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House of Lords

Tuesday, 12 February 2013.

2.30 pm

Prayers—read by the Lord Bishop of Worcester.

Retail: Business Rates

Question

2.36 pm

Asked by Lord Naseby

To ask Her Majesty’s Government whether, in the light of trading conditions in 2012-13, particularly for independent retailers, they will modify the automatic increases in business rates.

Lord Naseby: My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I should mention that a member of my family works in the retail trade.

The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham): My Lords, our commitment to hold business rate rises to the annual retail prices index cap means that there has been no real-terms increase in business rates since 1990. We have provided and are continuing to provide considerable support on business rates, including temporarily doubling the level of small business rate relief for another year. We have also postponed the revaluation of business premises from 2015 to 2017.

Lord Naseby: My Lords, that is a half encouraging answer from my noble friend, but is she fully aware that over 3 million people are employed in the retail trade, and that, equally importantly, at least 1 million of them are young people aged under 25? The situation on the high street in the past 12 to 14 months has been dire. Against that background, surely the time has come for Her Majesty’s Government to review the business rates, as it affects retailers and, frankly, for just one year to freeze those business rates?

Baroness Hanham: My Lords, the Government are committed to doing all they can to support the high street and other businesses. As the noble Lord made clear, the employment opportunities there are dire at the moment and we want to boost them as much as we can. The high street is facing challenges such as the rise of internet shopping. That is why the Government are offering practical support such as the Portas-plus package, and, as I said, why they have doubled the small business rate relief. We have also given authorities powers to grant their own discounts, which can be used to support local businesses, including shops.

Lord Peston: My Lords, is not the reason why the high street is in such a mess the catastrophic failure of the Government’s economic policy? What is required

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for the high street to get going is what is required for the whole British economy to get going: first, that the Government stop blaming their predecessor—the economy was certainly in a better state then than it is now—and, secondly, that they engage in an expansionary rather than a contractionary fiscal policy.

Baroness Hanham: My Lords, the Government are dealing with the deficit left by the previous Government. I do not think the noble Lord would expect me not to get that crack in one way or another. Whoever and whatever, we have realised that the economic situation is not helping. The Question is about small businesses. We are doing all that we can to help small businesses and to encourage the development of shops and other businesses. We are also very well aware of the essential nature of boosting employment, and we are trying to do that by a number of means.

Lord Cotter: What are the Government doing about the situation, which has long applied, whereby small shops proportionately pay a large amount more than supermarkets do in business rates? In proportion, they pay an enormous amount more.

Baroness Hanham: My Lords, as the noble Lord knows, business rates are set on the basis of value. That is carried out by the valuation office. We are helping small businesses in every way that we can. I am sure that noble Lords would not discount the fact that many small businesses now are not paying any rates because they have 100% relief. They can also appeal to their local authorities for a further discount.

Lord Anderson of Swansea: My Lords, what is very striking about any small town in France is that there are a number of small businesses in the high street. Of course, the supermarkets are grouped outside. Has the Minister considered what lessons we might learn from the French experience?

Baroness Hanham: My Lords, business generates itself, and I agree very much with what the noble Lord has said about small individual businesses. In fact, a number of those are being generated at the moment. In all high streets, there are people who are setting off in entrepreneurial ways. I do not think that is something that the Government want to deal with, but we want to ensure that, where we can, we encourage small entrepreneurs to develop their own businesses.

Lord Skelmersdale: My Lords, my noble friend the Minister mentioned the competition with the high street from internet shopping. Would she accept that the most successful firms in the high street also have internet sales operations?

Baroness Hanham: My Lords, the internet shopping people do in fact contribute to the rates, as they have to pay for the premises they use to store their goods and where they have their offices. As for internet shopping, well, there it is; many people take advantage of it. I am not sure that the Government can do anything about that, or would want to.

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Lord Harris of Haringey: My Lords, given the importance of London to the nation’s economy as a driver of economic growth, will the Government address the situation in which more than £2 billion that London businesses pay in business rates is redistributed across the rest of the country, rather than ploughed back into economic development in London?

Baroness Hanham: My Lords, I have a feeling of déjà vu about this question, which was asked when we were in opposition for exactly the same reasons. The noble Lord probably answered it. The distribution and the way the rates are set are not entirely a matter for the Government. I know that the mayor is making the representations that the noble Lord has made and which have been made for a number of years in both directions.

Lord Phillips of Sudbury: Does my noble friend the Minister agree with the very many who say that the greatest problem of our day is in fact the steady breakdown of community life? Does she accept that in that regard independent retailers and service providers in towns contribute a huge amount to the fabric and cohesion of their communities, which the socking great supermarkets do absolutely nothing for?

Baroness Hanham: My Lords, I am not going to deny that supermarkets have a major role to play, but I accept, as I did in response to a previous question, that small entrepreneurs and small businesses in the high streets add value not only to the community but to the economy. We do not need shops that are boarded up and shut; we want small businesses to move in. There are plenty of examples of that happening both in London and in the countryside. I think I am right in saying that over 90% of the country’s economy lies on the back of small businesses.

First World War: Commemoration

Question

2.44 pm

Asked By Lord Clark of Windermere

To ask Her Majesty’s Government what progress they have made with their plans to commemorate the centenary of the First World War.

Lord Gardiner of Kimble: My Lords, there has been significant progress in this £53 million programme of funded activity. Remembrance, youth and education will feature prominently in national events to mark the war’s first day, the Battle of the Somme and Armistice Day. Gallipoli, Jutland and Passchendaele will also be commemorated. The Government are actively developing plans with more than 20 Commonwealth and other Governments on both sides of the war for participation in their events. Community activity across the UK is also being strongly encouraged.

Lord Clark of Windermere: I compliment the Government on the manner in which they are “celebrating” this commemoration, but is the Minister aware that there

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are still people who say that this should be purely a celebration and not the agreed commemoration? Will he give the House an assurance today that the Government will not stray from the line of commemoration? Will there be sufficient resources for the activities that, as the Minister acknowledges, will take place in towns and villages up and down our land? Has the Heritage Lottery Fund allocated any extra finance to make those initiatives possible?

Lord Gardiner of Kimble: My Lords, in the extensive briefing that I have had, the word “celebration” has never featured at all. This is a moment for our nation and other nations to commemorate gallant men and women, and that is the whole focus of what the Government are seeking to lead on. On the noble Lord’s point about community projects, yes, there will be at least £6 million from the Heritage Lottery Fund for community-based projects. In addition, £9 million has already been committed to World War I-related projects across the land and there will be activities overseas as well.

Lord Elton: My Lords, the engagements that my noble friend listed in his substantive Answer are all well remembered. However, I ask him to put before those who are arranging this event the less well remembered but almost more tragic campaign in Mesopotamia during the First World War. I declare an interest, if that is the right way of putting it, as the son of one of the small minority of survivors from the besieged garrison who survived both that campaign and the horrific treatment they received on the 1,000-mile march afterwards. Can that be put on record as a commemoration as well?

Lord Gardiner of Kimble: My Lords, there will be discussions with the Turkish authorities on matters such as the Mesopotamian expeditionary force and the work undertaken by men and women from India as well as from our country. If I may say so, my late father-in-law served in the Poona Horse in Mesopotamia in the second war, so I am aware of the bravery of men and women in that sector, too.

Lord Empey: My Lords, given that HMS “Caroline”, which is currently moored in Belfast, is the last surviving commissioned light cruiser that participated in the battle of Jutland, what plans do the Government have for the future of that vessel?

Lord Gardiner of Kimble: My Lords, the interesting part about HMS “Caroline”, which will be restored with a £1 million National Heritage Memorial Fund award, is that it is the last surviving warship of the Battle of Jutland. It has been berthed in Belfast since 1924, and I very much hope that it will be an important part of Northern Ireland’s, and indeed Ireland’s, commemoration of the many gallant men and women who served in that war.

Baroness Hussein-Ece: My Lords, given that approximately 1.6 million women joined the workforce between 1914 and 1918 in a wide range of roles, including 950 women who were employed in munitions factories by Armistice Day, will the Minister confirm that the hugely important

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role that women played during the First World War will be recognised in the commemoration that he has outlined?

Lord Gardiner of Kimble: My Lords, the role of women will be very much part of the commemoration. It is, indeed, an integral part of the Imperial War Museum’s new First World War galleries, which will be opened next summer. The Government will mark the service and sacrifice of Edith Cavell as a symbol of the contribution made by women.

Lord Faulkner of Worcester: My Lords, I declare an interest as a member of the Government’s World War One centenary advisory board and as chair of the All-Party War Heritage Group. What progress has the Minister’s colleague Dr Andy Murrison made with his imaginative plans to recreate the Christmas Day truce football match between English and German troops that took place in 1914?

Lord Gardiner of Kimble: My Lords, there is clearly a totemic significance to the Christmas truce, and it should be commemorated. Discussions are ongoing with the Football Association and the National Children’s Football Alliance.

Lord Wright of Richmond: My Lords, may I support the Minister’s word “commemoration” and suggest that, in due course, some thought should be given to celebrating the Armistice in 1918?

Lord Gardiner of Kimble: The day falls on a Sunday, and will clearly be part of the ongoing discussions. Yes, the word is “commemoration”—of all that happened in those four years of a dreadful war.

Baroness Sharples: Is my noble friend aware that the Imperial War Museum has received letters written by those who served in the war? I had two uncles who were killed in 1916 and 1917 and who wrote wonderful letters. The Imperial War Museum has made copies of them. I hope everybody will read them.

Lord Gardiner of Kimble: The Imperial War Museum is in the lead. I have mentioned the £35 million that will be spent on the new galleries, but it will also be very much involved in a digital platform on the lives of those who served in the First World War and is leading an 800-organisation centenary partnership. It is doing tremendous work already.


Food: Waste

Question

2.51 pm

Asked by Baroness Jenkin of Kennington

To ask Her Majesty’s Government what plans they have to encourage a reduction in domestic food waste.

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The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley): My Lords, the waste review sets food waste as a priority, outlining the Government’s commitment to tackle it by focusing on waste prevention. The Government are working through agreements with food retailers, manufacturers and the hospitality sector to reduce food waste. We are helping households waste less and save money through WRAP’s “Love Food, Hate Waste” campaign.

Baroness Jenkin of Kennington: I thank my noble friend for that reply and welcome the improvement in the figure, but the fact is that food waste costs the average household £640 a year, which is a total of £12 billion to the country, and shows that there is much more to be done to help the consumer prevent this waste. Does my noble friend agree that supermarkets have a significant role to play in this area? While, for example, Asda’s promotion of WRAP’s “Love food, Hate Waste” campaign and the recent announcement by Sainsbury’s that its guidance to customers will move from “freeze on day of purchase” to “freeze up to the use-by date” are also to be welcomed, there is very much more they could be doing to support and encourage consumers in this area.

Lord De Mauley: My noble friend is quite right that food waste is costing households a substantial amount of money. She is also right that there is more to be done to help people, and I agree that supermarkets have a significant role to play in this area. The major food retailers have been taking action to reduce food waste through the Courtauld commitment and have helped consumers to save money and waste less through innovations such as resealable salad bags, recipe ideas for leftovers and smaller loaves of bread. WRAP has also been working with food businesses to help them make informed decisions about date labelling, which will help reduce food waste.

Baroness Parminter: Does my noble friend agree that we should place greater value on the food we eat? Will the Government’s Green Food project promote eating less, but better, meat, which could improve consumer health and animal welfare, cut carbon emissions and reduce domestic food waste?

Lord De Mauley: I thank my noble friend for that important and interesting suggestion. I will take it back.

Lord Lea of Crondall: My Lords, does the Minister agree that there might well be a current spike in food waste that could be addressed by more of the waste being taken away by horse and cart?

Lord De Mauley: Very droll, my Lords. I can assure the noble Lord that when products such as those that I think he is referring to are tested, or are part of an ongoing investigation, they will be held securely and when ready to be released the products will be disposed of appropriately. Of course, if it is safe and appropriate for a product to go to anaerobic digestion rather than

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incineration or landfill, I hope it will. Needless to say, products that are not fit to be sold will not find their way back into the food chain.

Lord Deben: My Lords, I declare an interest as chairman of Vision 20:20, which is concerned to do something about this. Is it not time that we banned this material from landfill? It is seriously dangerous to create methane. Banning it would enable us to insist upon much wider recycling of that which is wasted.

Lord De Mauley: My Lords, we have committed to reviewing the case for restrictions on sending particular materials to landfill over the course of this Parliament, including looking specifically at textiles and biodegradable waste. We are focusing on collecting the evidence. Our experience from working on wood has shown us that a good understanding of the data, waste streams, markets and other issues are vital to making informed decisions. Before making proposals on restricting any particular materials, the Government will need to be content that that is the best-value way of moving material up the waste hierarchy and that the costs to businesses—and, indeed, to the public sector—are affordable.

The Lord Bishop of Worcester: My Lords, does the Minister accept that how we use the earth’s resources appropriately, exploit its potential and treat fellow humans are moral as well as financial issues? Does he accept that extravagant or unnecessary waste of food should challenge us to think, “Who is my neighbour?”, and to answer that question with integrity?

Lord De Mauley: Absolutely, my Lords. The right reverend Prelate is 100% right.

