from deals done by politicians behind closed doors—and that a piecemeal approach to constitutional change for political advantage is also unacceptable? As Vernon Bogdanor said,
“the British constitution is not the private property of the Conservative party”,
Does the Leader agree that for reform to be successful, there must be consensus? I therefore ask, as I have done in the past: what are her party’s specific objections to a constitutional convention? We are all agreed that change is needed when it comes to laws applying only to England, or only to England and Wales, but as the Command Paper shows, there are several options available. Does she agree that a constitutional convention would be a much better way to consider and decide upon the best option, rather than partisan politicians?
In our debate on devolution on 29 October, the Leader said:
“There will be a time and a place for a constitutional convention”.—[Official Report, 29/10/14; col. 1204.]
I suggest that the time has now come, and I wonder whether the noble Baroness would agree. Noble Lords will know that Labour is proposing to devolve more than £30 billion to the cities and counties of England. I wonder whether the Government support this.
With regard to this House, does the noble Baroness agree that its future should be one of the issues considered by a constitutional convention, and that a democratic
second Chamber, drawn from the nations and regions of the UK, would be a means of addressing many of the challenges that result from devolution?
When it comes to constitutional change, we must consider the unintended consequences of our actions, and think through the way in which changes are interrelated and interdependent. This must not be a matter of quick fixes or political stitch-ups, but a considered, consensual approach. That is why it is our firm view that the constitutional convention should take this forward, as part of a wider package of political reforms.
3.30 pm
Baroness Stowell of Beeston: I am grateful to the noble Baroness, Lady Royall, for her response to the Statement. We want to approach this whole issue of devolution in a way that enables us to share some common ground. We were pleased that that was possible in Scotland and that all the pro-union parties worked together. All the parties—the Conservatives, the Lib Dems and the Labour Party—are committed to meet the commitment set out by the Smith commission.
As was made clear in the Statement that I repeated, we were very keen to have the Labour Party contribute to our Command Paper, which we published today, so that we could continue that cross-party approach. Therefore, it is a little surprising that the noble Baroness referred to our “behind closed doors” approach, given that the leadership of the Labour Party were invited to contribute to the process, but so far they have sadly declined to do so. However, that is not the case with many Labour leaders of local authorities in all parts of England. My right honourable friend the Leader of the House of Commons has met Labour leaders of local authorities from Birmingham, Cardiff, Glasgow, Leeds, Manchester, Newcastle, Nottingham, Sheffield and Liverpool over the past few weeks to talk to them and to hear what they have to say on further devolution within England following the Scottish referendum.
The noble Baroness referred to her party’s proposals to extend greater powers to cities and towns. We have done a tremendous amount during the lifetime of this Parliament to extend greater authority and autonomy to all parts of England. England is far more decentralised now than it has been previously, and is far more decentralised than Scotland and Wales.
The noble Baroness spoke about the McKay commission’s report and its proposals for English votes for English laws. As she rightly said, the McKay commission made several proposals, and the Labour Party is putting forward one of those as its preferred option. That is clearly worthy of consideration. However, since the McKay commission did its work, greater powers have been devolved to Scotland. Therefore, it is our view that we need to consider the current situation, which has led to both parties in the coalition putting forward something which goes beyond what is proposed by the McKay commission.
The noble Baroness mentioned a constitutional convention. The Command Paper sets out the arguments for a constitutional convention and the Government remain open to receiving ideas on it. However, the establishment of a constitutional convention cannot be used as an excuse for delaying what needs to be done now.
The noble Baroness also referred to reforms to the upper House. There was an opportunity earlier on in this Parliament for reforms to the upper House. Members of the opposition party—and, indeed, Members from other Benches in the other House—decided that that Bill should not come forward. Reform of the House of Lords should not be linked to something that is urgent, needs to be done now and addresses a fairness issue to do with English votes for English laws.
No one is arguing that the work of the Smith commission should be delayed for a constitutional convention. No one is suggesting that the work of the Silk commission should be delayed for a constitutional convention. Similarly, a resolution on English votes for English laws cannot be delayed for a constitutional convention. The issue of English votes for English laws must be resolved. There are some options now for resolving it; and it is right that we debate those options.
Baroness Royall of Blaisdon: Could I make it clear that we want the McKay commission’s proposals to be put forward into a constitutional convention? This is not the be-all and end-all, and we see what the noble Baroness and her party are doing as being strictly for political advantage. In terms of the constitutional convention, this is not the long grass. We want a time- limited constitutional convention that would look at all these things, not in a piecemeal way but in a proper and dignified way for the future constitution of our country.
Baroness Stowell of Beeston: I am a little bit baffled. A lot is happening in terms of Scotland, Wales and Northern Ireland, and the Opposition are not arguing that those changes should be delayed for a constitutional convention. Arising from the result of the Scottish referendum is the need for us to address an important issue, which is about English votes for English laws. That can be addressed quickly and there are some options for consideration. It comes off the back of several reports on the issue of English votes for English laws over many years. This is not about ruling out a constitutional convention or any other bigger issues that might arise in due course; but the issue of English votes for English laws needs to be addressed right now. It can be addressed and it should not be delayed.
Lord Wallace of Saltaire (LD): My Lords, we now have 20 minutes of questions. I remind noble Lords that we should have brief interventions and questions to enable the largest number of people to contribute.
3.37 pm
Lord Tyler (LD): My Lords, as the Statement reported, the Liberal Democrats made a positive contribution to the Command Paper before us, setting out clearly our plans to strengthen devolution within England, so that, for example, the people of Yorkshire and Cornwall could have proper assemblies with proper local legislative and fiscal powers, akin to those now available in Wales. Does my noble friend agree that the first priority should be decentralising and devolving power out of this building, and out of Whitehall, and then having a constitutional convention that could look at how different representative bodies in the UK could interact with
each other in those new circumstances and with the UK Parliament? Only then will the true, consequent remaining extent of the “English question” be clear. In other words, does she not agree that we should devolve power radically within England first, and worry about rearranging the Westminster deckchairs later?
Baroness Stowell of Beeston: This coalition Government have done a huge amount to decentralise within England. Much has been changed during our time in office. The key difference between the Conservative Party and the Liberal Democrats in terms of further decentralisation is that we, the Conservatives, support giving far more accountability and authority to people wherever they live, but what we do not support is the delegation of lawmaking out of Parliament. We believe that there should be one place for lawmaking in England—and that is Parliament.
Lord Elystan-Morgan (CB): My Lords, I respectfully invite Her Majesty’s Government not to panic in this matter. There are some 120 Members from Wales, Scotland and Northern Ireland, leaving some 530 Members from English constituencies. Therefore, first, does the noble Baroness agree that there is no immediate danger of English interests being mercilessly swept aside constitutionally? Secondly, will she undertake not to take any steps to create either an English Parliament or an English Parliament within a Parliament unless and until a full, detailed and mature study of the constitutional position has been conducted, thus avoiding some of the ludicrous matters which were brought before the House in the last four years?
Baroness Stowell of Beeston: We have no plans for an English Parliament. That is not contained in the Command Paper before us. We have options for addressing the very important issue of English votes for English laws, which has become more pronounced now that more powers have been devolved to Scotland. Clearly I listen very carefully to any advice that I receive from the noble Lord, but this matter has been around for a very long time. There has been a huge amount of thinking on it and we have now got to the point where we have some clear options, one of which we should implement.
Lord Foulkes of Cumnock (Lab): My Lords, will the noble Baroness answer one simple question? Why cannot a constitutional convention now be set up to look at matters in a coherent way instead of the piecemeal way set out in the White Paper?
Baroness Stowell of Beeston: I just do not accept the argument that the noble Lord puts forward. The point is that a huge amount of change is under way in Scotland, Wales and Northern Ireland. There is a single urgent issue in England that needs addressing. This is not about ruling out a constitutional convention in the future, but that should not delay us in addressing something that needs to be addressed straight away.
Lord Forsyth of Drumlean (Con): My Lords, does my noble friend accept that these proposals, together with the proposals for further devolution in Scotland, are regarded by many people outside this place as having been conceived in panic, delivered in haste and furthered by political expediency? Will she not therefore reconsider the Government’s view that there should not be a constitutional convention to look at this matter on the basis of consensus between the parties, which is the basis upon which we should make constitutional changes? The only beneficiaries of this approach have been the nationalists, who are surging in the polls, and this is not a moment to divide the unionists.
Baroness Stowell of Beeston: I shall try to make this as clear as I can. We are not ruling out a constitutional convention at all. There are clearly matters that some people would like to see addressed in a constitutional convention. We are saying that, in the light of greater devolution to Scotland, there is a need for us to address the issue of English votes for English laws. This is not being rushed into; Parliament has been looking at it for a very long time. We have some clear options, which we are inviting people to debate. We feel that that should happen without delay and that bigger issues beyond that should not be a reason to delay getting on with something that is very important to the people of England.
