Judicial Pensions and Retirement Bill [H.L.]

HL Deb 30 June 1992 vol 538 cc666-723

3.21 p.m.

The Lord Chancellor

My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, That the House do now resolve itself into Committee.—(The Lord Chancellor.)

On Question, Motion agreed to.

House in Committee accordingly.

[The CHAIRMAN OF COMMITTEES in the Chair.]

Clause 1 [Persons to whom this Part applies]:

Lord Ackner moved Amendment No. 1: Page 1, line 15, leave out sub-paragraph (ii).

The noble and learned Lord said: For one who is not used to delivering the first service, it is some consolation to know that I cannot thereby commit a double fault. The point I seek to raise with this amendment is a very simple and short one. In a way it is a probing amendment because the wording of subsection (b) (ii), dealing with the application of the pensions aspect of the Bill, is to apply to any person: who, on or after that day, is appointed to some other qualifying judicial office, service in which would (apart from this Act) have been subject, in his case, to some other judicial pension scheme".

The reason for this probing amendment is that it seems to me —I apologise to the Committee if I have misunderstood—that there is a flavour of retrospection about this clause. Perhaps I may give the Committee a simple example. It is becoming more usual for circuit judges to be elevated to the High Court Bench. There are very good examples of those who have had that privilege. At the moment, without going into detail, a circuit judge earns his pension after 15 years' service. If he is elevated to being a High Court judge, does it mean that under this clause he no longer has the advantage of serving only 15 years, subject to an age point, and then becomes obliged to serve 20 years? If so, it sounds to me like retrospection under a not very heavy guise. With respect, if I am right it also seems to me to impose a degree of deterrence upon a person who, by his very qualities, has ex hypothesi shown that he should be promoted.

That is essentially the basis of my amendment. I beg to move.

Lord Morton of Shuna

This amendment is in my name also and I should like to raise a different point. It is quite clear that to change from a 15-year earning of full pension entitlement to a 20-year earning involves a reduction in salary because the pension earning rate is in fact part of the salary. Can the noble and learned Lord tell us how much that is on a 15-year earning pension as a proportion of salary and what the difference is when it goes down to 20 years for earning the full pension? I should have thought that it may be quite a large percentage.

The Lord Chancellor

The amendment would have the result that all those who presently hold a qualifying judicial office would be part of the new scheme. Therefore, I assume that my noble and learned friend Lord Ackner, while wishing to probe, does not wish his amendment to be passed. That would be retrospection with a great vengeance. It has always been the policy of the Government, as proposed in various consultation papers, that members of the existing judiciary who remained in their present appointment or who were promoted within a system which had the same judicial pension arrangements would not be affected by this Bill unless they wished to opt for it. However, sub-paragraph (ii), which is sought to be deleted, seeks to deal with the case, for example, of a circuit judge. I take that example at the instance of my noble and learned friend.

The problem is that under the present arrangement circuit judges are on a different scheme from the High Court Bench. The result of promotion is that the judge has to start again, so far as concerns counting time, in order to earn his pension at the High Court judge level; or, if he does not want to do that (usually it will not have a particularly advantageous result) he can elect for the full period of service but with the pension arrangements based on the salary of the circuit judge, from which level he has been promoted. That is a disincentive to promotion at present.

I have to say that those who have been promoted my—noble and learned friend referred to distinguished people who had been so promoted—have normally just accepted that situation, wishing to become High Court judges. But I believe that that is a disadvantage. The purpose of this clause is to enable those who are appointed, for example, to the High Court to get the benefit of their full time of service and their salary at the higher level so as to produce, generally speaking, a better pension. It is just possible that it might work to someone's disadvantage but I think it highly unlikely because of the timescale that would be involved.

The question asked by my noble and learned friend Lord Morton of Shuna is a difficult one to answer. It depends on the age at which one makes the calculation. Obviously, if one serves for 20 years, the present scheme appears better than the old one. It depends somewhat on the length of service and also, if one is making a very strict calculation, on the age at which the calculation is made. Whatever the correct answer, I cannot believe that it can be right for this amendment to be passed. I strongly recommend the Committee not to agree to it.