Baroness Gardner of Parkes: My Lords, is the Minister aware that in the supermarkets, the “best before” label apparently means that they are not allowed to sell it after that date. Yet there is quite a period when that food remains good, and this is a great source of waste. Many large establishments give all of that food away to homeless charities and people who come to collect. Are the Government or any of the private enterprises looking into spreading that practice so that people are not wasting food which is still good for some days?

Lord De Mauley: My noble friend raises an important point. “Use by” and “best before” dates help consumers to know what is safe to eat. They are required by law. The “sell by” and “display until” dates, however, are not intended for customers and can confuse them. We have encouraged retailers to remove these from goods or to render them invisible to the human eye. Encouragingly, the WRAP retailer survey 2011 found that new labelling being rolled out by retailers including Marks & Spencer and Sainsbury’s makes it clear that consumers do not have to freeze goods on the day of purchase, but can do so any time up to the “use by” date. A number of supermarkets have also introduced new, larger, single-date label stamps on to products to help consumers make the best use of the food.

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Banking: LIBOR and EURIBOR

Question

2.57 pm

Asked By Lord Bates

To ask Her Majesty’s Government what plans they have to review the working of the Financial Services Authority’s executive settlement procedures in the light of discounts applied to fines levied as a result of misconduct in relation to the setting of the London Interbank Offered Rate (LIBOR) and the Euro Interbank Offered Rate (EURIBOR).

The Commercial Secretary to the Treasury (Lord Deighton): My Lords, the Financial Services Authority awards discounts for early settlement of cases involving financial penalties, as it considers early settlement to be in the public interest. The Government take the manipulation of LIBOR and EURIBOR very seriously. We accepted the weekly review recommendations on LIBOR, and are implementing them in full. Furthermore, we are ensuring that the money raised from these fines will go to specific causes which demonstrate the best of British values.

Lord Bates: I am grateful to my noble friend for that Answer. Does he agree with me that the manipulation of these rates by some banks was a deeply cynical fraud against borrowers in times when they could least afford it, and that while the fines levied by the FSA on those responsible may be at record levels they were a small fraction of the profits made by those institutions? The fines were substantially less than those imposed by the US regulator. Due to the FSA’s executive settlement procedures, those responsible received over £100 million in discounts on the fines levied so far. Would it not be more in keeping with the way in which banks treat their own customers if the FSA was now to scrap early-settlement discounts and replace them with a system of late-settlement penalties?

Lord Deighton: My Lords, my noble friend makes an important point about the seriousness with which we are addressing this attempted manipulation of LIBOR rates. On the specific question of the penalties, the Financial Services Authority is the independent regulator. It is mandated to set all the rules on regulatory matters. That includes decisions about using early-settlement discounts as a way of managing the process. It considers it in the public interest to settle matters in cases involving financial penalties as early as possible and to provide incentives. There are many advantages in early settlement. It helps consumers to get compensation earlier than would otherwise be the case and prevents cases being contested at the regulatory decisions committee, which could cost a lot of time and money.

Lord Barnett: My Lords, does the noble Lord find it as astonishing as I do that, on an issue such as interest rates, which is obviously of great concern both nationally and internationally, nobody in the Bank of England or the Treasury had the faintest idea about what was going on with LIBOR?

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Lord Deighton: My Lords, I absolutely accept the noble Lord’s observation that it is really a swingeing indictment of the financial system that a benchmark as critical as LIBOR—which is responsible for settling about $300 trillion-worth of transactions—could be manipulated in this way. Once this was uncovered, however, the Government have moved extremely swiftly, appointing Martin Wheatley, the chief executive-designate of the Financial Conduct Authority, to do a review. He came up with a 10-point plan, which has been implemented in full. The Financial Services Act was amended to make sure that LIBOR activities were brought within statutory regulation; we created a new criminal offence to ensure that it could be followed up in that way and the FSA has now been given the power to compel banks to participate in LIBOR setting.

Lord Higgins: My Lords, would my noble friend agree that the general public are somewhat bemused by the large sums of money involved in these transactions and are even more puzzled as to why there seem to be very few people who have been either prosecuted or convicted with penalties affecting the individuals concerned? Could my noble friend comment on that?

Lord Deighton: My Lords, with respect to the sanctions and penalties, I would point out that there are ongoing criminal investigations with the Serious Fraud Office. Three arrests were made at the beginning of the year, so it is clear that we are determined to follow through on picking up on criminal activity where that can be proven to have taken place.

Lord Eatwell: My Lords, before asking my question, I wonder if the noble Lord could clarify part of his answer to the noble Lord, Lord Bates, where he referred to the “attempted” manipulation of LIBOR. Is he saying that the manipulation failed? Turning to the Question, when I was a member of the Regulatory Decisions Committee of the Financial Services Authority, discounts on penalties were offered for early settlement only in cases where either the firms had reported their own failings or they had offered exceptional levels of co-operation. Did either of these circumstances apply in this case to British banks prior to measures taken by the American authorities?

Lord Deighton: With respect to the noble Lord’s question on whether the attempt was successful, I think that is actually the issue. The FSA’s review found that it was unclear whether the manipulation did result in a change of rates, so that is an open question. On the degree of co-operation shown by the firms under investigation, I understand that the firms were entirely co-operative. Of course, they are all under new management and, effectively, are the new brooms trying to sweep clean. I am afraid that I cannot layer together the timing of that co-operation vis-à-vis the application of the US penalties, but I am happy to look into that and get back to the noble Lord.

Lord Forsyth of Drumlean: Are the Government comfortable with very senior executives in the FSA, who are after all responsible for deciding those penalties, being able to move rapidly into employment with the banks at seven-figure salaries?

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Lord Deighton: My noble friend makes a good observation. Clearly, there were some gaps in the historical supervisory structure, which is why we have passed the Financial Services Act reforming entirely the regulatory apparatus around this business. Of course, the FSA is about to be replaced by a combination of the Financial Conduct Authority, the Financial Policy Committee and the Prudential Regulation Authority. We now have a new regime surrounding this arena. I share my noble friend’s concern that moving from gamekeeper to poacher needs to be managed closely.

Lord Campbell-Savours: Are the penalty levels to which the noble Lord referred set in legislation? If so, can we not change the legislation?

Lord Deighton: The penalty levels are a matter for the FSA. In 2010, it re-established the code under which it assesses the fines to make them more transparent. It is an area which has been recently reviewed.

Baroness Kramer: My Lords, may I at least commend the FSA for a new penalty regime which affected misbehaviour after 6 March 2010 and finally had some serious fines behind it? However, I still recommend the US system of triple damages. Does the Minister agree that it is crucial that the Government and all politicians stand behind the regulator in fierce enforcement and tough penalties? It was the slack that we saw cut for the banks under the previous Government that demonstrated to people that government and the regulator seemed to be on the side of the banks and not the people or the taxpayers?

Lord Deighton: My noble friend makes an extremely good point that under the new regime it is critical that government and regulators are seen to work together and to represent the interests of the consumers.


Hertfordshire County Council (Filming on Highways) Bill [HL]

Second Reading

3.07 pm

Moved By The Chairman of Committees

That the Bill be read a second time.

Bill read a second time.

Crime (International Co-operation) Act 2003 (Designation of Participating Countries) (England, Wales andNorthern Ireland) Order 2013

Motion to Approve

3.07 pm

Moved By Baroness Stowell of Beeston

That the draft order laid before the House on 8 January be approved.

Relevant document: 15th Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 7 February.

Motion agreed.

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Scrap Metal Dealers Bill

Third Reading

3.08 pm

Bill passed.

Public Service Pensions Bill

Report

3.08 pm

Relevant documents: 10th and 13th Reports from the Delegated Powers Committee.

Schedule 1 : Persons in public service: definitions

Amendment 1

Moved by Lord Eatwell

1: Schedule 1, page 23, line 6, at end insert—

“(c) the Defence Fire and Rescue Service”

Lord Eatwell: My Lords, this amendment refers to the position of the Defence Fire and Rescue Service within the structure of the Bill. Noble Lords will remember that it was revealed in the discussion of the Bill in Committee—the issue had not been discussed in another place—that the Defence Fire and Rescue Service had an anomalous status relative to that of other firefighters within the UK. In particular, while other firefighters within the UK had their retirement age fixed at the age of 60, together with other uniformed services, the Defence Fire and Rescue Service at that time had a retirement age tied to the statutory retirement age. Therefore, it would be 65, rising in accordance with the pattern planned for the increase in the statutory retirement age.

My hypothesis in Committee was that this was simply a slip and a mistake and that people had just happened to miss the fact that a category of firefighters was not covered in the actual language of the Bill. I therefore expected that, once the Minister had taken the matter back—he conceded in Committee that he had not had the opportunity to consider it with any great care—the mistake would be understood and the firefighters would be included with the other uniformed services, having their retirement age fixed at 60, as is the case with the other uniformed services. However, to my considerable surprise, this has not been the case. I understand that the firefighters—and, indeed, the Ministry of Defence Police, to which I will turn in a moment—have met the Minister and that he has turned down this proposition. He has substituted for it the assurance that their pension age would be maintained at 65 and not, perhaps, go up with the statutory pension age, although his assurance was not terribly clear in the sense that it referred to a three-year differential between the statutory retirement age and that for Ministry of Defence firefighters. In due course, when it gets to 68 or 69, as we all live longer, those firefighters would see their retirement age go up—or so I presume;

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perhaps the Minister can clarify that later on—while that of their colleagues in the rest of their fire service would stay the same, at 60.

The Minister has one fundamental question to answer. It is an answer that not just this House but the firefighters themselves deserve. How does their job differ from that of local authority firefighters? In what way is it less onerous, when they have to work on military establishments, dealing on occasion with extremely dangerous materials, and occasionally also in war zones? How is their job less onerous? In those circumstances, why should we have this situation in which their retirement age is five years higher?

I wonder whether the Minister has taken the trouble to find out when the Defence Fire and Rescue Service members actually retire. If he did take that trouble, he would find out that the majority of them retire before the age of 60. They retire early, with a significantly reduced pension, and they have to do that because they are physically unable to keep going. A study performed by the Civilian Consultant Adviser in Occupational Medicine for the Defence Fire Risk Management Organisation not only produced data but argued that continuing beyond the age of 60 was detrimental to the long-term health of firefighters in the Ministry of Defence Fire and Rescue Service. If the noble Lord had taken the trouble to find out what was actually happening, he would have found out that firefighters in this service are forced to retire early due to their physical condition or because they are unable to pass the regular physical examinations they undergo to ensure that they can perform their duties to the required standard.

3.15 pm

As I said in my introduction, initially I presumed that this omission was a mistake and I still think that that is the case. However, some pen-pushing bureaucrat is defending his back against men who risk their lives and health for us on a regular basis by producing the argument that if the age of retirement, which is currently 65—even though the majority retire before 60—were reduced to 60, like that of all other uniformed services, this would be the only group in the entire public service to have their retirement age lowered by the Bill. I refer the person who wrote to the Ministry of Defence firefighters to that effect to the excellent report of my noble friend Lord Hutton, in which he said:

“The current public service pensions structure was not designed for modern working patterns and has been unable to respond flexibly to changes in this area and to demographic change over the past few decades. This has led to … unequal treatment of members within the same profession”.

What we are discussing is a prime example of exactly that. Therefore, Amendment 1 seeks to incorporate the Defence Fire and Rescue Service firefighters within the overall category of firefighters to ensure that they are treated in exactly the same way as their fellows in local authority and other fire services.

Amendment 2 seeks to do the same for the Ministry of Defence Police. I ask the noble Lord to answer these questions. In what way are the tasks of the Ministry of Defence Police, who have to carry body armour and weapons at virtually all times, less onerous

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than those of the regular police forces? In what way are their tasks different? With respect to the police forces, we have a hint that perhaps the hypothesis that this is all a mistake is correct given that the definition of “members of a police force” in Schedule 1 states:

“In this Act ‘members of a police force’—

(a) in relation to England and Wales, includes special constables and police cadets”.

That is the only definition. It does not mention police forces that report to a police authority. It simply refers to,

“members of a police force”,

and states that that includes the cadets. It could be any police force: for example, the British Transport Police, the Ministry of Defence Police, and the nuclear protection forces.

I do not want to give the Government the opportunity to reinforce their discrimination against Ministry of Defence employees but there is a clear possibility that a discriminatory mistake is being made in this regard. It really is not sufficient, at the 11th hour, for the Minister simply to say, “Oh well, we’ll fix it at 65”, when one considers the nature of the work done by, and the considerable physical demands on, local authority firefighters and Ministry of Defence firefighters. It is important to recognise the nature of the work done and that the categories into which we would place the Ministry of Defence firefighters and police are exactly the same as those of local authority firefighters and normal police forces that report to police authorities. I beg to move.

Lord Whitty: My Lords, my name is attached to the first of these amendments and I support the second one. I do not want to add a lot to what my noble friend has said but I concur with him that at some point along the line, there has been either a mistake or an oversight. There can be very little argument but that the uniformed ranks who happen to be employed by the Ministry of Defence do a very similar and, if anything, significantly more dangerous job in certain locations than firefighters generally, and that therefore the exception to the general rule that applies to uniformed staff covered in my noble friend Lord Hutton’s report ought logically to apply to this group of workers. I cannot see a logical argument for excluding them from that exception.