Lord Soley: The Minister does not understand the force of the argument for a constitutional convention, which is that by going on with this piecemeal approach, the Government are playing into the hands of the separatists. I want to see the United Kingdom stay together but this is not the way to do it. We need a constitutional convention and we need it soon in order to deal with relationships between and within the four parts of the United Kingdom. Working things out on the back of a fag packet plays into the hands of nationalists.
Baroness Stowell of Beeston: I understand the noble Lord very clearly and I hope that he understands me. I am saying to him that I disagree because a lot of change has already happened and is happening. No side of this House or of the other place is calling for those changes to be delayed for a constitutional convention. The Labour Party has been a part of the changes which have been made and which are going through in Scotland, Wales and Northern Ireland. There is a specific issue that we want to see addressed in England. We absolutely do not rule out a constitutional convention where other matters can be considered. I can see why it is important and that is why we are not ruling it out.
Lord Kilclooney (CB): My Lords, when legislation is approved in the other place from which Members of Parliament from Scotland and Northern Ireland are excluded and that legislation then proceeds to your Lordships’ House, will Northern Ireland Peers and Scottish Peers also be excluded?
Baroness Stowell of Beeston: No, they will not. No one in this House represents an area of the United Kingdom. We are all United Kingdom Peers; we do
not have representative responsibilities, so the change in the Commons will not affect the way in which we do our business.
Lord Elis-Thomas (PC): My Lords—
Lord Wallace of Saltaire (LD): My Lords, it might be appropriate to hear from a Welsh Peer and then we will come back to England.
Lord Elis-Thomas: My Lords, I am very happy for you to return to England as soon as possible. I have one simple question for the Government. It seems from some references in the Leader of the House’s Statement in the other place that he is inventing a new polity—a place called England and Wales. What is the constitutional basis of this place, if it ever existed in history, which I doubt, being a sort of cultural historian? Since devolution, it is very clear that every piece of legislation which appears before this House, or indeed within the devolved Parliaments, is defined according to its competence and its territorial application. Therefore, there is no place called England and Wales. Legislation is either for the United Kingdom, for England, for Northern Ireland or for Scotland. The Government must be clear about that. I do not wish to go back to the Tudor period.
Baroness Stowell of Beeston: I do not think that anybody is asking the noble Lord to go back to the Tudor period. As set out in the Command Paper, there are various points of detail that will clearly be discussed further before any changes are implemented in the way that the other place operates. A Bill, when it comes to this House, will be dealt with in exactly the same way as it is now.
Lord Lang of Monkton (Con): My Lords, there are many matters of constitutional importance on which consultation should take place. Certainly I favour consultation whenever possible. It has to be said that 15 years of constitutional devolution have led to an extremely unsettled position in terms of the integrity of the United Kingdom, possibly because there was not wide consultation and asymmetrical measures were being introduced. There is a burning need to rebalance the constitution of the United Kingdom; we cannot go on as we are. I welcome the proposals that have come forward from my noble friend and the fact that a range of options is included. That opens the case for further consultation, and I hope that the Labour Party will take part in that consultation. There is absolutely no reason why it should not. This matter stands on its own, and it is important to rebalance, in the interests of England and of the United Kingdom, the way in which we govern ourselves. I particularly welcome the reference to an English Grand Committee. I assure my noble friend that the changes we made to the Scottish Grand Committee in the 1990s demonstrated the almost infinite flexibility of such a body. It could play an important part in the future of government within England and, indeed, within the United Kingdom.
Baroness Stowell of Beeston: I am very grateful to my noble friend for all the points that he has made and for his ongoing constructive contribution to this process.
The Countess of Mar (CB): If I may correct the noble Baroness, there are in fact five Peers of Scotland in this House, all of whom are hereditary Peers, and I happen to be one of them.
Baroness Stowell of Beeston: The noble Countess is absolutely right. I was not trying to suggest that there are no such Peers here in this House. The point I was making was that Peers do not represent a particular part of the country. We are all Peers representing the public and the national interest at large.
Lord Richard: My Lords, with great respect to the noble Baroness the Leader of the House, what she is saying is that English laws should be made by English votes only in the House of Commons, and that once they come up to this House, which is also a legislative Chamber, anybody—whether they are Scots, Welsh, English or Northern Irish—is entitled to express a view and vote on issues that may not affect them. What is the logic in that?
Baroness Stowell of Beeston: My Lords, we in this House are contributing to legislation now on an equal footing regardless of where we are from. We do not represent a particular part of the country. I come from Beeston and am very proud of that, but I do not represent Beeston. I am here as a United Kingdom Peer, as is the case for all of us.
Lord King of Bridgwater (Con): Would my noble friend pay particular attention to the intervention of my noble friend Lord Lang, who I think spoke extremely wise words on this matter? I thought that the most striking point of the Statement was the extraordinary contrast between the long list of Labour leaders of major boroughs and major cities in this country who take an entirely different view, as far as I can see, from the unfortunate position of the Opposition.
Baroness Stowell of Beeston: I am very grateful to my noble friend for that point because he is quite right. It was very welcome to see just how many Labour leaders of local authorities within England wanted to contribute to this process. We are grateful to them and we hope that the Labour leadership will take its lead from them.
Baroness Farrington of Ribbleton (Lab): My Lords, does the Leader of the House accept that for many of us there is a difference between the current Government’s decentralisation programme, where Labour leaders of local authorities are working with the Government of the day, and genuine devolution? I nail my personal colours to the mast of regional devolution in England. I do not believe that the people of the north-west of England, where I live—I accept that I do not represent them—should have their health policies determined by the predominance not only of the Westminster Parliament but of London and the south-east. We
have different problems; we need devolution. I want to see a proper examination of that before something is cobbled together as a matter of urgency. What has changed for the Conservative Party that it wants instant action now?
Baroness Stowell of Beeston: It is open to the noble Baroness to put forward her ideas for matters that should be considered as part of a constitutional convention; that has not been ruled out. However, it is worth reminding your Lordships that regional devolution by way of regional assemblies was tried before and was not successful; it was not welcomed by people in regions. However, we have ensured throughout this Parliament that we have given greater authority and control to all parts of England than had happened before, and we want to see more of that.
Lord Taylor of Goss Moor (LD): My Lords, the truth is that we are now three-quarters of the way to a federal system in the United Kingdom, and it is urgent that the matter is resolved now, by whatever means, rather than at a point of crisis, when a decision may be taken to impose on England something which is deeply unpopular in England and for which England has not voted but for which a majority has been created through a United Kingdom vote, when those other members of our federal United Kingdom would not have the same imposed on them as a result of devolution. We may have walked there by a long and winding path, but this matter now needs to be resolved—and it is better that it should be resolved thoughtfully than in a crisis.
Baroness Stowell of Beeston: Well, I do not recognise the description of our current situation that the noble Lord is giving. We know that lots of changes have happened. The particular issue that we feel is necessary for us to address has been around for a long time. A lot of thinking has been put into this over many years. We now have some simple options before us, but, as I keep saying, that does not rule out a constitutional convention on bigger issues, if that is what people feel is necessary.
Baroness O'Neill of Bengarve (CB): Does the Minister have any worries that this way of proceeding will add to the raggedness of our constitutional settlement and lead to asymmetric forms of devolution, and confuses devolution and delegation? This is an area where many of us fear to tread without great care. Surely, from the start, a constitutional convention, discussion, collaboration and cross-party agreement are all needed.
Baroness Stowell of Beeston: I am grateful to the noble Baroness and I know how distinguished she is in terms of her very thoughtful approach to matters of great importance. But I can only say to her what I have said to other noble Lords. We are not ruling out the possibility of the kind of approach that she is promoting, but we do not believe that doing that should delay us from addressing a fundamental issue of fairness that now exists which we feel that it is very important to address.
Lord Beecham (Lab): My Lords, is the Leader aware that the Prime Minister’s pledge on the morning after the referendum about English votes for English laws, and the proposals in this White Paper, are in fact an answer to the SNP’s prayers and will reinforce it considerably? Will the Leader also explain why in chapter 2 of the document Decentralisation and Localism in England:Achievements to Date, there is no mention of the singular achievement of the Government in imposing the biggest ever cuts on local government funding to the extent that even Conservative councils believe that by the end of this decade they will be able to provide only statutory services—if them alone?
Baroness Stowell of Beeston: As the noble Lord knows, what we have done in this Parliament and through this Government is given greater power to local authorities in terms of control of their own finances. They are now in a much greater position than they were before to make the kind of steps that are about real change in their approach to providing services for local authorities.