Lord Ackner

Before my noble and learned friend sits down, perhaps I may say something which arises out of the point raised by my noble and learned friend Lord Morton. I understood that the actuarial approach was that the 15-year pension represented the equivalent of an increase of about 30 per cent. to the salary. If so, an accrual period lengthened from 15 to 20 years represents, I have heard said, a decrease of 7.5 per cent. in the judicial salary. I should welcome my noble and learned friend's response. As was pointed out by my noble and learned friend Lord Donaldson at Second Reading, pension is nothing other than deferred pay.

3.30 p.m.

The Lord Chancellor

Pension is deferred pay. However, the rate at which pension accrues as a proportion of pay depends on what stage one has reached. Let me take an example, under the present scheme, of a judge who has worked for 16 years on the Bench. With regard to pension, the rate of accrual is zero because he has already acquired his full pension. The rate of accrual, strictly speaking as a percentage, depends on that factor. The other difficulty is that the pension is not the only benefit. There is also the benefit of a capital sum. Questions arise about the correct way in which that should be assessed.

The effect of the amendment would be to apply the new scheme to all the existing judiciary. Therefore I assume that the Committee would not wish to approve it.

Lord Ackner

I am bound to say that I am somewhat disappointed in my noble and learned friend's answer. However, I should like time to consider it. I therefore beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Ackner moved Amendment No. 2: Page 2, line 7, leave out ("within such time") and insert ("at any time prior to retirement").

The noble and learned Lord said: This is a short amendment. I can blame the parentage upon my noble and learned friend Lord McCluskey who raised the issue during Second Reading. He asked: Why does any period need to be laid down?"— that is, during which a judge should have the right to opt into the new scheme. Why should not the existing judiciary merely be given the right to elect in the light of their personal, financial and family circumstances at any time while they continue to serve?"— [Official Report, 16/6/92; col. 164.] Hence the quite short amendment which I have proposed to subsection (3) at line 7. It deletes the words "within such time" and inserts "at any time prior to retirement".

There may be occasions when a judge says to himself, "I am very concerned about the position of my wife. She is a great deal younger than I am. I am likely to die before her, and my health is such that that is more than likely to be the case. I should like to elect now. If anything happens to me I have made my election". Alternatively, he may wish to put off the matter until some other event occurs which makes the opting in appropriate. But he may not survive until the ordinary time for election. Therefore, the amendment enables him to anticipate what he considers is in his family's best interest.

When my noble and learned friend replies will he indicate what he has in mind regarding the personal representative of the judge who has died without opting? Under existing provisions, at present that consideration is very much on the cards. I much support the inquiry made by my noble and learned friend Lord McCluskey. It is the basis of the amendment.

Lord Mishcon

To follow on from the noble and learned Lord, Lord Ackner, what worries me is that provisions in the Bill—we have complained about this fact in other Bills—are taken out of the hands of those who are dealing with the matter in Parliament. If there is to be a limit, why is not the limit in the Bill? Why have we to pass a provision that is completely vague, unknown to us and to a large extent completely undetermined by us now or in the future? In the Bill the time is "as may be prescribed". I ask the noble and learned Lord why we cannot know the time period now. I quite understand that the manner in which the election is to be made, if it is to be a prescribed form, has to be left outside the Bill, but the time within which the election is made should be stated in the Bill.

Lord Morton of Shuna

The response to the consultation paper made it perfectly clear that judges on the old system were to be allowed at retirement (according to paragraph 19, I believe) to obtain advice from the Government as to which system would suit them better and then to choose. Therefore, I too do not understand why we have this somewhat threatening language in this subsection. Why was it not possible to say that "at any time prior to retirement" the person on the existing scheme could choose? That is what the amendment seeks to achieve.