My second point is that this group is in a Civil Service scheme that covers several hundred thousand people. We are dealing here with a unique workforce of 800 firefighters who serve our defence forces in the United Kingdom, in war zones and in other parts where the British Armed Forces operate abroad. They are not like the rest of the Civil Service, and nor would it be a major cost to the Civil Service scheme were this anomaly to be rectified in the Bill. In the other areas of the Bill in which I am interested as regards the local government scheme, the Minister has been pretty flexible over many aspects, which I applaud—and he will, I hope, be more flexible later this afternoon. However, I am surprised that he cannot see that this is an issue on which the Government could easily concede; it would meet with huge approval, would cost very little and would correct an anomaly that has been there

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for some time but does not need to be aggravated by raising the normal statutory retirement age, which the rest of the Bill does.

I ask—I plead with—the Minister, if he is not prepared to accept the amendment, to take it away again and consider it seriously, because in this respect his civil servants, whether in the Ministry of Defence or the Treasury, are not serving him well. We should have found a way through this. We should find a way this afternoon to ensure that the position of this group of workers is recognised and reflected in statute.

Lord Hutton of Furness: My Lords, perhaps I should briefly join the debate because my report has been cited by my noble friend. I echo the comments of my noble friends and support their argument. I ask your Lordships’ House to indulge me if I revisit some of the issues from my report. It talked about the uniformed services in general, not about whether you happened to be in the Civil Service scheme or any other scheme. I talked about uniformed services—firefighters, police and the Armed Forces. My report made a simple argument that the nature of their service is unique and should be reflected in the pension arrangements that we make for them.

I have to say that if, during the course of my inquiry, I had known about the unique circumstances of the MoD firefighters, I would have referred specifically to them in my report and urged the Government to show some flexibility, support and sympathy for the special role that they play within our Armed Forces. Sadly, this issue was not drawn to my attention, so I did not make any specific recommendations about the MoD firefighters or the MoD police. If I had known about it, I certainly would have done so.

I am sympathetic to the Minister’s position. I am sure that his officials have told him that enormous complexity is involved in changing the normal pensionable age for this group of workers. However, I ask the Minister to remind himself—I know what a decent and honourable person he is—of the fact that this is fundamentally a matter of fairness and of the need to approach the issue in the right way. I do not believe that there is any substantive technical reason why we cannot look again at the role of the MoD firefighters and the MoD Police. If there is a technical issue it has to be addressed on the face of the Bill, as my noble friend suggested, or in the scheme regulations or the discussions with the relevant trade unions. Surely there has to be a way of doing the right thing for these people. The MoD firefighters currently happen to be in the Civil Service pension scheme, which has a higher retirement age than the firefighters scheme or the Armed Forces scheme. It is incumbent on us to address that issue and not to use the technical arguments as an excuse for not addressing this fundamental discrepancy.

I am not familiar with the history of all this—I am sure that there is a lot of history to it—but I wish that it had been raised with me, as I would have referred to it in my final report in the way that I have suggested. However, we now have an opportunity to do the right thing for these people, and I hope that this House takes the right course.

12 Feb 2013 : Column 571

Lord Newby: My Lords, these amendments reflect an issue about which I know many noble Lords feel strongly. Before I address the amendments themselves, perhaps I may remind the House of the context and the background.

These forces are made up of civil servants directly employed by the Ministry of Defence. Although there are some similarities with their counterparts in the Home Office police and the local authority fire and rescue services, their terms and conditions of employment are set by the Ministry of Defence and are therefore materially different in many respects. As civil servants they benefit from provisions which are not available to their non-MoD counterparts, such as the Civil Service compensation scheme, injury benefit provisions, relocation and leave allowances. The amendments being suggested would fundamentally alter the status of these individuals and that should not be carried out lightly.

I should remind the House that, as civil servants, individuals joining these forces currently have access to the Principal Civil Service Pension Scheme. This means that since 2007 those joining these forces have had a normal pension age of 65. The amendment proposed by the noble Lord, Lord Eatwell, would reduce that pension age to 60. He has already referred to this argument, but I shall make it again. Such a reduction in pension age runs counter to the Government’s aim of managing the risks associated with increasing longevity. It would also make these workforces unique in seeing a five-year decrease in their pension age as a result of these reforms.

Furthermore, there are a number of problems associated with the specific amendments that have been proposed. First, it is not clear how the amendments proposed by the Opposition would be implemented. The institutional architecture required for these workforces to become part of the non-MoD fire and police schemes would need to be established, bringing with it additional cost. The non-MoD fire and police schemes are locally administered and early work suggests that in order to include the DFRS and MDP in these schemes, equivalents of elected police commissioners and fire authorities would need to be established for these forces. The schemes are also discussed and established through fora which the MoD forces do not participate in, and which are not designed to cater for them, such as the Police Negotiating Board.

The amendment would also split the remuneration of these individuals so that their pay and other conditions are controlled by the Ministry of Defence while their pension entitlement would be set by either the Department for Communities and Local Government or the Home Office. This will potentially place financial risks on the Ministry of Defence over which it has no control and, more importantly, would prohibit the MoD from taking a view on appropriate remuneration for these forces in the round.

However, the Government are not deaf to the concerns of the House. I have listened carefully to the arguments for providing these groups with additional protection. I have, as the noble Lord, Lord Eatwell, mentioned, also met representatives from the groups themselves to hear their concerns. One of the issues that they highlighted was that as SRA and NRA increases in the decades

12 Feb 2013 : Column 572

ahead, the disparity between their retirement age and that of their civilian counterparts would be increased and their retirement age would move towards 68. They believe that such further increases in retirement age would be unfair and unreasonable, and I agree. Therefore, I held discussions with colleagues in the Treasury and the Ministry of Defence. As a result, the Ministry of Defence pledged to look at appropriate ways in which the issue could be managed so that retirement at 65 could be maintained in the new pension schemes established by the Bill when they are implemented in 2015.

This is a sensible way for the issue to be resolved. The details of these changes should be discussed by the employer and their employees, and, for the MDP in particular, in conjunction with the consideration already under way of their wider terms and conditions. In the light of these arguments, I hope that the noble Lord will feel able to withdraw his amendment.

3.30 pm

Lord Eatwell: Well, my Lords, we got the answer that we all feared. We were told that somehow the unique position of an injustice is such that the injustice should be maintained. We were told that it was not clear how the changes could be implemented. “It’s just too jolly complicated. Our staff aren’t up to it. We haven’t got enough civil servants who can puzzle through all these problems. There is no way through”. That is ridiculous.

We were told that somehow these firefighters would have to be transferred to other pension schemes. I am afraid that that is not the case. Civil Service pension schemes are flexible and perfectly able, as currently structured, to take into account differing retirement ages.

We then heard the proposition that the differential—the unfairness—should be fixed at five years’-worth of unfairness, with the retirement age of MoD firefighters and police being kept at 65. Apparently this is not too difficult to implement. We can find a way to fix the retirement age at 65 but we cannot find a way to fix it at 60. I am afraid that the Minister has significantly reduced the credibility of his own arguments.

He also completely failed to address two fundamental points. He failed to answer the question: in what way do the working conditions of Ministry of Defence firefighters differ from those of local authority firefighters? He failed to take into consideration that the majority of MoD firefighters are forced to retire before the age of 60 because of physical and other health reasons. He also failed to take into account the point made by my noble friend Lord Hutton that this is a fundamental issue of fairness. Given that that is the position, we owe it to Ministry of Defence firefighters and police to agree this amendment. I urge noble Lords to do so and beg leave to test the opinion of the House.

3.33 pm

Division on Amendment 1

Contents 216; Not-Contents 193.

Amendment 1 agreed.

12 Feb 2013 : Column 573

Division No.  1

CONTENTS

Adonis, L.

Ahmed, L.

Alli, L.

Alton of Liverpool, L.

Anderson of Swansea, L.

Bach, L.

Bakewell, B.

Barnett, L.

Bassam of Brighton, L. [Teller]

Best, L.

Bhattacharyya, L.

Bichard, L.

Bilston, L.

Blackstone, B.

Blood, B.

Boothroyd, B.

Bradley, L.

Brooke of Alverthorpe, L.

Brookman, L.

Brooks of Tremorfa, L.

Browne of Belmont, L.

Butler-Sloss, B.

Campbell of Surbiton, B.

Campbell-Savours, L.

Carter of Coles, L.

Christopher, L.

Clancarty, E.

Clark of Windermere, L.

Clarke of Hampstead, L.

Clinton-Davis, L.

Cobbold, L.

Collins of Highbury, L.

Condon, L.

Corston, B.

Coussins, B.

Craig of Radley, L.

Crawley, B.

Davidson of Glen Clova, L.

Davies of Coity, L.

Davies of Oldham, L.

Davies of Stamford, L.

Dean of Thornton-le-Fylde, B.

Deech, B.

Desai, L.

Donaghy, B.

Donoughue, L.

Dubs, L.

Eames, L.

Eatwell, L.

Elis-Thomas, L.

Elystan-Morgan, L.

Evans of Parkside, L.

Evans of Temple Guiting, L.

Evans of Watford, L.

Falconer of Thoroton, L.

Falkland, V.

Farrington of Ribbleton, B.

Faulkner of Worcester, L.

Filkin, L.

Ford, B.

Foulkes of Cumnock, L.

Gale, B.

Gibson of Market Rasen, B.

Giddens, L.

Glasman, L.

Golding, B.

Gordon of Strathblane, L.

Goudie, B.

Gould of Potternewton, B.

Graham of Edmonton, L.

Grantchester, L.

Greenway, L.

Grenfell, L.

Grocott, L.

Hannay of Chiswick, L.

Hanworth, V.

Harris of Haringey, L.

Harrison, L.

Hart of Chilton, L.

Haskins, L.

Haworth, L.

Hayman, B.

Hayter of Kentish Town, B.

Healy of Primrose Hill, B.

Hilton of Eggardon, B.

Hollick, L.

Hollins, B.

Hollis of Heigham, B.

Howarth of Newport, L.

Howe of Idlicote, B.

Howie of Troon, L.

Hoyle, L.

Hughes of Stretford, B.

Hughes of Woodside, L.

Hunt of Chesterton, L.

Hunt of Kings Heath, L.

Hutton of Furness, L.

Irvine of Lairg, L.

Janner of Braunstone, L.

Jay of Paddington, B.

Jones, L.

Judd, L.

Kakkar, L.

Kennedy of Southwark, L.

Kennedy of The Shaws, B.

Kestenbaum, L.

Kidron, B.

Kingsmill, B.

Kinnock, L.

Kinnock of Holyhead, B.

Kirkhill, L.

Knight of Weymouth, L.

Laming, L.

Lea of Crondall, L.

Leitch, L.

Levy, L.

Liddle, L.

Lipsey, L.

Lister of Burtersett, B.

Low of Dalston, L.

McAvoy, L.

Macdonald of Tradeston, L.

McIntosh of Hudnall, B.

MacKenzie of Culkein, L.

Mackenzie of Framwellgate, L.

McKenzie of Luton, L.

Mar, C.

Martin of Springburn, L.

Masham of Ilton, B.

Massey of Darwen, B.

Mawson, L.

Maxton, L.

Meacher, B.

Mitchell, L.

Monks, L.

Moonie, L.

Morgan of Drefelin, B.

Morgan of Huyton, B.

Morris of Aberavon, L.

Morris of Handsworth, L.

Moser, L.

Noon, L.

Nye, B.

O'Neill of Bengarve, B.

O'Neill of Clackmannan, L.

12 Feb 2013 : Column 574

Palmer, L.

Pannick, L.

Parekh, L.

Patel of Blackburn, L.

Patel of Bradford, L.

Pendry, L.

Peston, L.

Pitkeathley, B.

Plant of Highfield, L.

Ponsonby of Shulbrede, L.

Prashar, B.

Prescott, L.

Prosser, B.

Puttnam, L.

Quin, B.

Quirk, L.

Radice, L.

Ramsay of Cartvale, B.

Ramsbotham, L.

Rea, L.

Rees of Ludlow, L.

Rendell of Babergh, B.

Richard, L.

Rogan, L.

Rooker, L.

Rosser, L.

Rowe-Beddoe, L.

Rowlands, L.

Royall of Blaisdon, B.

St John of Bletso, L.

Sandwich, E.

Sawyer, L.

Sheldon, L.

Sherlock, B.

Simon, V.

Singh of Wimbledon, L.

Slim, V.

Smith of Basildon, B.

Smith of Finsbury, L.

Smith of Gilmorehill, B.

Smith of Leigh, L.

Soley, L.

Stern, B.

Stirrup, L.

Stoddart of Swindon, L.

Stone of Blackheath, L.

Taylor of Blackburn, L.

Taylor of Bolton, B.

Tenby, V.

Thornton, B.

Tomlinson, L.

Touhig, L.

Triesman, L.

Tunnicliffe, L. [Teller]

Turnberg, L.

Turner of Camden, B.

Uddin, B.

Walker of Aldringham, L.

Wall of New Barnet, B.

Walpole, L.

Warner, L.

Warnock, B.

Wheeler, B.

Whitaker, B.

Whitty, L.

Wigley, L.

Williams of Elvel, L.

Williamson of Horton, L.

Woolmer of Leeds, L.

Worcester, Bp.

Young of Hornsey, B.

NOT CONTENTS

Addington, L.

Ahmad of Wimbledon, L.

Alderdice, L.

Anelay of St Johns, B. [Teller]

Ashdown of Norton-sub-Hamdon, L.

Ashton of Hyde, L.

Astor of Hever, L.

Attlee, E.

Bates, L.