Lord Cormack (Con): My Lords, would not my noble friend accept that with three months left of this Parliament and a general election, with all the frenetic atmosphere that goes with it, this is no time to rush a constitutional settlement? The constitution is not the possession of any party: it is the responsibility of us all. I urge my noble friend, while I agree with my noble friend Lord Lang that it is good that there are options in this paper, not to attempt to rush pell-mell before the general election. In the calm—I trust—atmosphere that will follow, we have to try to reach a solution where we do not have two classes of Member of Parliament at the other end of the corridor.
Baroness Stowell of Beeston: My Lords, my noble friend was a Member of the other place and I was not, but there are already two classes of MPs in the other place. We have at the moment MPs for Scottish constituencies who are not able to vote on matters that affect their constituents, but they are able to vote on matters that affect people in England. We feel that this is a fundamental matter of fairness. It is not something that we are rushing into. This issue has been around for a long time. Five reports have been published on how to address this very important matter over the past 15 years. In the past few weeks, we have done some further thinking and put forward some options. I urge all noble Lords interested in this to come forward with their views—but this is something that it is now right to address.
Pension Schemes Bill
Second Reading
3.58 pm
Moved by Lord Bourne of Aberystwyth
That the Bill be now read a second time.
Lord Bourne of Aberystwyth (Con): My Lords, I am grateful for the opportunity to open this debate on the Pension Schemes Bill and the Taxation of Pensions Bill.
Before I proceed to introduce these Bills, could I say this is an important occasion for a different reason? My noble friend Lord Jenkin of Roding has given distinguished parliamentary service for over 50 years and served in Cabinet with distinction. He has made an immense contribution to public life in our country. His contributions to the House of Lords, always effective and to the point, will be much missed, and he too, of course, will be greatly missed from the Chamber.
Lord Bourne of Aberystwyth: I am sure that we all wish him a very happy and well earned retirement, and look forward to hearing his speech today.
I turn to the Bills before us today. Together, these Bills introduce the latest radical reform of pensions. These ground-breaking pension changes were the centrepiece of the Queen’s Speech, and are about encouraging new forms of pension saving, such as shared-risk schemes and the provision of collective benefits to give greater security in retirement, and giving people freedom and choice in how and when they access their pension savings. The time is right to make these changes to private pensions legislation. The new state pension will provide a simplified foundation for those in retirement, making it easier for people to know what pension they will receive from the state. It will provide a platform on which individuals can build their own private pension savings according to their wants and needs in retirement.
The excellent early results of automatic enrolment mean that millions more savers have joined workplace pension schemes. This Government have also taken forward other changes so that the future private pension landscape delivers high-quality, value-for-money pensions for members. For example, regulations are being brought forward so that, subject to parliamentary approval, from April 2015 there will be a charge cap in the default funds of qualifying schemes—schemes used for automatic enrolment—and new requirements for independent governance committees and trustees to report on costs and charges.
The market is therefore growing, and employers and the pension industry are already thinking about future pension provision. These Bills further encourage a flourishing private pensions market that provides greater choice for business on the pensions offered and for individuals on how they access their pension savings. Taking no further action is simply not an option. Despite government action, the Department for Work and Pensions estimates that there are 11.9 million people below state pension age who are not saving enough to provide adequately for their retirement.
I turn to the Taxation of Pensions Bill. My noble friend Lord Newby is the pilot of this legislative craft, but let me say a few words by way of introduction. The Taxation of Pensions Bill contains measures to make the tax system fairer by ensuring people have more choice about how they access their savings, to prevent this new flexibility being exploited by individuals to gain unintended tax advantages and to ensure the taxation of pension savings on death remains fair and appropriate under the new system. The Bill will mean
that, from April 2015, individuals from the age of 55 will be able to access their money purchase pension savings flexibly if they wish, subject to their marginal rate of income tax, rather than the current 55% tax charge. In addition to the Government’s consultation after the Budget, we also published draft legislation for technical consultation in August.
I will talk about these changes in a little more detail, starting with measures to ensure people have more choice about how to access their savings. This Bill is about ensuring that people have greater choice at the point of retirement. The current system restricts choice at the point of retirement. Those with the smallest and largest amounts of pension savings have flexibility, but those with a moderate amount of savings have very limited options. The measures in this Bill will change that by extending this flexibility, such that it applies regardless of the size of the pension pot, thereby ending the effective compulsion to annuitise.
The Bill also introduces a new method to allow people to access their pension flexibly. The “uncrystallised funds pension lump sum”, or UFPLS—the clumsiest acronym I have ever seen in my life—is a new option. This will give individuals the flexibility to take one or more lump sums from their pension fund, with 25% of each payment tax free and 75% taxed at their marginal rate, without having to enter into draw-down or take all of their tax-free lump sum in one go. The Bill also increases choice by introducing changes to encourage innovation in the retirement income market, allowing providers scope to make annuities much more flexible products in line with consumer needs.
Lord Beecham (Lab): I am grateful to the noble Lord for giving way. Could he tell us how much and for how long the Treasury will gain from the changes in the Taxation of Pensions Bill as people draw down or take their pensions early?
Lord Bourne of Aberystwyth: The noble Lord is right if he is inferring that there is a tax saving. Estimates have been made, but of course we cannot be certain of them. I have the estimates and I will ensure that I send them to the noble Lord—I do not have them to hand —but suffice it to say that this is not the thrust of the legislation. I think we will see that it is perfect in terms of providing what pensioners want, it gives a boost to the pensions industry and it probably saves the Exchequer money, although these are only estimates. However, that is not the main intention. As I say, it is to give consumers and members, after consultation, a very fair deal.
The Bill also contains measures to ensure that the new system cannot be exploited by individuals to achieve unintended tax advantages. If the Government were to put in place no protections, an individual over the age of 55 could divert their salary each year into their pension, take it out immediately and receive 25% of it tax free, thus avoiding income tax and national insurance contributions on their employment income. This is not the intention of the reforms. However, in the context of automatic enrolment, it is also important that any solution preserves the incentive for those aged over 55 to save after accessing their pension flexibly.
As a result of extensive consultation, the Government decided that introducing a £10,000 money purchase annual allowance for those who have accessed their pension flexibly strikes the right balance. On the one hand it allows people the flexibility to withdraw or contribute to their pension as they choose from the age of 55, while on the other it ensures that individuals do not use the new flexibilities, which are intended to provide people with greater access to their retirement savings, to avoid paying tax on their current earnings. It will also avoid unnecessary complexity for both consumers and pension providers when the new system comes into places in April 2015. As stated in the Government’s response to the consultation, we will be closely monitoring behaviour under the new system and will work closely with industry to ensure that it remains fair and proportionate.
I turn now to the changes made by this Bill to the taxation of pensions at death. As set out in the original consultation document which the Government published alongside the Budget, it is likely that the 55% tax charge which currently applies to pensions on death would apply to more people under the new system. If it were retained, it could provide an incentive for individuals to remove their savings from their pension in order to avoid the 55% tax charge. Consequently, the Government have amended the Bill to ensure that taxation of pensions at death remains fair and appropriate under the new system. The changes to the Bill will allow individuals who die with pension funds remaining to pass them on to anyone they choose. These funds can be paid tax free if the individual dies before the age of 75. If the individual dies having reached the age of 75 and the funds are paid out as a pension, they will be taxed at the beneficiary’s marginal rate, or at 45% if they are paid out as a lump sum. The aim of these changes is to ensure that individuals who have made sacrifices to save over the course of their lives can pass on their pension savings without worrying about those funds bearing excessive tax charges when they die. They will also preserve the incentive for individuals to keep money in their pension without fear of their beneficiaries being hit by a 55% tax charge.
Additionally, the Chancellor announced in the Autumn Statement that these changes will extend to annuities. Death benefit payments from joint life and guaranteed-term annuities will also be tax free when the policyholder dies under the age of 75, and such death benefits will be able to be paid to any beneficiary. This will also apply when an individual uses uncrystallised or draw-down funds to buy a dependant’s annuity. These changes will be legislated for in due course, although not through this Bill. The Taxation of Pensions Bill will therefore increase choice for the 320,000 people retiring each year.
The Taxation of Pensions Bill deals with the tax changes and the Pension Schemes Bill, which I will turn to shortly, deals with changes to enable the flexibilities to work as the Government intend. There are differences in the definitions of money purchase benefit in tax legislation and in pensions legislation which we have had to address. Tax legislation provides a definition of money purchase which in essence covers all forms of accrual that result in a cash amount. The pensions
legislation definition is narrower, as it focuses only on those forms of benefit in which a deficit cannot arise. This is to ensure that the correct funding and member protection regime applies. In order to ensure that the provisions of both Bills work correctly together, the Pension Schemes Bill contains a new definition of “flexible benefit” which fits within the pensions legislation context and captures the forms of benefit to which the tax flexibilities apply. We also define the term “safeguarded benefits”, which are, in the main, forms of benefit to which the flexibilities do not apply but to which other provisions do. I will explain the context in which the term is used shortly.
I turn now to the Pension Schemes Bill. This Bill will make the changes required to pension legislation as a result of the freedom and choice created by the Taxation of Pensions Bill. This will include a legislative framework for a guidance service providing individuals who benefit from the new pension flexibilities with access to free, impartial guidance so that they are clear on the range of options available to them at retirement. The Bill places a duty on the FCA to ensure that the providers it regulates make people aware of their right to guidance and signpost them to this service, and the Department for Work and Pensions will ensure that the equivalent duty is placed on pension schemes regulated by the Pensions Regulator.
It is important to note that there is a fundamental distinction between advice and guidance. Providing advice on investments, including pensions, is an activity regulated by the FCA. A financial adviser will usually make a full assessment of a consumer’s circumstances and make a specific recommendation, and may sometimes sell a product, based on what is most suitable for that person. The guidance service will not aim to replicate this. Instead, it will provide tailored information to consumers regarding the options available to them but, unlike financial advice, it will not recommend specific products or providers. The guidance is designed as a first step for consumers, to support their decision-making and to empower them to make their own choices. Having had the guidance, it is expected that many people may wish to go on to seek financial advice to help them with their decision, and the guidance will help them to access the service they need.
The Government will continue to allow members of private sector schemes offering safeguarded benefits—that is, benefits other than money purchase or cash balance benefits—the freedom to transfer to other types of scheme. However, in the vast majority of cases where a member has safeguarded benefits, it will continue to be in the best interests of the individual to remain in their scheme. Therefore, two additional safeguards will be introduced to protect individuals and schemes. First, there will be a new requirement for individuals transferring safeguarded benefits out of a scheme to take advice from a financial adviser before a transfer can be accepted. Secondly, there will be new guidance for trustees of schemes on using their existing powers to delay transfer payments and taking account of scheme funding levels when deciding transfer values.
We will also ensure that the taxpayer and Exchequer are protected. First, transfers will not, other than in very limited circumstances, be allowed from unfunded
public service defined benefit schemes into schemes from which flexible benefits can be obtained. Secondly, for funded public service schemes, Ministers will have a power to reduce cash equivalent transfer values in circumstances where there is a risk to the taxpayer.
The Pension Schemes Bill also makes other changes to the transfer requirements allowing individuals to access pension savings. We will do this by extending the current transfer rights for those with flexible benefits up to and beyond their schemes’ normal retirement age, and applying statutory transfer rights at benefit category—rather than scheme—level.
We will also make three technical changes to existing pensions legislation. The first will allow pension schemes to offer the new flexibilities to their members and will ensure that these flexibilities operate as intended in relation to those with cash balance benefits. The second will allow members to take one or more lump sums from their money purchase funds after the minimum age is reached. The third will prevent the conversion or replacement of non-money purchase benefits with money purchase benefits when a scheme winds up or during a Pension Protection Fund assessment period.
As the flexibilities will come into force on 6 April next year, we are making the relevant regulatory changes that are necessary to deliver these significant reforms by that date. The Department for Work and Pensions and the Treasury are co-ordinating a structured engagement with the industry on the drafting of regulations to ensure that final decisions are informed by stakeholder views.
With these changes, the Taxation of Pensions Bill and the Pension Schemes Bill together give the individual greater choice and flexibility in how they access their pension savings. The Pension Schemes Bill also introduces legislation to enable greater risk sharing between the employer and the saver—and, indeed, third parties—and risk pooling between savers, thus encouraging greater innovation in the private pensions market.
I now turn to the measures that grant pension providers greater flexibility in the sort of pension schemes they offer. The Queen’s Speech announced a radical reshaping of pensions legislation to ensure that it remains relevant for future generations. The Pension Schemes Bill reflects, recognises and encourages innovation in response to demand. It does this by creating a clear space for shared risk or defined ambition—as they are sometimes called—pensions and enables the provision of collective benefits in the United Kingdom. Those are two quite separate concepts.
With increased participation in saving, the Government are keen to support greater innovation in the products offered to savers, based on employer and member demand. Consumer trust in the pensions industry is relatively low, and although we can protect beneficiaries against risks of high charges or poor governance, our research shows us time and again that many individuals want more stability and more certainty. They want to know something about what their savings will give them and some protection from the worst of the vagaries of the market.
Many employers have found the increasing costs of longevity—welcome though it is—and investment risk too heavy to bear in traditional final salary defined benefits schemes, but if defined contribution schemes
are the only alternative, outcomes for members and savers will be less certain and more volatile than for earlier generations, making it much harder for future generations of savers to plan for later life.
Although some forms of risk sharing can already happen, the current legislation is based on a binary structure, leading to a tendency for schemes to polarise into schemes in which either the member or the employer is bearing all the risks. While both of those types of pension can be the right product for many, we do not think it is right that the only future for pensions that our legislation explicitly recognises or encourages is either where the individual member or the employer takes on the full financial risk of such long-term savings.
Therefore, the Pension Schemes Bill introduces three categories of pension scheme and enables a new type of collective benefit along with requirements to ensure that there is appropriate regulation in relation to such benefits. The scheme categories are based on the type of promise that the scheme provides to savers during the saving phase about the benefits that will be available to them at retirement. The Bill includes new definitions of defined benefits, where the member receives a full benefit and the employer takes the risk, defined contributions, where the member takes the risk, and shared risk, or defined ambition, the third category of pension scheme.
The shared risk, or defined ambition, definition describes a middle ground between the defined benefits and defined contributions definitions. It creates a distinctive space to encourage innovation in pension design that provides for more certainty for individuals than defined contributions schemes, in which there is no promise during the savings phase, by sharing risks between employers, employees and third parties.
The new scheme categories will apply to existing occupational and personal pension schemes. They do not make any additional requirements about benefit design and do not change any current legislative requirements, such as occupational scheme funding or member protections.
The definitions work at scheme level, rather than the benefit level, so the wider legislative requirements that apply to certain benefit types still apply, regardless of the scheme category. That includes, for example the new Budget flexibilities, and the collective benefit requirements, to which I shall come shortly. The definitions are formulated very specifically and, along with the regulation-making powers, they ensure that current and new scheme designs will fall into the correct categories to reflect the member experience of certainty during the savings period.
The Bill also provides for a new definition of collective benefits. These are different from shared risk schemes, although shared risk schemes may include collective benefits. The collective benefit definition enables a new form of risk pooling among scheme members that can provide greater stability in outcome for members—partly by virtue of scale. Collective pension schemes are a key part of some other countries’ pension systems—for example, the Netherlands and some of the provinces of Canada—and they are recognised internationally as being of high quality. As we aspire to develop a pension
system that is rated among the world’s best—we hope the best—it is only right that the United Kingdom should also have pension schemes offering these types of benefits. We also have the advantage of providing protections at the outset which address issues that have arisen in relation to these types of schemes overseas. The regulation-making powers are key to the success of collectives, ensuring appropriate safeguards can be applied and developed in discussion with industry, employers, and members’ representatives. The Bill enables collective benefits to be part of a defined contributions scheme or a shared risk scheme. The intent is that members of schemes offering collective benefits would be able to access their collective benefits flexibly, either directly or by transferring to a money purchase scheme.
The Bill makes changes to existing legislation in order to reflect the new scheme categories and collective benefits. It also provides for additional governance protections for these new types of pensions, reflecting the new types of decisions that are being made on behalf of members. We also intend to use regulation-making powers in other legislation in respect of governance and disclosure as appropriate. We have engaged extensively with stakeholders across the pensions industry and found there is appetite for legislation that allows for greater risk sharing and risk pooling. There are employers that would welcome the greater flexibility to create pension schemes that suit the needs of their workforce. Pension providers want the flexibility to design and offer pensions that provide greater certainty and more options for sharing risk, and individuals value greater certainty than that provided by defined contributions pension schemes and the greater stability that collective benefits may provide. All these are considerable advantages.
I turn to the other changes to private pensions legislation made by the Pension Schemes Bill. These are relatively minor in terms of the main thrust of the legislation. The Bill contains two clauses from the Ministry of Justice concerning judicial pensions. One corrects the Judicial Pensions and Retirement Act 1993, regarding the funding of pensions shared on divorce, to ensure that the Act works for cases where pension sharing is activated after a person has left judicial office. The second allows a pension scheme to be established for fee-paid judges, as required by relatively recent case law. It is aimed at old and transitional cases. Pensions for fee-paid judges will in the future be governed by a new scheme under the recent public service pensions legislation.
In addition, the Bill contains a minor and technical measure on the Remploy pension scheme. The legislation will allow the Department for Work and Pensions to fund the Remploy pension scheme directly rather than via the company, should this be required in the future.