Benjamin, B.

Berridge, B.

Blencathra, L.

Bonham-Carter of Yarnbury, B.

Bowness, L.

Brabazon of Tara, L.

Bradshaw, L.

Bridgeman, V.

Brinton, B.

Brittan of Spennithorne, L.

Brooke of Sutton Mandeville, L.

Brougham and Vaux, L.

Browning, B.

Burnett, L.

Buscombe, B.

Byford, B.

Caithness, E.

Carlile of Berriew, L.

Cathcart, E.

Chadlington, L.

Chidgey, L.

Colwyn, L.

Cope of Berkeley, L.

Cormack, L.

Cotter, L.

Courtown, E.

Craigavon, V.

Crathorne, L.

Cumberlege, B.

De Mauley, L.

Dear, L.

Deben, L.

Deighton, L.

Denham, L.

Dholakia, L.

Dixon-Smith, L.

Dobbs, L.

Doocey, B.

Dundee, E.

Dykes, L.

Eaton, B.

Eccles, V.

Eden of Winton, L.

Elton, L.

Empey, L.

Falkner of Margravine, B.

Faulks, L.

Fearn, L.

Fellowes of West Stafford, L.

Flight, L.

Fookes, B.

Forsyth of Drumlean, L.

Fowler, L.

Framlingham, L.

Freeman, L.

Freud, L.

Garden of Frognal, B.

Gardiner of Kimble, L.

Gardner of Parkes, B.

Geddes, L.

German, L.

Glasgow, E.

Glenarthur, L.

Goodlad, L.

Grade of Yarmouth, L.

Greaves, L.

12 Feb 2013 : Column 575

Hamilton of Epsom, L.

Hamwee, B.

Hanham, B.

Henley, L.

Higgins, L.

Hill of Oareford, L.

Howe, E.

Howe of Aberavon, L.

Hunt of Wirral, L.

Hurd of Westwell, L.

Hussain, L.

Hussein-Ece, B.

Inglewood, L.

James of Blackheath, L.

Jenkin of Kennington, B.

Jenkin of Roding, L.

Jones of Cheltenham, L.

Kirkwood of Kirkhope, L.

Kramer, B.

Lang of Monkton, L.

Lawson of Blaby, L.

Lester of Herne Hill, L.

Levene of Portsoken, L.

Lexden, L.

Liverpool, E.

Lothian, M.

Lucas, L.

Luce, L.

Luke, L.

Lyell, L.

Lytton, E.

MacGregor of Pulham Market, L.

Mackay of Clashfern, L.

Maclennan of Rogart, L.

McNally, L.

Maddock, B.

Mancroft, L.

Marks of Henley-on-Thames, L.

Marlesford, L.

Mawhinney, L.

Mayhew of Twysden, L.

Methuen, L.

Miller of Chilthorne Domer, B.

Miller of Hendon, B.

Montgomery of Alamein, V.

Montrose, D.

Moore of Lower Marsh, L.

Morris of Bolton, B.

Moynihan, L.

Neville-Jones, B.

Newby, L. [Teller]

Newlove, B.

Noakes, B.

Northbrook, L.

Northover, B.

Norton of Louth, L.

O'Cathain, B.

Oxburgh, L.

Palmer of Childs Hill, L.

Parminter, B.

Phillips of Sudbury, L.

Plumb, L.

Popat, L.

Randerson, B.

Razzall, L.

Redesdale, L.

Renfrew of Kaimsthorn, L.

Rennard, L.

Risby, L.

Roberts of Llandudno, L.

Roper, L.

Ryder of Wensum, L.

Sanderson of Bowden, L.

Scott of Needham Market, B.

Seccombe, B.

Selborne, E.

Selsdon, L.

Sharkey, L.

Sharples, B.

Shaw of Northstead, L.

Sheikh, L.

Shipley, L.

Shrewsbury, E.

Skelmersdale, L.

Smith of Clifton, L.

Spicer, L.

Stedman-Scott, B.

Stewartby, L.

Stoneham of Droxford, L.

Stowell of Beeston, B.

Strasburger, L.

Sutherland of Houndwood, L.

Swinfen, L.

Taverne, L.

Taylor of Holbeach, L.

Thomas of Gresford, L.

Thomas of Swynnerton, L.

Thomas of Winchester, B.

Tonge, B.

Tope, L.

Tordoff, L.

Trefgarne, L.

Trimble, L.

True, L.

Tugendhat, L.

Tyler, L.

Tyler of Enfield, B.

Ullswater, V.

Verma, B.

Wade of Chorlton, L.

Wakeham, L.

Wallace of Saltaire, L.

Wallace of Tankerness, L.

Walmsley, B.

Warsi, B.

Wei, L.

Wilcox, B.

Younger of Leckie, V.

3.46 pm

Amendment 2 agreed.

Schedule 2 : Responsible authorities

Amendment 3

Moved by Lord Newby

3: Schedule 2, page 23, line 30, leave out from “servants” to end of line 31

12 Feb 2013 : Column 576

Lord Newby: My Lords, the amendments in this group bring the Bill into line with the Government’s announced policy on judicial pensions. They recognise the special constitutional position of the judiciary and have been tabled in response to the Delegated Powers Committee’s 10th report. The report identified that the Bill will move some features of judicial pensions, which are currently provided for in primary legislation, into secondary legislation. Under the amendments, the pensions of the judiciary will be separated from the Civil Service scheme, of which they were originally going to form part.

The regulations governing pensions for the judiciary will be made by the Lord Chancellor, in consultation with the Secretary of State for Scotland where this is appropriate. Scheme regulations will also require the consent of the Treasury. In addition, in order to recognise the move from a basis in primary legislation to one in secondary legislation for some elements of scheme design, scheme regulations will attract the affirmative procedure. The exception to this will be cases where the pension board for the scheme deems the regulations to have either a minor or a wholly beneficial effect. The judiciary will be represented on this board. As a final change, we have amended the Bill so that the Lord Chancellor’s role in making pension schemes for the judiciary becomes a protected function. This means that any future machinery of government changes will not change the fact that the responsibility for these pensions will remain with the Lord Chancellor.

The amendments that I have described represent a reasonable balance between the importance of recognising the judiciary as having a particular and special role within our constitution and ensuring that the Bill continues to provide a consistent and coherent framework for public service pensions. An independent judiciary is the cornerstone of any modern democracy. It must be able to carry out its role without interference from government. These wide-ranging reforms to all public service pensions, which will impact on judicial remuneration, in no way diminish that fundamental constitutional role. Judges will be as free to uphold the law, to interpret the will of Parliament and to rule against the Government of the day after these reforms as they were previously. Indeed, judges have the protection of the affirmative procedure, which means that Parliament, not government, will have the final say on any major changes.

Amendments 26 and 27 address a separate issue about some individuals who have worked for the residential property tribunal. It has emerged that some of them may be provided with pensions under the Rent Act 1977 and may not be covered by the provisions of the Bill. This amendment clarifies that these individuals should be included within the scope of the Bill. I beg to move.

Amendment 3 agreed.

Amendment 4

Moved by Lord Newby

4: Schedule 2, page 23, line 33, leave out sub-paragraph (2) and insert—

12 Feb 2013 : Column 577

“1A (1) Scheme regulations for the judiciary may be made by the Lord Chancellor.

(2) Before making scheme regulations in relation to an office with a jurisdiction exercised exclusively in relation to Scotland, the Lord Chancellor must consult the Secretary of State.”

Amendment 4 agreed.

Clause 3 : Scheme regulations

Amendment 5

Moved by Lord Newby

5: Clause 3, page 2, line 13, leave out paragraph (b)

Lord Newby: My Lords, the government amendments in this group concern powers, which have been previously debated at length, to amend primary legislation and to make retrospective changes. I am hopeful that both sets of amendments will be well received across the House.

The amendments on powers to amend legislation follow on in particular from the recommendations of the Delegated Powers Committee. As the Delegated Powers Committee noted, the Bill as drafted contains “unrestricted” powers to amend primary legislation. The committee did not see a justification for such a wide scope to make changes without full parliamentary scrutiny. It recommended that the powers be limited to being able to amend existing primary legislation for consequential and consistency purposes only. We have looked at this, and agree with the committee.

While the powers currently mimic those in the Superannuation Act 1972, the predecessor to this Bill, there is no evidence of the powers being used for anything beyond consequential amendments in the past. We do not envisage a scenario where wider use would be needed in the future. The amendments therefore reduce the scope in line with the Delegated Powers Committee’s recommendations. The powers can be used only for consequential changes to current Acts, including changes that are needed to achieve consistency.

I should make clear that the amendments do not remove the power to amend primary legislation completely, since such a power is essential to bridge any gaps between pre-existing primary legislation and the scheme regulations, but they significantly reduce the scope of the powers to be used in ways that the committee felt could not be justified. I hope that this strikes a balance that the House can support.

The powers to make retrospective changes were also mentioned in the Delegated Powers Committee’s report, although it did not make any specific recommendations in this case. However, we have discussed these retrospective powers in detail in your Lordships’ House on a number of occasions, and I hope we are approaching a resolution that everybody can support.

Our amendments take account of amendments tabled at earlier stages by the noble Lords, Lord Eatwell and Lord Whitty, both of whom also have amendments on the Marshalled List today. I hope they feel that we have been able to take account of their arguments as we work through the detail in this complicated but

12 Feb 2013 : Column 578

vital area. As I think we all agree, we must get this absolutely right and I hope the House will feel that our amendments achieve that.

As I have set out before, powers to make retrospective changes can be required for several reasons. Usually they are required to make minor or technical operational changes to allow the schemes to run efficiently, often for the benefit of members. They may also be used to make retrospective changes that are part of wider negotiations and which increase the likelihood of the Government and their employees reaching agreement on a package of reforms. Therefore, the Government firmly believe that such powers are necessary and should not be restricted.

However, the Government recognise that if there are insufficient protections against using these powers in an unfair way, even if we have no intention of doing so, this could damage members’ confidence in these reforms. That is why we have brought forward the new clause contained in Amendment 36 and the associated consequential amendments.

Amendment 36 implements a consent lock for any retrospective changes to pensions that have “significant adverse effects” on members. Members or their representatives would have to agree to such changes. Significance is a low but appropriate threshold—one that is on the whole favourable to members and not the responsible authority. It has already been used in the Bill and by some noble Lords in their own amendments. I note that the amendment tabled by the noble Lord, Lord Whitty, in this area refers similarly to “material” effects. If I may say so, he and I are talking about the same thing.

Indeed, our amendments mean that material or significant retrospective changes would require the consent of the members who are affected, or their representatives. Amendment 36 therefore provides an extremely strong form of protection against the unfair use of retrospective powers. It will give members who are significantly adversely affected, or their representatives, a veto on any such changes. The requirements to follow the affirmative procedure and to lay a report to Parliament will also continue to apply to safeguard wider interests, including those of the House.

The consent requirement will apply to changes that have a significant adverse effect on the pensions of all scheme members, whether active, deferred or pensioners. That means that they go further than the protections against retrospective changes in many existing schemes, including the NHS, local government and teachers’ schemes. They provide unambiguous protections for all members, not just deferred and pensioner members.

However, the consent lock will not apply to retrospective changes that have a significant adverse effect on non-pension benefits, such as injury and compensation schemes. Such benefits will continue to be protected instead by the enhanced consultation procedure of Clause 22. That clause requires consultation with a view to reaching agreement, a report to the appropriate legislature, and the affirmative procedure.

Injury and compensation schemes cover people by virtue of their particular employment, not whether they happen to be members of a public service pension scheme. The persons covered do not accrue an entitlement throughout their career in the same way as a pension,

12 Feb 2013 : Column 579

but rather receive benefits that are calculated at the point of claim. Moreover, those schemes are entirely funded by the employer with no employee contribution. We therefore think that a veto power over changes to injury and compensation schemes that might in some cases be regarded as retrospective would give disproportionate influence to members. None the less, I should make clear that reforms to current injury and compensation schemes are not contemplated by this Bill.

I therefore hope that the House will be able to support these amendments. I believe that they provide excellent reassurance to members that the retrospective powers will not, and indeed now cannot, be used in ways to which they do not consent.

I hope that the House will find it helpful if I speak to the other amendments in the group. The amendment of the noble Lord, Lord Whitty, would restrict the scope of powers to make retrospective changes such that they could make only non-material changes. As I have said, we believe that the scope of those powers should not be categorically restricted. Flexibility can be desirable—I mentioned the possibility of members consenting to significant changes if they are part of a wider negotiating package—and it is much more important that we give members a fair say in what affects them. Our amendments do that, with a veto power no less. So, in the light of our amendments, the amendment of the noble Lord, Lord Whitty, is unnecessary.

The amendments of the noble Lord, Lord Eatwell, and the noble and learned Lord, Lord Davidson, would take away the clear responsibility of the responsible authorities to make a judgment on the effect of retrospective changes. It is not entirely clear who would take a view instead, but it might well end up being the courts. The difficulty here is that these are decisions—what is significant and who is affected?—that require a clear decision in order to start the right consultative process. Someone has to take a view on the nature of the effects in good faith. In our view, the authority is best placed to do that, given that it operates the schemes and would initiate and implement any changes.

Public authorities should not be held to unrealistic standards of judgment. That is inefficient, encourages inaction or excessive litigation, and hampers their ability to deliver their public functions. Not all effects will be so clear cut as to leave no room for disagreement, so it is right to leave a small margin of safety.