Furthermore, the Bill contains an amendment to extend a regulation-making power in the Pension Schemes Act, relating to survivors’ benefits in the case of certain gender-change cases, to Scotland. Finally, the Pension Schemes Bill contains a provision the effect of which will be to permit schemes to increase the maximum age at which a pension credit, following a pension share on
divorce, must be put into payment if the highest normal pension age for benefits payable under the scheme is higher than 65.
These are very radical reforms that build on this Government’s previous changes to improve pensions in the United Kingdom. Giving people greater choice is at the heart of these reforms—greater choice for business on the pensions they offer and greater choice for individuals on how they can access their pension savings. These are important changes to allow the private pensions market to flourish too. I commend these Bills to the House. I beg to move.
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Lord Davies of Oldham (Lab): My Lords, I thank the Minister for his extensive coverage of both Bills and reassure the House that my own contribution will be not to follow him down every detail of the legislation but to concentrate on those parts where we have anxieties and worries that we intend to contribute to the debate today and subsequently in Committee on the pension reform Bill. I thank the Minister for his extensive coverage but he will know that the Opposition support the principle of increased flexibility for people in retirement and reform of the pensions market so that people can get a better deal.
The Bill seeks to remove the limits on withdrawals from draw-down to make annuities more flexible and to prevent the Government’s pension reforms being exploited for unintended tax purposes, and we share those objectives. However, it is vital that the Government get the details of those changes right. We have set out three tests for pension reforms: guidance, fairness and cost. We are supporting the reforms to ensure that people have more flexibility in how they access their pension savings, but these are significant changes and we have to ensure that they work for all savers. First, on guidance, we need to ensure that savers get the right guidance, and I will develop that point subsequently. The fairness test needs to ensure that there are decent products for low-income and middle-income earners; it is fairly obvious that those with large pension pots are in a better position to look after their interests. The costs test that we are seeking to apply is to ensure that the reforms do not result in extra pressures on the state, either through social care or through pensioners falling back at a later stage on means-tested benefits such as housing benefit.
We have concerns about the speed with which these reforms have been pushed through. There was no consultation prior to the Chancellor’s Budget Statement, and the Government have refused our calls to publish further details and analysis of the behavioural impacts of these important reforms as well as, I might add, the potential impact on government revenues. I am not sure that the Minister was entirely convincing in his response to the point that my noble friend Lord Beecham made in his intervention; we need to examine carefully the potential impact on public revenues and resources.
We will press the Government to undertake a Treasury review within two years of the reforms coming into force. These are of such significance for such a significant part of our population that we need to know that they are working as intended. That review should detail the
impact of the Bill on government revenues, with particular reference to opportunities for tax and national insurance contributions avoidance. The Government make great play of their approach to tax avoidance issues at present, but they must recognise that there are some anxieties about the potential effect in that area of those proposals.
The pension reforms will introduce increased flexibility for savers; however, they will also lead to the creation of a more diverse pensions market, with a range of new products available. Safeguards must be in place to protect customers from being exploited or facing unreasonable fees and charges. People need real support to negotiate this new, more complex landscape. That is why these changes must be accompanied by free guidance that is high-quality and impartial. The Government made a commitment to provide everyone with free impartial face-to-face guidance. They have a responsibility to ensure that that guidance is in place on time and meets customer expectations.
The Government are not always reassuring on that front; sometimes they seem to talk about guidance and sometimes about advice. Advice is something for which you pay in the industry; it is an activity regulated by the Financial Conduct Authority, which authorises individuals and firms acting as advisers. Guidance is different. Guidance in the context of the pension changes that will take effect from April 2015 must be free and impartial information to empower customers to make informed and confident decisions. That activity will not be regulated by anyone; the individual will have to make up their own mind as to the best route post-retirement.
After all, the FCA sums it up distinctly and neatly on its consumer website:
“The main difference between guidance and advice is that you decide which product to buy without having one or more recommended to you”.
That is why guidance will bear a heavy weight. The guidance envisaged in the Bill aims to provide the estimated 300,000 new retirees per year with defined contribution schemes with this service. Even with the distribution channels of the web, face-to-face—for example, Citizens Advice—and via telephone, including the Pensions Advisory Service, there must be grave doubts about the level of take-up that will be achieved. The amount of resources assigned and the task of preparation time leaves the impression that we are being subjected to rushed initiatives in the most crucial area for the citizen. There are no details on how the guidance will be delivered in a consistently high-quality manner, given that no specialist qualification, experience or regulation is required for the agencies to commence this process. The Minister must recognise our very clear anxieties on these points. Safeguards must be in place to protect customers.
The Bills, which share their Second Reading in this rather interesting procedure, allow for the establishment of the collective defined contributions pension schemes, which we promoted some time ago. We were convinced by the value of these potential schemes, and are of course pleased that they are included in the legislation. They have the potential to provide a more reliable
retirement income than individual defined contribution schemes. Therefore, we are not opposed to the Bill but welcome it.
I hope that I have expressed the Opposition’s constructive criticism of the Bill, while at the same time indicating that we support its principles and wish it every success. Later in this debate and in Committee, my noble friend Lord Bradley will take up some of the challenges that I put forward. However, I hope that the House will recognise that our broad commitment of support does not involve a superficial approach to the very real challenges that this significant pension reform envisages.
Finally, in a rather more consensual manner than the one I normally adopt when expressing a view on government legislation from this Dispatch Box, I pay tribute to the noble Lord, Lord Jenkin, and his service to both Houses over a very considerable period. I will never forget the time when I had responsibility in this House for an Energy Bill on which we spent 17 days in Committee. The only noble Lord who was unremitting in his work at that stage, when even Ministers were forced to hand some responsibility over to each other, was the noble Lord, Lord Jenkin. It was a tour de force in everything we heard at that time, and of course the whole House will wish him well in his retirement.
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Lord German (LD): My Lords, I, too, join in the tributes to the noble Lord, Lord Jenkin, and associate the Liberal Democrat Benches with the good wishes that have been passed on to him so far. We look forward to his speech. Perhaps the House will afford me a moment for a small personal recollection. I know that the noble Lord, Lord Jenkin, has the words “love of music” stamped throughout him. One of the assurances that you can have about music is that you can continue to enjoy it no matter what age you are, from the youngest to the oldest. I wish him every success in his retirement, and hope that he will be able to join us, as he always has done, at future musical occasions of this Parliament, and enjoy with us once more those wonderful occasions. We all look forward to his speech later on in this debate.
This suite of Bills adds to the most comprehensive range of changes which we have seen to state and private pensions in a generation. Set against the backdrop of auto-enrolment—with the number of new savers reaching beyond 5 million and rising; the new single-tier state pension; establishing the link between pension age and life expectancy; and abolition of the retirement age altogether—I think it is safe to say that this Parliament has seen an unprecedented period of major pension change. In fact, I would venture to say that it has been a revolution, a quiet one, which has at last seen the coming together of major pension reforms.
I recognise that many noble Lords in all parts of this House, some present here today, have played a key role in ensuring that we have got to the place we are debating today. However, I pay tribute to my right honourable friend Steve Webb for the part that he has played in bringing these reforms to fruition. He is deserving of great praise, and it undoubtedly says something about his skills, as I understand that he is now the longest-serving Pensions Minister for many decades.
The Pension Schemes Bill follows two consultations, in November 2012 and November 2013. It will extend to three the present two-pronged approach to pension provision, defined contribution and defined benefit schemes. However, with the decline of defined benefit schemes, increasingly, as of now, for many people, the only realistic option available is a defined contribution scheme. The defined ambition option provided by this Bill provides a new alternative, one which allows people to act collectively, sharing risk, and smoothing out fluctuations, reducing volatility for the customer.
Sharing investment risks and longer-life risks has the potential to act against the interests of a consumer when operating as a solo investor. This measure will mean a reduction in the ups and downs of investment. The Bill therefore offers a third route, one which can provide more certainty and stability. I note that the Government do not claim that it will produce a better financial outcome, although some have claimed that it will—but it will provide stability. This new approach will also allow people to leave money within the scheme if they wish, even after entering the decumulation phase, so they can continue to see all, or part, of their pensionable savings invested.
As always, we look for parallel experiences in other countries, and my noble friend the Minister mentioned two in his introduction. However, each has conditions that render them unique, and it is not wise to try to lift the experience of others in a wholesale manner into the United Kingdom. For example, I anticipate that we will have a detailed discussion of the intergenerational nature of the new defined ambition pension. However, one benefit that your Lordships may wish to ensure as the norm in this measure is that joint action should lead to a spreading of windfalls and setbacks over time, so that fluctuations can be avoided. It is possible to mitigate changes in current market rates to reduce volatility and maintain stability within a collective pension scheme. The effect that this has on a defined cohort of pension recipients, by laying off the risk through smoothing over present and future generations, is one that this House will undoubtedly debate in detail at future stages of the Pension Schemes Bill. However, the experience of the Netherlands should lead the House to ensure that expectations are managed, that there are clear communications with members of the scheme, and that cross-subsidies within schemes are adequately and comprehensively managed, with legislative context for this to happen.
As a result of all the changes in pensions policy, and those in these two Bills, pension providers are increasingly being asked to think creatively, to adjust their provision, offer new products and provide more choice. Annuities have been a shackle on the pensions market, particularly as annuity return rates have gone steadily downwards over the past decade. The challenge for the pensions industry is to respond to the need for a strong dose of competition and innovation.
There is a danger that consideration of these Bills will mainly centre on the guidance guarantee. That is, none the less, a very important part of the legislation. It is important for the guarantee to consider the potential choices that a pension saver has, by looking at all assets that that person has. Here I must declare
an unregistrable interest as a member of the advisory committee for the Equity Release Council. Housing wealth in this country is estimated to be £1.4 trillion—and many people also hold other assets, such as investments and savings. The FCA has just produced its “near final” rules and standards on the guidance guarantee, but the relevant standard, standard 20, is silent on the level of housing wealth being considered.
An Equity Release Council survey suggests that average housing wealth for the over-55s is £271,000. Meanwhile, the average defined contribution pension pot is in the order of £20,000. Whether these figures are robust is not the issue here, because they merely illustrate the need to consider housing wealth within the guidance guarantee. They show that housing wealth is more significant than the pension pot for most people over 55. This huge financial gap between the two assets is likely to continue in the next decade for people aged 40 and more, as this cohort is more likely than its predecessor to have defined contribution rather than defined benefit pensions, and they are just as likely to be pursuing home ownership through a mortgage that will be repaid before they retire.
I appreciate that the Government’s intention is for the guidance guarantee to equip people with basic concepts about their future financial needs, and to provide a basic knowledge of the range of products available. But not taking all assets into account when providing guidance will work against the guidance guarantee’s fundamental task, which surely must be to equip people with the questions they need to ask in order to help them make their decisions. To do this effectively the whole picture needs to be seen, and that means getting all the relevant information in one place, and in an easily understood format.
In respect of the pensions freedoms in these Bills, I would be grateful for confirmation from the Minister that the Government regard the FCA as the second line of defence, standing apart from the guidance guarantee, to ensure that the highest standards are met by those supplying financial products when people are at the point of making these crucial decisions involving their pension savings.
These Bills provide an opportunity for the introduction of much needed rights to improve the way that savers can engage with their savings. All the available evidence shows that people struggle to understand and engage with what is happening to their pension savings. This high level of disengagement must surely be a concern. One key mechanism for improving understanding and engagement is transparency—letting people know what is happening to their money. People are interested in knowing how their money is used, even though the language used by the financial sector may put them off. We could use this Bill to increase the ability for customer scrutiny over those who decide how to place their money. In a system where people cannot easily move their money, it is all the more important that their agents are held to account. What is required is customer-facing information and materials which help savers understand and access information. I look forward to a discussion on these issues at future stages of the Bill.
The number of government changes to the defined ambition Bill in its final stages as it went through the House of Commons was dramatic. Effectively, those changes added 65% or more extra detail to the Bill. This means that there is a real job of work to be done in your Lordships’ House to undertake scrutiny, particularly in Committee. I do, however, recognize that many of these changes were made as a result of announcements made in the Budget, after the Bill had been published.
Given the wide range and scope of subordinate legislation required for these Bills, there will undoubtedly be a need for detailed consideration at later stages of whether the affirmative or negative procedures are appropriate. Without draft regulations before us, I suspect that your Lordships’ House may well seek the affirmative procedure for many of these new regulations, but perhaps for some of them only on their first appearance in this House.
The timing of the new standards and rules governing all the issues in these Bills is a key consideration to be debated. The issues of quality of governance and levels of charging are high on the list of matters where the customer will require protection. The most urgent of these is the conversion of the FCA’s “near final” standards and rules on the guidance guarantee into their final form in time for when this Bill comes into force in April next year. I would be grateful if my noble friend the Minister could indicate when he expects these final standards and rules from the FCA to be received. Given that there are two regulators engaged in protecting the customer in these Bills, perhaps he could also indicate how it is proposed that the roles of both will be delineated, and how the Government will ensure that there is no overlap or, indeed, cracks between their respective areas of responsibility, where protection might subsequently fail. Perhaps my noble friend could give his and the Government’s view of whether it would be better to have a single regulator operating in this space rather than run the risk of overlap or gaps in provision.
In conclusion, I welcome these Bills and look forward to debating the key issues at future stages. They provide choice and rightfully put more powers in the hands of the consumer. They are to be welcomed.
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Baroness Greengross (CB): My Lords, I add my personal tribute to the noble Lord, Lord Jenkin of Roding, whom I have known for many years. He has always been very gracious in his various roles when I have wanted to discuss issues with him. He has made a huge contribution, and I shall miss him very much, personally and professionally.
I very much welcome the changes made through the Bill, as they seek to strike a new balance between the sensible accumulation of savings for later life and the freedom for people to choose how they spend their money in retirement. I believe that there should be more choice for people entering retirement. Increased choice should help to enable them to save for, and make informed decisions about, their retirement income. However, this means that they must fully understand the risks associated with these choices. My main point
is that there are many risks attached to this, in particular, the risks associated with Part 3 of the Taxation of Pensions Bill, which creates the UFPLS. This will provide an additional option for flexible access to a pension, but there are associated risks here which I fear many consumers will not fully appreciate. I will come back to those risks later.
I very much welcome the fact that Schedule 3 to the Pension Schemes Bill will place a duty on the FCA to create and regulate the advice and information part of the “freedom and choice” pension reforms in the shape of the guidance guarantee, which is a crucial part of the reforms. My worry is that individuals are neither aware of the existence of this guidance, nor obliged to seek it, nor to follow it if they find it, and so many will remain seriously ill informed and may make wrong decisions. Recent research from Partnership has disclosed that, with so little time to go before the introduction of this new pension regime, 53% of people over 40 do not know whether they are eligible for the guidance guarantee, 18% said that they were not eligible and only 29% said that they knew they could use the service. There is a lot to be clarified, which we will work on at later stages.
While accepting that the FCA has the role of ensuring the quality of the guidance on offer, I think that there are areas that could helpfully be further clarified in the legislation. The proposed standards will work well for web-based guidance, for example, but I am not sure that they will work well for telephone or face-to-face provision; and that issue needs to be looked at. Perhaps also the guidance guarantee should be regularly reviewed in order to ensure that suitable information is there to make sure that people can make the important decisions that best suit their needs.
Also, a second line of defence regulation has been suggested—certainly, Dr Ros Altmann recently called for this—which would include knowing about dealing with risks such as outliving assets and running out of money or not providing benefits for a spouse on death. These are important issues and I very much hope that we can see some progress in those areas. Lastly, I should like the Government to commit to an annual report on the outcomes for everyone affected, whether they access the guidance or not.
Finally, the levy that will fund the guidance guarantee will come from only those firms regulated by the FCA. However, to create a level playing field, perhaps the guarantee should be funded by all pension and retirement providers, including trust-based pension schemes and master trusts, such as NEST, which currently would not contribute to the levy.
I end by considering people’s care needs. The funding of long-term care, which I mentioned earlier, is a growing concern of many retirees who potentially have to fund all or some of their social care needs out of their retirement funds. The proposals set out in the Care Act of this year will go a long way to helping to address some of those concerns, but these changes provide a good opportunity to encourage people also to consider how they could fund any long-term care needs that might arise. The role of care fees funding in pensions decumulation needs some consideration and should be part of the wider debate. I am wondering just how the Government plan to respond to the question asked
by the noble Lord, Lord Hunt of Kings Heath, in last week’s Motion of Regret tabled by the noble Lord, Lord Lipsey: how will a pension pot be treated in relation to the calculation of a non-housing asset? Do the Government expect the new flexibility in assessing pension savings contained in the Taxation of Pensions Bill to have any effect on this policy?
In summary, these bold reforms bring with them new freedoms but many new risks, and we should all strive to ensure that the pensioners of today and tomorrow can fully enjoy the former in the safe knowledge that they will have appropriate information, guidance, advice and choices to minimise the latter.
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Lord Hutton of Furness (Lab): My Lords, I should like to draw the attention of the House to the interests I have declared in the register. I am an unremunerated non-executive director of Pension Quality Mark. I should also like to express my personal tribute to the noble Lord, Lord Jenkin of Roding, who in a few minutes will make his last contribution to our proceedings in this House. The noble Lord has made a truly extraordinary contribution to public and parliamentary life over a very long career. I, for one, am going to very much miss him in this House.