If responsible authorities do not exercise their judgment reasonably, they do so at their own risk. Of course, members can always challenge the decisions of the responsible authority on this point as part of the consultation, or even in the courts. So there is no justification or incentive for the authority to act irresponsibly or without good faith. Although I can understand the reason why these amendments have been tabled, I fear that I cannot support them.

However, I hope that the House is reassured that just because there is a small element of subjectivity, that does not mean that the way is open for the responsible authority to act in an arbitrary manner. More importantly, I hope that the House will agree that the Government’s amendments on retrospection provide excellent protections to members.

12 Feb 2013 : Column 580

The Government have listened carefully on this topic and have brought forward sensible amendments inspired by previous amendments tabled by Members on the other side of the House, and I urge noble Lords to support them.

4 pm

Lord Eatwell: My Lords, it may be for the convenience of the House if I refer to the amendments tabled in the name of myself and my noble and learned friend Lord Davidson, since the government amendments are substantially responses to the points that we made in Committee. I want to make it clear why we feel that the situation has, let us say, not moved on far enough.

Let me deal first with Amendments 37, 38 and 39 because they make a proper, logical story. They seek to remove from Amendment 36 the role of the authority in deciding whether an adverse effect on the pensions payable has in fact occurred. In other words, the authority has to decide whether its measures should be challenged in consultation. This is as if, in a game involving Manchester United, penalty decisions against it were to be made by Sir Alex Ferguson. I am sure that he, as a talented football manager, would then make a decision on a reasonable basis. However, with all due respect to that distinguished person, do we think that these decisions would be made in a way which was balanced? I could choose any other football manager, including Mr Wenger, who apparently never sees things that happen on football pitches.

I refer to balance because in Committee the noble Lord, Lord Newby, in setting out the criteria that he applied in these circumstances, said that he wanted to achieve a sensible balance between members’ protection and the role of the authority. It seems that while the proposed new clause in Amendment 36 provides for a significant protection for members of the scheme, it is still not balanced in that it leaves the authority with the responsibility for deciding that its own measures have had an adverse effect on those members. In those circumstances, even the most reasonable person is likely to be reluctant to feel that measures which they are taking have a negative impact upon the scheme. Our amendments simply remove the role of the authority so that the new clause would say,

“containing retrospective provision which appears … to have significant adverse effects”.

In those circumstances it seems to me that the authority, facing the responsibilities that the noble Lord referred to, and without the protection of the statute giving it the decision-making responsibility—a decision-making role or power—would take a more balanced and reasonable view. These amendments are to encourage reasonableness on behalf of the authority.

Moving backwards, our Amendments 22 and 23 refer to what is now Clause 12, which deals with the employer cost cap. The problem with this clause is in subsection (7), where it is recognised that steps to change the cost cap may result in an,

“increase or decrease of members’ benefits or contributions”.

In other words it may decrease members’ benefits so that the action of using the cost cap to encourage efficiency and efficient management of pension schemes may result in the retrospective diminution of benefits which members feel that they have accumulated.

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The key question is whether Amendment 36 covers that eventuality. The eventuality that it covers is,

“where … the responsible authority proposes to make scheme regulations containing retrospective provision”.

Changing the cost cap may have retrospective consequences but does not contain retrospective provision. Much as we welcome the general intent of Amendment 36, then, it does not deal with one of the significant cases of retrospection that still deface the Bill. Amendments 22 and 23 are designed to protect the benefits of pensioners against retrospective effect, perhaps unintentional, when there is some change in the cost cap. We are delighted to see the noble Lord, Lord Sassoon, here performing duties that were formerly performed for him.

Those two amendments are necessary unless the Minister can find a way for Amendment 36 to refer not simply to regulations containing retrospective provisions but to regulations that have retrospective consequences. That would be a way, I suggest, to transform Amendment 36 from a rather imperfect structure to one that would deal with retrospection throughout the Bill.

The amendments that I and my noble and learned friend have tabled are in the spirit of Amendment 36 and indeed of the Government’s laudable attempts to remove the retrospective elements—the ones, that is, which are unnecessary and potentially harmful to members; I understand that there are technical retrospective elements that are necessary—but I feel that they have not yet managed to achieve what the whole House wishes to achieve. Our amendments would contribute to that goal.

Lord Flight: My Lords, I should be grateful if the Minister could comment on the extent and the manner to which the Government’s amendments to the ability to make changes and to make retrospective changes affect the fundamental issue of affordability. I apologise for raising this issue yet again but it is fundamental. We start, as everyone knows, from the OBR advising that there will be a cash flow deficit of £15.4 billion by 2016-17. My related question to the Minister is: what is the Government’s estimate of the additional cash flow deficit costs of both increasing longevity and, more particularly, the new single-tier pension proposals made by the DWP? It strikes me that two separate silos have been working on this, with the Treasury in one and the DWP in the other. Precisely what the effects of the loss of employer and employee NI contributions and the ending of contracting out will be on the deficit of pay-as-you-go public sector schemes seems to some extent to be a mystery.

I think it was in Committee that the Minister advised that he felt the estimates I suggested were too high; thus I would be grateful if he would comment on what the Government’s estimates are. My revised estimates, done with the assistance of Michael Johnson, who many noble Lords will know has done significant work on the subject, are that there is an additional cash flow cost from longer longevity of the order of £2 billion per annum, and there may now be an additional £3.4 billion resulting from the loss of public sector employers’ NIC rebates with the ending of contracting out and a further £4 billion per annum as a result of public sector employees continuing to enjoy an enhanced occupational pension as if contracted

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out while still being entitled to further accruals under the new single-tier state pension, once it appears. In contrast, private sector employers who are contracted out will be permitted to change their scheme rules, effectively to reduce pensions paid, without trustee consent. As I have said, I cannot believe that the prospect of a potential cash flow deficit of some £24 billion per annum will be acceptable to whoever is in power at that stage, given the state of the public finances. Dare I say that it seems that not only the Opposition but the Government are ignoring the affordability issue with regard to this legislation as it passes through both Houses of Parliament?

I would be grateful for a response to the question about to what extent room for manoeuvre is being reduced by the government amendments. Secondly, what is the Government’s revised, post-OBR estimate of the total cash flow deficit cost of the arrangements under the Bill?

Lord Whitty: My Lords, as the Minister said, I have Amendments 7, 31 and 35 in this group. I should explain that for the remainder of the discussion of the Bill on Report I am likely to be seeing it through the perspective of the Local Government Pension Scheme which, in response to the noble Lord, Lord Flight, is a funded scheme, not a pay-as-you-go scheme, and, moreover, a funded scheme that has recently reached agreement between the trade unions and the LGA, sanctioned by the CLG and the Treasury, on a new cost-management structure. I therefore think the costs of any limit on retrospection in that scheme are unlikely to arise. I probably should declare that I am an honorary vice-president of the LGA and a member of the GMB, although I have no pecuniary interest in the pensions covered by the LGPS. I was also, until recently, chair of one of its schemes.

The Minister deserves considerable credit for moving significantly on this front. It is clear that what appeared to be quite an open-ended ability to amend primary and secondary legislation in the original text of the Bill has been significantly modified by the changes which he has proposed and the procedures that he has outlined, particularly in relation to Amendment 36. It would be nice if he could go a little further, particularly in respect of two points. Amendment 7 would effectively prevent retrospective changes for non-administrative reasons that had a material detriment for any members of the scheme. The reference in Amendment 36 to “significant adverse effects” sounds like a significantly higher threshold than “material detriment”. Does the Minister think there is a real distinction there? Could some quite serious detriment in effect occur without triggering Amendment 36? I would hope not, but I would like some on-the-record reassurance on that point.

4.15 pm

My noble friend Lord Eatwell has already raised my second point. There is a “judge and jury” problem with Amendment 36 but, in general, I welcome the clause. The procedure is sensible and the associated amendments are likely to be able to deal with the situation, if anything, slightly better than the procedural amendments that I have tabled. However, there is an issue as to whether a detriment is in the eyes of one

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party rather than appearing to be a detriment to any objective observer. That could be a cause, in the long run, for a serious lack of trust in whether Amendment 36 and its associated amendments really meet the point.

The Minister has gone a long way, and I congratulate him on that. I do not want to appear too narky about where we are but he could still make some improvements, some of them by giving clearer assurances today both on the point about material detriment and on the unilateral definition of “appears” which seems to arise in Amendment 36. Two and a half cheers for the Minister. He could make me happier were his response to my noble friend Lord Eatwell’s points and mine to be constructive today.

Lord Newby: My Lords, I am pleased that I am moving in the right direction, at least as far as the noble Lord, Lord Whitty, is concerned.

On the amendments of the noble Lord, Lord Eatwell, there are two differences between the Alex Ferguson situation and the one that we are discussing. First, while he could of course be relied upon to act impartially in every circumstance, he is not given that freedom. There are a referee and various other officials on the pitch, taking decisions on a second-by-second basis. There is an authority; it is just not him. The noble Lord is concerned about what happens if that authority then acts improperly or unreasonably—if, say, the referee blatantly misses a series of handballs in the penalty area. The answer is that if there is a sense that the authority is behaving improperly, it has an oversight body: the courts. The authorities cannot just make arbitrary decisions, let alone unfair ones, without acting in good faith. If they do act unreasonably, they are also acting unlawfully. It is right that the responsibility lies with them, as they operate the schemes. Somebody has to make an initial decision. The underlying implication of what the noble Lord is saying is that the authorities will act in a malevolent way to do down scheme members. I do not believe that they will, or that that is the history.

Lord Whitty: My Lords, on a point of information, in the LGPS we make a clear distinction between an employing authority and an administering authority, the latter being the equivalent of a quasi-trustee body, whereas this seems to imply the employing authority— that is, the local authority. If it were the administering authority, I think that we would be slightly more reassured.

Lord Newby: My Lords, I simply do not know the answer to that question. I will have to write to the noble Lord. I hope that, in doing so, I will be able to reassure him.

I turn to the amendment of the noble Lord, Lord Eatwell, on the cost cap. Its operation has been extensively discussed here and I hope that noble Lords were reassured that we will not seek to use it to reduce accrued benefits. If noble Lords have not been reassured, I hope I can reassure them now by setting out the Government’s own detailed amendments on retrospective provisions and protections.

As I have stated, the new clause on retrospective protections will require that retrospective changes to pension benefits with significant adverse effects be

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subject to the consent of members or their representatives. This would include changes made as a result of the operation of the cost cap. I have already made clear that adjustments to benefits or contributions under the cost cap would not be retrospective. The new clause, set out in Amendment 36, also provides protections to this effect. First, there would be the procedure set out in Clause 12(6) for reaching agreement on changes that are contingent on the operation of that mechanism. Then, when scheme regulations were made to give effect to those agreed changes, those regulations would require consent for any provisions that were retrospective and had significant adverse effects on pensions.

Given this, I hope that noble Lords are convinced that Amendment 23 is not necessary either. As the noble Lord, Lord Eatwell, himself said in previous debates, this would be a belt-and-braces provision to provide further protection to members in the event that the cost cap is triggered. There is no need for this additional protection because the response to the cost cap calls for the approval of the members themselves. If that response were to involve a retrospective change with a serious adverse effect, the implementing provisions in scheme regulations would also require consent. So the belt and braces are already in the Bill, were that extremely unlikely scenario ever to happen. In these circumstances and with these reassurances, I hope noble Lords will not press their amendments.

The noble Lord, Lord Flight, asked a couple of questions about whether the changes relating to restricting retrospection would reduce the Government’s ability retrospectively to reduce provisions and thus make it easier, in his view, to get the costs under control. The problem about that from a legal point of view—leaving aside whether it is desirable in practice—is that tinkering with accrued rights falls foul of human rights legislation and the Government have made it absolutely clear that they have no intention of going down that road. On the question of figures in Michael Johnson’s report, the Government simply do not recognise them. The House should be reassured that the costings for these reforms and the single tier have been fully worked through. If, at some stage in the future, the schemes appear unfinanceable, we have the cost cap; that is the whole purpose of having a cost cap. If his worse fears were borne out—and, as I say, we do not recognise the figures that Michael Johnson has produced—

Baroness Noakes: I thank the Minister for giving way. He says that the Treasury does not recognise the figures in Michael Johnson’s helpful report, mentioned by my noble friend Lord Flight. Could he say what figures it does recognise because, clearly, the proposals for the single tier pension and the impact on contracted-out contributions came after the development of the public sector pensions and after the OBR report? There has to be a figure, given that he does not recognise that quoted by my noble friend, so what figure do the Government estimate it to be?

Lord Newby: The best way of dealing with this is by writing to the noble Baroness to explain how the Government believe that the proposals for the single-tier pension can be accommodated within the finances we think are available. I do not believe that a single figure

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here deals adequately with it, but we will write to her. We have not had a huge amount of time to analyse Michael Johnson’s figures, but on first sight, they do not look like ones that we can follow.

As regards the amendments in the name of the noble Lord, Lord Whitty, and whether “material” is different from “significant”, is one a higher bar than the other? As I said earlier, we believe that they are virtually synonymous. We do not believe that material is of a lesser or greater value than significant. Therefore, we do not think that there needs to be any concern in that respect.