I strongly agree with what the Minister said in his opening remarks when he described these reforms as truly radical. They certainly are. I welcome the Government’s continued focus on looking at our pension system and ensuring, wherever possible, that people are thinking ahead to the needs they will have when they retire. This is a hugely important issue for our country. I regard it as perhaps the most important public policy challenge we face if one thinks about the nature and speed of demographic change in our country.
This problem has assumed even greater significance because of the general thrust and drift of public policy in the pensions space in the past 10 years or so. The burden of responsibility for providing secure retirement income is now rightly, in my view, steadily moving from the state to the individual. That is certainly the whole thrust behind the auto-enrolment reforms and the reforms to the state pension. For these policies to work, we have to be sure that people make adequate provision for their retirement. If they do not, the risk is that public finances will become unsustainable and that, once again, being old becomes the same thing as being poor. We need to avoid that outcome at every possible opportunity. Therefore, every reform to our pension savings system should pass one simple but important test: will it encourage more people to save more for their retirement?
There is much to be welcomed in the Bills before us today. None of us wants to be treated like an idiot, and it is right that we should therefore have more choice about what we do with our savings. I welcome that. However, it is right and proper that in this place we highlight some of the challenges that the Government’s reforms are going to create.
The first is that there is some tension between these two significant reforms—on the one hand, giving more freedom for savers in DC schemes and, simultaneously,
providing for more risk-sharing in defined ambition schemes. Some people would say that these two reforms are not entirely compatible, and that is certainly the view of many in the industry. John Lawson, the head of pensions policy at Aviva and a much admired figure, went so far as to say recently that these reforms are completely incompatible with each other. On the one hand, encouraging more collective risk-sharing through collective defined contribution schemes sits oddly with the new freedoms at 55 to take out all the cash built up in conventional defined contribution schemes. One stresses the benefits of collective risk-pooling; the other, the right of the individual to make their own decisions about how to manage retirement income risks. In my mind, it begs the obvious question: what is the most important public policy objective that these reforms should prioritise? Is it freedom of choice or should it be income sufficiency in old age?
There is also the danger that we might begin to lose sight of something rather fundamental here. The purpose of a pension scheme is to provide secure retirement income for as long as the pensioner remains alive. It is not just about wealth accumulation and the instant gratification of converting your pension pot into a tidy cash sum. In my view, we should remain absolutely focused on the question of retirement income: how we can secure it and how, if possible, we can increase it.
One of the obvious risks in the Government’s approach to annuities reform is that there is a real possibility that more pensioners will start to run out of money in old age. Here, it is worth talking about the experience in Australia. It is true to say that auto-enrolment was heavily influenced by the Australian reforms, and successive Governments, including this one, have paid close attention to how this model has worked. The Chancellor of the Exchequer prayed in aid the Australian experience as providing the intellectual underpinning for his announcement on annuities reform. I am afraid to say that I am not entirely sure that he is on absolutely firm ground.
The recently published Murray report in Australia has recommended introducing compulsory deferred annuities that would pay out after the age of 85—going, I am sorry to say, in almost exactly the opposite direction to the one proposed by the Government here. This was recommended in Australia because it was found that a quarter of Australian pensioners had depleted their pension savings by the age of 70. There is a real warning sign here for us. That is why I strongly favour a hybrid approach—dare I say it, a third way—with greater freedoms to draw down pension savings on retirement, combined with a focus on the need to secure retirement income in later years. Allowing these new freedoms to be exercised at the age of 55 also poses another set of problems, particularly for employers.
The Organisation for Economic Co-operation and Development has also recently expressed similar concerns. It has pointed out—rightly, in my view—that pensioners in the United Kingdom are unlikely to achieve better incomes in retirement simply as a result of scrapping mandatory annuitisation. This, I think, gets us to the heart of the issue. We should remain focused on retirement income and on ensuring that every pensioner has adequate provision. At the end of the day, an
annuity is merely an insurance against outliving your savings. This is a risk that the Government and individuals need to take very seriously. Partial annuitisation should at the very least be strongly encouraged as an integral part of planning for retirement. The danger today is that we appear to have created the sense that we have moved decisively against this kind of provision. That would be an enormous mistake.
As other noble Lords have said, there is the whole question of the so-called guidance guarantee which lies at the heart of the annuities reforms that are being set out in this legislation. I am yet to be persuaded that the guidance guarantee is sufficiently robust. It is not compulsory and what is being proposed is quite limited for such an important decision. Inertia will be a real problem. The FCA recently reported, for example, that 60% of people retiring with defined contribution schemes did not take advantage of the open market option of purchasing an annuity from a different provider, despite the fact that 80% of those individuals would have been better off. How confident can we be and how confident is the Minister that the guidance guarantee will be taken up properly?
The other great danger is that the benefits of the proposed collective defined contribution schemes are being seriously oversold. They are modelled largely on the experience of similar schemes in the Netherlands. It is important that we all understand that the Dutch pension landscape is not a land of milk and honey. I have no objection at all to these schemes being one option available to employers and employees, but I simply draw to your Lordships’ attention some problems. These schemes do not guarantee higher retirement incomes. They are no less vulnerable to unexpected lower investment returns than conventional defined contribution schemes. Just look at what has been happening in the Netherlands only very recently, with significant reductions being made to pension benefits. These schemes certainly expose younger savers to quota risks and the possibility that they will receive lower payouts as risks within these schemes are effectively shifted across different age cohorts.
I am not at all convinced that these schemes are all that progressive either. Lower earners who typically enjoy lower life expectancies effectively subsidise higher earners who tend to live longer. In the UK at present, those with lower life expectancies can receive higher retirement incomes through either enhanced or impaired annuities. This is not an option within CDC schemes. These schemes are inherently less transparent and certainly more complicated than other UK workplace pension schemes. My advice to the Minister and the Government is not to over-egg the pudding, although I suspect that it might be a little too late for that.
Looking at the provisions of the Bill relating to the defined ambition schemes, it is obvious that there is a very substantial regulatory risk for these schemes as the Bill grants enormous powers to the Secretary of State to legislate by way of statutory instrument as opposed to clearly setting out the parameters in the Bill. We do not yet know how these powers will be used and what form they will take. That creates obvious uncertainty for these putative schemes.
I shall conclude my remarks by saying one or two things about the Taxation of Pensions Bill. I am obviously aware that it is a money Bill and that we have no power to amend it, but I should like to raise with the Minister some concerns that I have about its provisions. I am pleased that the Government are removing some anomalies in the tax treatment of death benefits paid out of income draw down products and annuities, which will now be tax exempt if a scheme member dies before the age of 75. We all welcome that. It will, I hope, act as an incentive to save and should be supported. But the Government have made no changes to the taxation of a dependant’s pension scheme benefits which will still be taxable at the marginal rate of income tax. I am not sure that I understand the logic here. It seems perverse that a dependant’s scheme pension benefits should be treated adversely from a tax perspective compared with annuities and draw down products. This will surely encourage more members to transfer out of defined benefit schemes than would otherwise have been the case. Is this really the Government’s intention? It would be good for the House to know.
In fact the whole area of transfers from defined benefit to defined contribution and how they will be affected by these reforms is a moot point. It would be good to hear more from the Government about how they see developments in this space. Most informed commentators expect to see significant numbers transferring out of defined benefit schemes to defined contribution schemes to take advantage of the new freedoms on offer. There is a widespread concern that these DB to DC transfers, unless we are vigilant, are a potential mis-selling scandal waiting to happen. We really have to guard against that.
Much has been made of the fact that lump sum payments to nominated beneficiaries are going to be tax-free if the pension scheme member dies before reaching the age of 75. So far so good. I very strongly welcome the Chancellor’s focus on this issue. However, scheme administrators cannot nominate a different beneficiary from the person nominated by the scheme member himself or herself. That is clear from paragraph 3 of Schedule 2 to the Bill. I am particularly concerned that the effect of these changes could result in inheritance tax being payable on these lump sums—although not income tax because of the reforms in the Bill—on the basis that only death benefits paid out of a discretionary trust are exempt from inheritance tax. I hope that my fear is misplaced, but it would be very good to hear from the Minister on this point at some stage in our proceedings today.
I cannot fault the Government’s energy and commitment to pension reform, and I welcome it. It is impressive, particularly at this late stage of the Parliament, and both these Bills represent significant reform. The noble Lord, Lord German, who spoke earlier, said that this is a pension revolution. I think that it is, but, as any student of history knows, the problem with a revolution at the beginning is that you never can be quite sure where it is going to end. That, I think, remains the principal concern that I and many others have about the reforms set out in these Bills.
5.06 pm
Lord Jenkin of Roding (Con) (Valedictory Speech): My Lords—
Lord Jenkin of Roding: My Lords, last month the House, in its wisdom, accepted the recommendation of the Procedure Committee that a Peer who has given notice of his wish to retire might have an opportunity to make what they christened “a valedictory speech”. I would point out that a number of noble Lords have retired recently, their retirements having been announced by the noble Baroness the Lord Speaker, and they have not felt it necessary to bother the House with any valedictory speech. However, when I see just how conspicuous this first valedictory speech has become, I wonder why I did not take the same decision. I suppose that one excuse I could offer is that I seem to have given the experts on pensions, to whom I have been listening for the last hour or so, a bigger audience than perhaps they might otherwise have attracted—although whether that is regarded as an advantage I do not know. However, I feel humbled, in a sense, by the numbers—their curiosity seems to have overcome their apprehensions—who have come this evening. I only hope that they will not regret it.
One undertaking I can give is that, in view of the very kind things that have already been said in this debate, I think I can be extremely brief. The Procedure Committee said not more than 10 minutes; I hope I will be rather less than that. I can give the House one further assurance. I have been advised that it is not necessary in a valedictory speech for the speaker to address the subject of the legislation in which he has chosen to make the speech. If my noble friends on the Front Bench and others will forgive me, I will not do so. I have been enormously impressed by the expertise that has been demonstrated. As a former Minister in charge of pensions, I am lost in admiration and realise that it is just as well that I am not trying to talk about this legislation.
In recent weeks, I have been approached by a number of noble Lords from all parts of the House asking, sometimes with some asperity, why I am retiring. After all, I am getting on a bit and I realise that, but I have two answers; one is very short and the other is slightly longer. The short one is that after 50 years in Parliament—a number of noble Lords have already made reference to that—and at the age of 88, I feel that I have done enough. I have done what I can offer, and it is best to bow out and let others carry on.
The slightly longer answer is that, if this House is to continue to perform its hugely important functions in the running of this country, I totally believe that there has to be a constant infusion of new blood introduced into the House, with people who have current experience and whose experience of business or whatever field they have operated in is completely up to date. They can bring their advice and guidance to the House. If the House is not to remain too big—there seems to be a fairly widespread if not universal view that, as the second largest legislature in the world after the Chinese congress, we are a little big—it seems incumbent on oldies to hand over to a younger generation. Everyone
must make their own decisions about that: there is no sense of compulsion. I have made my decision and that is why I stand here before this House today.
Last month, a number of us were fortunate to attend what I found to be an inspiring thanksgiving service at Westminster Abbey for the late Mary Soames. Talking to people coming away from it afterwards, there was one phrase that was repeated by people: it really is the end of an era. When Winston Churchill’s youngest child passes on, that is the end of an era. I am conscious of having lived through much of that era. I was privileged in 1964 to follow Sir Winston as the Member of Parliament for Woodford, which was later renamed Wanstead and Woodford. I look back to the maiden speech that I made in the House on that occasion, where by convention the new Member is expected to say something nice about his predecessor. I thought, “What on earth can I say about that great man that would not be said with far greater eloquence by others?”. I therefore looked up his maiden speech to see what he had said on 18 February 1901. I was struck by a passage that impressed me. If nothing else, Sir Winston was a great parliamentarian. At the age of 26, just home from the Boer War, which was still going on, he said:
“In my opinion, based upon the experience of the most famous men whose names have adorned the records of the House, no national emergency short, let us say, of the actual invasion of this country itself ought in any way to restrict or prevent the entire freedom of Parliamentary discussion”.—[Official Report, Commons, 18/2/1901; col. 407.]
That was 40 years before Dunkirk, when the Nazis threatened the invasion of these islands. At the age of 26 he had such foresight. He was absolutely unique. Of course, during that war, as Prime Minister, he led this country to victory in 1945 and made sure that Parliament was always able to hold Ministers to account during that period. We should be very proud of that.
Here we are now in December 2014, 50 years after the 1964 general election. I look back and I have been very fortunate. I have had a very eventful life. It has had its tragedies. I never have the slightest hesitation when answering a question as to what for me was the biggest tragedy in that period. It was the death of my hero Iain Macleod, one month after he became Chancellor of the Exchequer. I see the noble Lord, Lord Armstrong, there. I have never forgotten—he was the Principal Private Secretary at No. 10 who rang us up early in the morning to give us the tragic news. For the rest of that day—indeed, for the weeks that followed—it was an appalling disaster and a huge loss for this country. I have no hesitation whatever in saying that.
Then, later on, the election of the first Thatcher Government was the start of six years’ service in her Cabinets. I have one disappointment. We always lined up every year for a Cabinet photograph, in two rows: the seated at the front with the Prime Minister and the standing at the back. I never made the front row. That gives one a very clear indication of where one stands on things. Those years saw successes and failures. I am not going to stand here and spell out the failures. There was a marvellous book published by two Essex University professors last year—a very revealing book— called The Blunders of Our Governments, by Professors Anthony King and Ivor Crewe. I have to tell your Lordships that my sins are ruthlessly exposed in that book.
I am sometimes asked what legacy one can point to. I am not sure that I am the right person to do that, but I offer two suggestions. In the other place I became Secretary of State for Industry and inherited six very major state-owned nationalised industries. As a former Chief Secretary, I could tell their chairmen and chief executives that there was no way they were going to get their investment requirements funded by the Treasury. I started with British Telecom and told the chairman that, if he wanted to have his £28 billion investment programme or whatever it was, he would have to go to the market and have 51% from the private sector. I look back at that decision: I was able to persuade first the Prime Minister and then the Cabinet that BT should be privatised. Other noble Lords were responsible for subsequent stages, but the decision to publish the White Paper and introduce the Bill was when I was Secretary of State. I look back on that with some pride. Nobody has ever suggested that that one should be reversed and I think it set a pattern.
What about this House? Some have pointed to the Science and Technology Select Committee report Science and Society of 1999. It was this report that convinced the scientific community—not just in the UK but across the world—that, if you wanted the public to support and understand, you had to engage with the public and not just preach down to them, and not just on the public understanding of science. It took a while for the message to get across, but there are very few national scientific bodies in this country or anywhere else that do not have their science and society activity, of which, quite rightly, they are very proud. Ten years after that report was published, the British Council organised a conference in London to celebrate the report. It was attended by the representatives of more than 55 different countries. As someone who never did any science at school or university at all, I felt rather pleased with that. It has not stopped: only last week at a gathering downstairs, to which I had been invited but did not attend, my son accepted an award for what is called “outstanding contribution to science”. It was meant for me. I am completely flabbergasted. However, there it is.
I am over my time. I must end by thanking all those who have made these 50 years possible, including my former constituents in Wanstead and Woodford, the clerks and staff of both Houses, and all the people who keep the wheels turning over and make it possible for us to do our job in the way that we do: the Library staff, the catering staff, the security staff, the police, the doorkeepers, the Printed Paper Office and many others. I offer to them all my heartfelt thanks. Above all, I thank my colleagues for their friendship and forbearance, and for their patience in listening to me this evening. My Lords, I will miss you all dreadfully.
5.19 pm
Lord Freeman (Con): My Lords, it is a privilege and a pleasure to speak immediately after my noble friend Lord Jenkin of Roding. I must say that this is the first time I have heard applause in this House, and I think that it is a great tribute to my noble friend. He has announced his retirement after 50 years’ service in Parliament, 25 years in the other place and 25 years here.
He was the MP for Wanstead and Woodford, and a Minister between 1970 and 1985. I think that those who have served in Government will realise that 15 years is a quite remarkable length of time. He was a Secretary of State three times—for social services, for industry and for the environment—and many of the Bills that he was responsible for and the decisions he took still stand and are respected.
I would particularly like to note the encouragement that my noble friend offered to new Members of the other place. He would not always praise them, but would offer them encouragement by saying, “I think that speech was a bit too long”—or too short, but that encouragement was always appreciated. It is now my pleasant duty to invite the House to salute in the traditional way a parliamentary career of great distinction and to wish my noble friend not only long life and happiness with his family, standing at the Bar and represented there, but also the wish to see him back here in the House often. We all salute a great parliamentarian.
Lord Freeman: My Lords, I am quite conscious of the fact that my contribution to the Pension Schemes Bill is not likely to attract this number of noble Lords so, as they say, please leave quietly. I shall restrict my remarks to a relatively short period of time, because we are pressed by our schedule.
These two important Bills follow the very welcome Budget and subsequent announcements from the Chancellor of the Exchequer, which I fully support. Many noble Lords will warmly welcome the flexibility of the rules being proposed in these two Bills, particularly in relation to defined contribution schemes. I shall restrict my remarks to direct and defined contribution schemes rather than defined benefit schemes, which of course for very large companies in this country, including in particular the public sector, make up the majority of schemes. However, it is the defined contribution schemes where the amount of money that has been saved by the prospective pensioner is going to be affected quite significantly.