Amendment 31 would require that any change to scheme regulations undergoes consultation with a view to reaching agreement. I understand why the noble Lord is concerned that there should be meaningful consultation with scheme members and their representatives when scheme regulations are made. The Government carry out consultations for a number of reasons. While it is always good to have agreement, this will not always be the appropriate focus. Pensions are complex issues and regulatory changes may often be needed for minor and technical reasons. It surely would be impractical for the Government to undergo a more onerous consultation process every time a minor change was made. Moreover, this amendment is not necessary to ensure that this consultation is meaningful. This already is a mandatory requirement of any consultation process. If any stakeholder felt that a consultation was not meaningful or fair they could challenge this in court.

Amendment 35 goes somewhat further than Amendment 36. It would require that any change to scheme regulations after the first set of regulations has been made should follow the higher standard of consultation and reporting requirements set out in Clause 22. As I have said previously, this would be simply impractical. Amendments to scheme regulations can be made for a wide range of reasons down to the most minor of changes. It cannot be right that the more extensive provisions in Clause 22 should apply to every circumstance. Very often these changes are to the benefit of members and I am sure that any delay in implementing such beneficial changes because of the legal requirement to carry out the kinds of consultation set out in Clause 22 would not be seen by members in a positive light. I hope that noble Lords can understand why such a blanket requirement would not be in anyone’s interest. The Government already are committed to proportionate levels of consultation on all scheme regulations, which is the appropriate and responsible course of action.

Amendment 35 would also change Clause 22 so that, instead of setting a high bar for changing the protected elements, it would be illegal to make any such change unless the members or their representatives consent. I fully understand the concerns of some members and their representatives around these issues but, again, such a blunt instrument does not seem to me to be a particularly sensible way forward.

The Government have committed themselves to the reformed schemes as they have been negotiated and they are even now working hard with members and their representatives to ensure that these are implemented by 2015. The Government believe that the deal which

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has been put in place is one which should stand for 25 years, perhaps longer. It is an arrangement which represents a good outcome for both individual members and the taxpayer. The provisions of this clause are intended to reflect that commitment. The amendment in the name of the noble Lord, Lord Whitty, would go far beyond that and would seek to bind all future Governments over the next 25 years in a way that this House does not tend to endorse.

None of us can foresee the future. I will reiterate again that the Government see no reason why these pensions should not still be fit for purpose in a quarter of a century from now. However, the responsible course of action is to ensure that, if any future Government were to take a different view, for whatever reason, strong but appropriate processes are put in place to protect scheme members and to scrutinise the rationale for any changes they might seek to make. But the protections must strike a fair balance between the interests of the taxpayer and members. The Government do not believe that this can be achieved by allowing members to veto any change to scheme design, contribution rates and benefits. On that basis, I hope that the noble Lord will feel able not to move his amendment.

Amendment 5 agreed.

Amendment 6

Moved by Lord Newby

6: Clause 3, page 2, line 15, at end insert (but see section (Procedure for retrospective provision))

Amendment 6 agreed.

Amendment 7 not moved.

Amendment 8

Moved by Lord Newby

8: Clause 3, page 2, line 16, at end insert—

“( ) The consequential provision referred to in subsection (2)(b) includes consequential provision amending any primary legislation passed before or in the same session as this Act (as well as consequential provision amending any secondary legislation).”

Amendment 8 agreed.

Police Integrity

Statement

4.30 pm

The Parliamentary Under-Secretary of State, Home Office (Lord Taylor of Holbeach): My Lords, with the leave of the House I will repeat a Statement made earlier in another place by my right honourable friend the Home Secretary about our work to ensure the highest standards of integrity in the police. The Statement is as follows:

“Mr Speaker, we are lucky in Britain to have the finest police officers in the world. They put themselves in harm’s way to protect the public. They are cutting crime even as we reduce police spending, and the vast majority of officers do their work with a strong sense

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of fairness and duty. But the good work of those thousands of officers is undermined when a minority behave inappropriately.

In the last year, we have seen the Leveson inquiry, which cleared the police of widespread corruption but called for greater transparency in policing, and the shocking report of the Hillsborough independent panel. We have seen the sacking of PC Simon Harwood and the investigation of several chief officers for misconduct, and yesterday I told the House about the investigation led by Mick Creedon into the work of undercover officers from the Metropolitan Police.

I want everyone to understand that I do not believe there is endemic corruption in the police, and I know that the vast majority of police officers conduct themselves with the highest standards of integrity. This was confirmed by Her Majesty’s Inspectorate of Constabulary in its report last year. But that does not mean that we should ignore the fact that when it does occur, police corruption and misconduct undermine justice, let down the decent majority of officers, and damage the public’s confidence in the police.

We need the police to become much more transparent in their business. We need clearer rules for how officers should conduct themselves. We need to open up the top ranks so that policing is less of a closed shop. We need to make sure that officers who do wrong are investigated and punished, and we need to make sure that the organisations that we ask to police the police are equipped to do the job.

Many of our existing police reforms address these challenges. The new College of Policing will improve the quality of police leadership and drive up standards. Police and crime commissioners are making the police more accountable to their communities. Direct entry into the senior ranks will open up the police to talented outsiders. HMIC is more independent of the police, and for the first time it is led by a non-policing figure.

These reforms will help but we also need to take further, specific measures to root out corruption and misconduct from the police. First, in line with the recommendations made by Lord Justice Leveson, national registers of chief officers’ pay and perks packages, gifts and hospitality, outside interests including second jobs, and their contact with the media will be published online.

Secondly, the college will publish a new code of ethics, which will be distributed to officers of all ranks. In addition, the college will work with chief officers to create a single set of professional standards on which officers will be trained and tested throughout their careers.

Thirdly, to prevent officers who lose their jobs as a result of misconduct being recruited by other forces, we will introduce, for the first time, a national register of officers struck off from the police. The list will be managed and published by the College of Policing.

Fourthly, to introduce a sanction for officers who resign or retire to avoid dismissal, hearings will be taken to their conclusion, notwithstanding the officer’s departure from the force. When misconduct is proven, these officers will also be struck off by the College of Policing.

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Fifthly, the college will establish a stronger and more consistent system of vetting for police officers, which chief constables and police and crime commissioners will have to consider when making decisions about recruitment and promotions. Every candidate for chief officer rank will need to be successfully vetted before being accepted by the Police National Assessment Centre.

Sixthly, Lord Justice Leveson’s report made several recommendations on policing, focused on providing greater transparency and openness. The Government accept what has been recommended, and the College of Policing, ACPO and others have agreed to take forward the relevant work that falls to them. I will place details of the Government’s response to each of the Leveson report’s recommendations on policing in the Libraries of the House.

Finally, I want to make sure that the Independent Police Complaints Commission is equipped to do its important job. Over the years, its work has been evolving and the proposals I announce today develop it further. Public concern about the IPCC has been based on its powers and its resources. I want to address both these issues.

Regarding its powers, last year Parliament legislated, with welcome cross-party support, to give the IPCC the ability to investigate historical cases in exceptional circumstances. In the same legislation, we gave the IPCC the power to compel police officers and staff to attend interviews as witnesses.

In addition, as I have already said, we will legislate as soon as parliamentary time allows to give the IPCC the power to investigate private sector companies working for the police, along with other powers the IPCC has asked for to improve its effectiveness and increase public confidence, and I am prepared to consider any further legislative changes that the commission says it needs.

But I believe the main difficulty for the IPCC is its capacity to investigate complaints itself. Last year, the commission investigated just 130 of the 2,100 serious or sensitive cases that were referred to it independently, while supervising or managing about 200. Individual police forces investigated the remainder. But 31% of appeals against forces’ handling of complaints were successful. That is simply not acceptable. I will therefore transfer to the IPCC responsibility for dealing with all serious and sensitive allegations. I also intend to transfer resources from individual forces’ professional standards departments and other relevant areas to the IPCC to make sure it has the budget and the manpower to do its work.

The Government’s police reforms are working and crime is falling. Corruption and misconduct are thankfully the rare exception and not the norm in our police, but that does not mean that we should not act. I believe this is a comprehensive plan to address public concern about the integrity of the police”.

I commend this Statement to the House.

4.38 pm

Baroness Smith of Basildon: My Lords, I thank the Minister for repeating the Statement in your Lordships’ House today. We certainly welcome the direction of

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travel on this issue, and many of the measures outlined are sensible in principle. Obviously, a lot of detail has yet to be revealed and I hope that we will have the opportunity to contribute to that debate in your Lordships’ House.

British policing has an enviable reputation across the world for low levels of corruption, high standards of integrity and our tradition of policing by consent. That is why, when there are cases where standards fall below the level that we expect, we are rightly appalled and action has to be taken to address that. On many occasions when I have asked police officers why they have joined the police, without exception all have very high on their list a very simple reason: to help people. The vast majority of police officers join the force to help the public and keep people safe from crime and harm, and they take great risks when doing so.

Most people, when they go out to work in the morning, know that they will never face a situation where their life could be at risk. However, in Greater Manchester, there is now the trial for the killing of two police officers who were shot down for answering a routine 999 call. Officers such as those and their colleagues know that this is a risk they face. Every day, police officers across the country face incidents and disturbances. They have to inform families if their loved ones have been injured or killed. They have to deal with some very unpleasant situations and they undertake those responsibilities with great integrity and without regard to their own safety.

However, police officers are deeply concerned about serious cases that undermine confidence in policing. The vast majority of police officers want action against officers who let down the force and the public. They also want action to improve standards. We must have robust and meaningful action to tackle those who have weakened public confidence and respect. The Minister mentioned some examples; others include hacking and the Hillsborough tragedy. It is clear that there are also problems with some undercover officers, and it is right that we address cases where policing has failed to protect the public or deliver justice. We must ensure that we have a framework in place to make such cases less likely and take effective action against those individuals involved.

In the light of that, many of the Home Secretary’s measures are sensible. We support the implementation of the Leveson recommendations. Your Lordships’ House made it clear that it wishes the rest of Lord Justice Leveson’s proposals to be implemented with similar speed. We support a code of ethics, stronger professional standards and stronger action when these are breached. The Stevens commission has taken evidence on issues around codes of ethics, national registers, the role of the College of Policing, and proposals for striking off police officers, and is likely to make new proposals in this area.

Perhaps I may ask the Minister some questions around this matter. I would appreciate his answering me today, but if he cannot it would be welcome if he wrote to me. Can he say any more about the professional register? My understanding from the Statement is that the new College of Policing will manage and publish the register and have a duty to ensure that those guilty

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of misconduct will not be allowed to work for any other police force. The Minister said that they will be “struck off”, but from what? There is currently no register of police officers from which they could be struck off. Will there be a new comprehensive register of police officers, or will there instead be a list of those who have been found guilty of misconduct or other offences? What criteria willbe used?

The Statement implies that this will apply only to officers facing disciplinary action leading to dismissal, and there may be other cases where it would be right for someone to be on the register. Given the welcome commitment that disciplinary action will continue, even after an officer retires or resigns, will the Minister confirm that such officers will still be included on any list? What is meant by “publish”? Does that mean that the list will be publicly available or available only to the police? The Minister will be aware that former police officers often find employment in private security work of varying kinds, including, I am sure, in G4S. Will the information also be available to prospective employers?

I have one further point on this issue. As I have said, it is welcome that disciplinary action will continue even if police officers resign or seek early retirement, and we have called for such action. However, the Minister said in the Statement that those officers will face sanctions if misconduct is proven. What will those sanctions be? Being placed on a list or struck off a register is hardly a sanction if the officers have already resigned or retired.

On the issue of vetting, the Statement says that the college will establish a stronger system of vetting but that chief constables and police and crime commissioners have only to “consider” this. It does not appear to be binding. Is that the case, or have I misunderstood? Although candidates for chief officers’ posts will be vetted, it is not clear by whom. Given that the Government’s Statement places on the College of Policing additional responsibilities beyond those previously proposed, is the Minister confident that it has the necessary resources to undertake this very important work? Unless it is 100% accurate, it will not be worth very much or be that effective.

We welcome the code of ethics. Can the Government confirm that the activities of undercover officers such as using the identities of deceased children should be addressed in such a code?

Although there is much to welcome in the Statement, we are disappointed by the proposals regarding the IPCC. The Minister will be aware that Yvette Cooper, the shadow Home Secretary, has argued for the past year that the IPCC has neither the powers nor the resources needed to be really effective. We remain concerned that it will struggle to produce a timely response to the Hillsborough tragedy, and there are countless cases where the IPCC has failed to investigate swiftly.

The problem is that the Home Secretary’s reforms, which are outlined today to the IPCC, seem to be incremental. We are not convinced that the Government are doing enough to give the IPCC the real powers that it needs, or to create a proactive rather than a reactive culture to deal with problems, so there is

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a concern that it will not do enough to restore public confidence in the IPCC to solve problems swiftly, to get justice, and to ensure that lessons are learnt when policing goes wrong.

I am still not clear—I listened very carefully and I read the Statement before it came to this House—about the additional resources that will be available to undertake the extra work. It appears that all serious and sensitive cases will be dealt with by the IPCC rather than by individual police forces. How will “serious and sensitive” be defined, and who will define it? What about initially low-level cases that are deemed not to be serious or sensitive but which, as the investigation progresses, are deemed to be serious and sensitive? Will they be transferred to IPCC? How much of the total police forces’ budget will be transferred to allow the IPCC to deal with all serious and sensitive cases? Will the Government commit to ensuring that the adequacy of funding is kept under review?

In the Police Reform Act, Ministers argued that more cases should be dealt with by individual forces rather than by the IPCC. As a result, my understanding is that under the Government’s policies the number of commissioners roughly halved. Can the Minister confirm that he considers that that was a mistake and that the Government will now be recruiting more commissioners? It is hard to imagine that with additional work and investigating all serious and sensitive cases, more staff will not be needed, but where will those staff be found? How many staff and how much financial resource do the Government envisage transferring from police forces to the IPCC, or will they recruit in other ways? Will there be any new money from the Government, or are the Government confident that the IPCC can be fully and adequately resourced by this transfer of funds?

My final question, the Minister will be pleased to know, is whether he can also confirm that the additional powers for the IPCC, announced by the Home Secretary, will be introduced in this Parliament.

We are concerned that this incremental reform is a lost opportunity to introduce a new, robust organisation with a new framework. Currently, the IPCC, the PCC, the police and crime panels and the College of Policing all have a role to play. One has to ask whether one strong organisation with the appropriate framework and powers would be more appropriate. I really feel that the Government should look again at replacing the IPCC altogether with a new police standards authority, and with a new and coherent framework of standards and accountability for the police.

We all want to see well motivated, professional police officers who are keen to do a good job and serve the public. We have a duty to the public to ensure that they can have confidence in the work of the police and that action will be taken when things go wrong. We also have a duty to ensure that police officers get the support that they need and have a proper framework of accountability to keep standards high. The Statement today is welcome and responds to many of the concerns that we have raised, for which we are grateful. However, we remain concerned that it does not go far enough and that it will not deliver the kind of protection and framework that the police and the public need.

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4.48 pm

Lord Taylor of Holbeach: My Lords, I thank the noble Baroness, Lady Smith, for her general welcome for this Statement. I know that in another place similar support was given to the Home Secretary’s Statement. This is good news. I shall start with the last point made by the noble Baroness, which was on rebranding. Do we want a new body? I do not think that is necessary. The IPCC has good leadership under Dame Anne Owers and it has a sense of direction, which is now supported by the Government through this Statement. Although I cannot anticipate what may be in future Queen’s Speeches, I am fairly confident that legislation on this matter will not be long delayed. Indeed the Statement drew attention to that.

The IPCC is currently engaged in a lot of extremely serious investigations. The Statement referred to them as probably lying at the heart of the realisation that we need to look afresh at how we investigate the police, and at what new framework we should establish. This is the Government’s response. We believe in beefing up not only the powers but the resources of the IPCC. The noble Baroness asked where those resources were coming from and whether there was any fresh government money. The Statement rightly said that they were coming from the existing budgets of police forces—certainly in the main that will be the case. However, the matter will be discussed with each police force.

A Statement such as this is clearly indicative rather than absolutist. Certainly we will debate the issues that it raises over the next few months. However, it is important, when the Government have something to say on an issue as important as this, that they demonstrate to the House, through the way they present the issues involved, their direction of travel. That was the purpose of the Statement today.

The noble Baroness asked a large number of questions. There was a radio programme called “20 Questions”. I did not count the noble Baroness’s but I felt that she asked a fair number. I will do my best to answer them, but she very kindly said that I might write to her. It might help if I wrote on some of these matters and put a copy in the Library of the House.

The noble Baroness asked how public the professional register would be. It will be a public document. It is intended that organisations such as the Security Industry Authority and private security firms will be able to take note of these matters. It will not be just for police officers to note who has been in effect deregistered from the police service as a result of misconduct.

The parallel organisation to the IPCC is the College of Policing. With its code of ethics, it will provide the framework in which the new sense of purpose about integrity can be addressed. The noble Baroness asked whether it would cover matters such as the identity of children. As she knows, that is being investigated by Chief Constable Creedon at the moment, and he will report on the full implications. That is just the sort of issue at which I expect a code of Essex—sorry, ethics—to look. I apologise for that slip of the tongue.

The noble Baroness also asked how one would define “serious” and “sensitive”. One tends to know what is serious and sensitive when it turns up. This will

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be about the relationship between the IPCC and individual police forces. Individual forces have just as great an interest in making sure that the public are supportive of them and perceive that the integrity of the police is based very locally within each police force.

I have a few further points to make. The list is designed to ensure that all those who are dismissed as a result of misconduct proceedings, or would have been dismissed had they remained in service, cannot find employment in another force. That is the principal purpose behind it. They are struck off from being a police officer in the future. We envisage that the list will be used by other employers—I have mentioned employers in the security industry—to consider whether or not to employ such dismissed officers.

I hope that the noble Baroness will allow me to write to her on the other questions which I have not addressed, and I hope that I have assisted the House in giving some sense of the thinking that lies behind the Statement.

Baroness Stowell of Beeston: My Lords, before the clerk starts the clock for Back-Bench contributions, in the interests of ensuring that as many noble Lords as wish to do so are able to contribute in the 20 minutes which now follow, perhaps I may remind the House that this is an opportunity to put brief questions.

4.56 pm

Lord Condon: My Lords, I declare an interest in policing and the security services. The Government are to be congratulated and supported by all sides of the House on bringing forward this courageous package of measures because it is clearly in the public interest and in the interests of the service to ensure the highest levels of integrity in policing. While there may be concerns about other aspects of police reform, this package is clearly moving in the right direction. When the Minister places a letter in the Library of the House, will he consider including in it a response to just how and when resources will be transferred from individual police services to the IPCC to enable it to carry out its enhanced role? It is not clear at the moment whether only budgets are to be transferred or whether this will involve real, live investigators moving sideways on attachments, moving permanently, and so on. The House would welcome some fairly clear guidance on how this is to operate, but in the round, these proposals are courageous and are to be welcomed.

Lord Taylor of Holbeach: My Lords, I thank the noble Lord, who speaks with considerable experience of these matters. I shall certainly do my best to respond promptly to his request for details of the transfer of resources and whether indeed that will involve more than cash and budgets, and will extend to resources. To some degree, the Statement is a starting point for a discussion with individual police forces and, indeed, with police and crime commissioners for they too are engaged in the governance of the police across the country; I hope that that dialogue will be productive. I am sure that noble Lords appreciate that this is considered to be an important development in the integrity of policing.

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Baroness Hamwee: My Lords, I, too, welcome the Statement and I agree with the implicit message that transparency and integrity go hand in hand. I do not doubt that, when there is a problem, those who feel it most keenly are individual police officers who themselves have shown the utmost integrity. First, what consultation has been undertaken on these measures, not just with ACPO but with those who represent the lower ranks of the police service? Secondly, will any of these measures —I am thinking particularly of the registers of interests, gifts and so on—apply to civilian staff within police forces?

Lord Taylor of Holbeach: My noble friend has raised two very interesting aspects and I thank her for bringing them forward. The key thing about these proposals is that they will affect the professionalism of the police at all ranks so, as she rightly points out, they represent a development that I hope will be welcomed. They will be part and parcel of ongoing discussions that we are having as we seek to create a modern police force in this country—something that covers a whole load of matters and will now include this. We will make sure that that happens.

It is intended that those employed by the police in a civilian capacity will be subject to IPCC involvement, a matter that the IPCC itself has raised with us. I cannot say whether the register of gifts, or of contacts with the media, will be extended into that area but she makes a very interesting suggestion that it should do so.

Lord Whitty: My Lords, I would like to ask the Minister a question which my noble friend did not ask. The noble Lord started his Statement by referring to falling crime levels. The Minister will be aware that integrity and transparency are not simply about high-profile corruption cases or miscarriages of justice but about the way in which the police represent what is going on in relation to crime and their success in dealing with it. He will also be aware that, a couple of weeks ago, the Office for National Statistics seriously queried the rate at which crime is falling and suggested that some of the police forces’ figures,

“overstate the true rate at which crime has been falling”,

and that officers may have been failing to document some offences.

The Minister may also be aware that there are even more serious allegations around, some of which may well be aired in a meeting here tonight, that some of that underrecording is deliberate, whether as result of reduced resources in police forces or as a result of deliberate connivance or encouragement by senior police officers. If that is at all the case, there are serious issues of integrity that need to be addressed. I am not clear whether this new structure would be able to address such issues in the police force; they are basically administrative but have huge implications for the public’s and the body politic’s trust in what the police are telling us. In particular, can the Minister indicate whether the ONS suggestions are being pursued and whether, in future, they could be pursued through these new arrangements?

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Lord Taylor of Holbeach: The noble Lord raises a very serious issue. There was in fact a letter in my local paper only last week on this very point, and I get—gratis, I have to say—a copy of the New Statesman, where I think there was a similar article last week. I have certainly read an article in a journal recently implying the same thing.

Lord Whitty: The Minister is a more avid reader of the New Statesman than I am.

Baroness Stowell of Beeston: I must remind noble Lords that this is a Statement, not a debate.

Lord Taylor of Holbeach:It is of course very important to keep oneself well informed, even if it is just to inform one of where people are going wrong. This issue is a very serious one. I do not think there is any dispute about the fact that crime figures are falling. There are matters of definition, which I think it is going to be in everyone’s interests to get tidied up, but the allegation that these figures are being manipulated is a very serious one. Unfortunately, I cannot attend the meeting which the noble Earl, Lord Lytton, who is not in his place at the moment, has called for this evening. I would like to have gone to it but I am on duty in the Chamber. However, I have asked an official to attend because it is very important that the Home Office follows these arguments and listens to what is being said.

Lord Elystan-Morgan: My Lords, as one who was privileged, 45 years ago, to be Police Minister in the other place, I suggest that the situation which now obtains in relation to the police is not all that dissimilar to that which existed in the early 1960s. The Government of the day, a Conservative Government, set up the royal commission under Sir Henry Willink because they were convinced that only an inquiry that was wholly independent of government could have the chance of replacing the police in that position of trust and distinction which they had traditionally occupied in the community. I respectfully ask the Minister to consider deeply whether that precedent should not now be followed in the circumstances prevailing.

Lord Taylor of Holbeach: I cannot accept the noble Lord’s suggestion that there is equivalence between the two situations, but I am certain that the restoration of good practice within communities is a very local matter. That is why the focus of the Statement is on the engagement of individual forces and the maintenance of professional standards throughout the police force from top to bottom. I hope the noble Lord will understand that I am not prepared to go quite as far as he would suggest.

Lord Trefgarne: My Lords, perhaps I may pick up on something said by the noble Baroness, Lady Smith. Is it not the case that senior officials in Whitehall and others who need access to highly sensitive, classified information undergo a process called positive vetting? Does this apply to senior police officers and, if not, why not?

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Lord Taylor of Holbeach: It is intended that an enhanced vetting process will apply to all senior appointments within the police force. All police recruits should be vetted at the point of recruitment, but the vetting process for senior posts within the police will be enhanced.

Lord Dholakia: My Lords, as one who was a member of the former Police Complaints Authority who now serves on the small review group looking at serious cases for the IPCC, I welcome what the Minister has just announced. Perhaps I may ask him two questions. The first relates to the point raised by the noble Lord, Lord Condon, about the implications of a transfer of resources from local areas to the IPCC. Has the Minister worked out the figures that we are talking about, bearing in mind that the cuts that have been imposed on police forces are causing serious problems in local areas? Has he worked out what the implications of the transfer might be, because many lower level cases are best dealt with at the point at which they occur; that is, in the local area. Secondly, the Minister mentioned the powers that are required by the IPCC and said that we can expect legislation. Will he consult not only the IPCC but the many other relevant organisations which have repeatedly raised concerns about the existing powers of the IPCC? What will he do to ensure that their views are taken into account before the legislation is formed?

Lord Taylor of Holbeach: On the noble Lord’s latter point, if there is to be legislation, there will have to be a period during which Parliament and the wider public will be engaged in considering what might be in it. On resources, the Home Secretary will write to the IPCC, Her Majesty’s Inspectorate of Constabulary, PCCs and the college itself to seek detailed proposals on how the transfer of resources might take place and over what period. I think that will help the noble Lord, Lord Condon, in his question to me. This is a matter of consensuality. I think that there is sufficient consensus within the police service to enable this to be done on a consensual basis, recognising that integrity in policing is holistic and not specific to one particular force.

Lord Deben: Can my noble friend confirm that there was a point at the turn of the century when in police education the phrase “leadership training” was changed to “management training”? If that is so, can he assure the House that that will be reversed and the lesson will be learnt that leadership is crucial in an effective police force?

Lord Taylor of Holbeach: My noble friend quite rightly recognises that we have been through a process where management has been seen as being the most important ingredient for success. Indeed, management is important, but in policing—and many other services—leadership is vital because of how those who command inspire those who work with them. The College of Policing is based on developing exactly that set of skills and indeed a professional ethos within the police force and reinforcing that professionalism.

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Baroness Doocey: My Lords, I, too, very much welcome the Statement, particularly the fact that the IPCC will now investigate all serious offences. For too long, we have had the ridiculous situation of the police investigating themselves, so this is a very welcome move indeed. I also welcome the other changes that the Minister has outlined.

However, there is another problem that needs to be addressed: the issue of police officers with a criminal conviction being allowed to remain as serving police officers. I have looked at this issue over the years, most recently in January 2012. I was looking at it in respect of the Metropolitan Police but I suspect that in other police forces the pattern is similar. I was absolutely shocked to find that there were 400 serving Metropolitan Police officers who had had a criminal conviction, a caution or a penalty note for disorder. Fifty-five of these were for offences of violence—of which 30 were for assault, ranging from battery through to actual bodily harm—and 22 for offences involving dishonesty.

All sorts of issues come out of this. For example, can it be right that serving police officers who have a conviction for violence are able to volunteer to be trained to use firearms or tasers? Can it be right that police officers who have a conviction for dishonesty can then appear in court? It seems inconceivable that police officers with serious criminal convictions should be allowed to serve. I urge the Government to look at this as a matter of urgency.

Lord Taylor of Holbeach: I am equally shocked by the figures that my noble friend Lady Doocey has evidenced. We had the case of Simon Harwood, which I think made everyone aware that it was possible for people to resign from one force and sign on with another. This is designed to make that much more difficult. Indeed, as I have said, the vetting of constable appointments will make it very much more difficult, and that will address the concerns that my noble friend has expressed.

Public Service Pensions Bill

Report (Continued)

5.14 pm

Clause 5 : Pension board

Amendment 9

Moved by Lord Newby

9: Clause 5, page 3, line 4, at end insert “(or each scheme manager)”

Lord Newby: My Lords, I will start with government Amendments 10 and 11, which would require equal numbers of employer and member representatives to be appointed to each pension board in the public service pension schemes.

The noble Lords, Lord Eatwell and Lord Sharkey, previously argued for an amendment that would have required one-third of pension board appointees to be member representatives. Their amendments essentially sought to create parity with requirements that apply to trust-based occupational pension schemes.

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During Committee, I explained why simply importing those requirements was in our view inappropriate, but we accept the principle that employees should be properly represented, so, for the public schemes, we propose that there should be equal representation. That would mean that there will always be equal representation of employer and employee interests, regardless of the number of participating employers in a scheme. Given that public service pension boards will not have a role in setting the scheme regulations, there is no need to engineer a balance that favours either group.

The amendments would not prevent schemes appointing other types of board member. We anticipate that schemes will want to include scheme manager representatives, independent board members and other interests. It is of course right that other legitimate interests can be included alongside the core of employer and member representatives. We believe that our approach offers a fairer and better way to ensure that members’ interests are represented in the public schemes.

The other amendments in the group are straightforward clarifications and corrections. Amendment 9 would reinforce the appropriate reading of the Bill. As we know, there will be multiple scheme managers in the locally administered fire, police and local government pension schemes. The amendment makes it clearer that each of them shall have a pension board.

Amendments 12 and 13 are minor and technical corrections to ensure that the Bill operates as intended. Amendment 12 ensures that a scheme advisory board can be given a role in advising the scheme managers and pension boards in any public scheme that is administered by more than one scheme manager. The previous drafting inadvertently and incorrectly prevented a scheme advisory board being given such a role in the police scheme. The amendment corrects that.

Amendment 13 responds to a point raised by the noble Lord, Lord Hutton, in Committee, by adjusting the provisions that prevent a person with a conflict of interest being appointed to the scheme advisory board. The change means that mere membership of either the pension scheme or a connected scheme does not constitute a conflict of interest. The amendment would mean that the conflict of interest provisions in this clause exactly mirror those already in Clause 5. I commend the amendments to the House.

Lord Davidson of Glen Clova: My Lords, we on this side welcome the amendments. The Minister gave a commitment to the House which we are pleased has been honoured. We recognise that significant movement has been made by the Government in relation to governance and pension boards. In particular, we applaud what the Minister said about equal representation on pension boards. To have employees on such pension boards is a very welcome development.

Perhaps it is a small matter, but the Minister referred to the amendment dealing with conflict of interest. It is particularly gratifying to see that a small matter which might have been seen as an obstacle to equal representation on the pension board has been removed by careful drafting.

Lord Sharkey: My Lords, I shall speak briefly in support of Amendments 9, 10 and 11. I raised the issue of member representation on pension boards at

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Second Reading, and in Committee, as the Minister said, I tabled an amendment that would have required one-third of members of pension boards to be members of the underlying scheme. I was grateful then for the support of the noble Baroness, Lady Donaghy, and the noble Lord, Lord Eatwell, for the amendment.

With the amendments now before us, I think that the Government have taken a realistic and fair view of member representation. The equality of employer and employee representatives on pension boards is an entirely satisfactory resolution to the problems that we outlined earlier. In fact, I think that the amendments provide a better solution than those proposed previously here and in the Commons. Equality of representation is very simple and clear and completely unambiguous. I know that my noble friend has been instrumental in securing the amendments, along with my right honourable friend Danny Alexander, and I pay tribute to their efforts and thank the Government for proposing the amendments.

Amendment 9 agreed.

Amendments 10 and 11

Moved by Lord Newby

10: Clause 5, page 3, line 26, leave out paragraph (c) and insert—

“(c) requiring the board to include employer representatives and member representatives in equal numbers.”

11: Clause 5, page 3, line 32, at end insert—

“( ) In subsection (4)(c)—

(a) “employer representatives” means persons appointed to the board for the purpose of representing employers for the scheme and any connected scheme;

(b) “member representatives” means persons appointed to the board for the purpose of representing members of the scheme and any connected scheme.”

Amendments 10 and 11 agreed.

Clause 7 : Scheme advisory board

Amendments 12 and 13

Moved by Lord Newby

12: Clause 7, page 4, line 10, leave out from “Where” to “in” in line 13 and insert “, by virtue of section 4(5), there is more than one scheme manager for a scheme mentioned in subsection (1) (and accordingly there is more than one pension board for the scheme), the regulations may also provide for the board to provide advice (on request or otherwise) to the scheme managers or the scheme’s pension boards”

13: Clause 7, page 4, line 33, after “scheme” insert “or any connected scheme”

Amendments 12 and 13 agreed.

Clause 8 : Types of scheme

Amendment 14

Moved by Lord Eatwell

14: Clause 8, page 5, line 4, at end insert—

“(3A) A scheme under section 1 which replaces a defined benefit scheme may only be established as a defined benefits scheme.”

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Lord Eatwell: My Lords, this amendment, which is a reprise of something that we debated in Committee, derives from a peculiarity of the process through which this Bill has gone, in that many of the measures in the Bill derive from negotiation between the trades unions, other interested parties and the Government. Having reached agreement, the Government’s side seems to appear in the Bill but the assurances given to the other side in the negotiations do not. What we have instead is simply a continuous series of government assurances.

This amendment requires that a defined benefit scheme should be replaced with a defined benefit scheme. This reinforces the Government’s oft-repeated commitment to maintaining the defined benefit structure once the definition of the defined benefit has been changed, in the way that was proposed by my noble friend Lord Hutton. However, Clause 8 still provides that any scheme, once closed, can be replaced by,

“a scheme of any other description”.

Those are the exact words. As I said just now, the Government have continuously sought to give assurance that they would not replace a defined benefit scheme by anything other than a new defined benefit scheme but they have proved peculiarly reluctant to place such a condition in the Bill. This persistent reluctance is becoming quite disturbing and is significantly undermining the confidence of pension scheme members that their rights are going to be protected in the ways that have been suggested.

As I pointed out in Committee, the noble Lord, Lord Newby, further undermined the confidence of members when he said on 19 December that,

“although the Government have absolutely no intention to change the basis of the schemes, it makes sense for a piece of legislation, which we hope has a long life itself, to allow flexibility in the future if there are unforeseen changes”.—[

Official Report

, 19/12/12; col. 1585.]

Therefore, the Government are making a commitment: they continuously assure members that they will replace defined benefit schemes only with newly constructed defined benefit schemes—but, on the other hand, perhaps unforeseen circumstances mean that they will not.

I feel it is appropriate that the Government keep their side of the deal, which was that the defined benefit schemes would move from a final salary scheme to a salary-averaging scheme, which was a deterioration in the future pension benefits available to scheme members. They accepted that because the other side of the deal was that the Government said that they would commit not to move away from defined benefits. The Minister really has to tell us why the Government are so reluctant to keep their side of the deal. I beg to move.

Lord Newby: My Lords, this is indeed a reprise of a debate which we had in Committee. I believe that the Government have been extremely clear about their position on this issue throughout the legislative process, both here and in another place. Let me explain again why we remain unmoved. At the risk of stating the obvious, the Government have no desire or intention to replace the defined benefit schemes that have been negotiated. Officials, employers and member representatives have worked extremely hard to agree scheme designs that meet the needs of the different workforces and which are fair and affordable.

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We believe that the new schemes are fit for purpose. Everyone is now working to implement these schemes from April 2015 for most workforces, but earlier than that in some cases. Draft regulations for the Civil Service scheme have been shared with the House, while the local government scheme in England and Wales has gone out to informal consultation on its own draft regulations.

While each set of regulations remains a work in progress, there can be no doubt that they would establish a defined benefit scheme of the agreed career average design. So when the Government say that we have no other intention than to create defined benefit schemes, those are not mere words—we are putting them into practice. The Government say that we have no intention of replacing defined benefit schemes with other designs, and that intention is underpinned clearly in the Bill by Clause 22.

The extent to which a scheme is a CARE scheme is explicitly one of the protected elements in the clause. That means that for a full 25 years—26 years in some schemes—the defined benefit design could not be easily changed. To do so, the responsible authority would have to consult on the proposed changes with all those affected,

“with a view to reaching agreement”.

That is a higher standard of consultation than in most other statutory consultations. The authority must do more than seek out and consider the views of interested parties; it must engage with them, with the aim of reaching agreement with them. In addition, the authorities must present a case to Parliament, or the devolved legislature, for changing the scheme design from career average, notwithstanding an explicit presumption written into the Bill that it would not be desirable to change the design before 2040.

There is no ambiguity here. Noble Lords and scheme managers can be fully reassured of our commitment to a defined benefit arrangement. It would be misleading and unnecessarily alarmist to imply anything to the contrary. So I say again: there is no prospect of the Government wanting to replace the defined benefit schemes that we are working so hard to develop, and I believe that that is the position of the party of the noble Lord, Lord Eatwell, also. The noble Lord may say, as he has in the past, that Governments come and go, but the status of the new defined benefit schemes will be protected by the Bill. I therefore urge the noble Lord to withdraw his amendment.

Lord Eatwell: That was an intriguing reply. The usual reply in circumstances where the Government feel that they have covered all bases is that an amendment is unnecessary, but the Minister did not feel that he could say that. It is striking that, despite his variety of assurances, a simple statement is unacceptable. However, under the circumstances, I will take this away and think about it further. For the moment, I beg leave to withdraw the amendment.

Amendment 14 withdrawn.

5.30 pm

Amendment 15

Moved by Lord Whitty

15: Clause 9, page 5, line 22, leave out “or decrease”

12 Feb 2013 : Column 602

Lord Whitty: My Lords, this amendment relates to revaluation. Clause 9 appears to allow the Treasury to change yet again the basis of revaluation, this time away from the CPI to something else. We discussed this in Committee and various assurances were given in that respect, although they are not as yet reflected in the Bill. However, no reassurances were given—indeed, the Minister was less than his usual emollient self—in relation to the provision in the Bill that in effect allows for negative revaluation in the light of changes in the CPI. That means that the Treasury can on the one hand amend the index and on the other impose a decrease in the accrued pension without any consultation with those affected, and in a way that, in the case of the LGPS, seriously undermines not only long-established practice but the recent agreement between the LGA and the trade unions.

I have looked at the history of the LGPS over the past 30 years, although it has actually run for a longer period than that, and there was only one point at which the relative index, at that point the RPI, actually fell at the point at which it was evaluated, and that was from September 2009 to the 2010 increase.

There were no precedents at that time. We had to refer back to the Pensions (Increase) Act 1971, which allows for increases but does not allow for decreases. The interpretation at that time was that that Act did not permit a decrease, so the 2010 adjustment was, in effect, zero. That is one aspect.

The other aspect of having the potential for a negative adjustment in revaluation is that it is inconsistent between those who are already receiving pensions or who are entitled to deferred benefits and are therefore governed by the Pensions (Increase) Act 1971, in which case their benefits would not be reduced, and active members who are still contributing to the scheme and who would, at precisely the same time when a negative revaluation could be made under this clause, see their benefits go down. We would therefore be treating active members disfavourably compared with members who have left the scheme or are already drawing their pension.

I am grateful for the assurances on the continuation of the CPI, but the fact is that the sudden and unexpected replacement of long-established RPI by the CPI has left a legacy of distrust in the schemes. Part of that is that if the CPI, as is expected, performs, if that is the word, less substantially than the RPI, there is a greater likelihood or possibility of a negative figure. The recent agreement between the LGA and the trade unions made it clear that past practice would continue to operate, and that if there were a negative change in the index there would be a nil adjustment. The implication of this clause is that it is attempting to override that commitment and agreement, which I think the Minister, and certainly some of his predecessors, would accept got the Government out of a very difficult position on pension reform in general and the LGPS in particular. Therefore, unravelling that aspect of the agreement—there are other amendments I will come to with a similar effect—is not helpful.

Amendment 15 would stipulate precisely what is already past practice and in the agreement: namely, that if there is a negative movement in the index, there

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will be a nil adjustment. I think the Government should accept the amendment. I appreciate the strong words of the Minister last time that the Government are not prepared so to do, despite the anomalies and distrust it would create. There are alternative amendments on this in this group in the name of my noble friend Lord Eatwell. Perhaps the Government could at least show their good will by accepting that if there were a negative increase, it would have to be subject to the affirmative procedure as provided for in my noble friend’s amendment, which no doubt he will speak to more ably than me shortly.