The Lord Chancellor

My noble and learned friend Lord Morton of Shuna has demonstrated very plainly that the amendment will not provide what he seeks. The amendment suggests that the election has to be made "at any time prior to retirement". What he wishes to do, among other things, is to have the opportunity of advice about the various points of view on the respective merits of the courses open to the person in question and then for that person to make an election. I hope that I made it perfectly plain on Second Reading, in reply to my noble and learned friend Lord McCluskey, that the intention is for it to be possible to make an election at the time of retirement.

The point made by my noble and learned friend Lord Ackner is also good; namely, that a person might wish to make an election at a time other than retirement. There are certain problems associated with the degree of freedom of election available which can have some effect. However, the real problem was for how long such election was to be open. I have endeavoured to make it plain that election would be open until such a time as to enable it to be made in respect of retirement. How long should one have after that to consider such matters? How long will it take to obtain proper advice? One might not necessarily wish only government advice. I believe that a degree of flexibility in such matters is highly desirable.

Such experience as I have of seeking to operate pension schemes has suggested to me that often quite unexpected problems can arise. It is therefore wise in a subsidiary matter of this kind to have power to make regulations affecting the time and manner in which the election should be made.

However, of this I am perfectly clear. The intention is that election should be open in respect of the merits of the two courses open at the time of retirement, and within some reasonable period thereafter, in order to enable the matter properly to be considered. I also believe it right to permit a degree of flexibility about making elections earlier that would be regarded as binding, as my noble and learned friend Lord Ackner wishes.

The proposed amendment does not have the effect that my noble and learned friends wish. I believe that it would not be wise to specify in complete detail the time within which elections have to be made. However, if the Committee takes a different view upon that we may return to the matter. I believe that it would be a mistake to try at this stage to lay down in detail all possible ways and times at which an election might be made. The situation with regard to representatives has an effect in that respect. In this provision I intend that the election is by the person who has earned the pension.

Lord Renton

Flexibility is of advantage in some circumstances; but is not certainty essential with regard to judicial pensions and judicial salaries? Parliament exists to ensure the independence of the judiciary, of which this matter is part. It may be some time before Report stage. Could not my noble and learned friend the Lord Chancellor make up his mind about the matter between now and Report stage? It could then be inserted as part of the primary legislation.

Lord Morton of Shuna

The noble and learned Lord suggests that there should be a discretion beyond retirement, which may be quite welcome. Do we take it that the Government have changed their mind since July 1991 when they said: The Government have decided that existing judges will be allowed to keep their options open until such time as they wish to retire"? If there is to be a wider choice, would it not be better to express it on the face of the Bill rather than simply say that an election may be made within such time and in such a manner as may be prescribed, which might even be within one month of the Bill coming into force?

The Lord Chancellor

All I can do is indicate what I have in mind. The conclusion expressed in paragraph 19 is precisely what I have in mind. But if we put that into the Bill we would soon be faced in practice with feelings that hardship had been done to judges because they could not accumulate enough information, having decided perhaps rather quickly to retire. I know from experience that some of their Lordships take a period of time to decide that question while others decide relatively speedily. They might not therefore have enough time before the actual date of their retirement properly to evaluate the matter. What I have in mind is that the decision should be made at the latest in respect of the options as they exist at the date of retirement, but what I said in response to the consultation paper is perfectly appropriate to giving a reasonable time in connection with retirement for that to be decided. The problem is that my noble and learned friend Lord Ackner wishes the possibility of election to be made earlier as well. Questions arise about that. That is why I believe that flexibility is important. If noble Lords have views about what should be done in the light of our discussion we shall have the Report stage in which to consider the matter.

I understand the view of the noble Lord, Lord Mishcon, supported by my noble friend Lord Renton, that precision is desirable. Precision is desirable on the main matters so far as possible but flexibility sometimes works to the advantage of those who are subject to the scheme. That is the purpose of providing for this particular type of flexibility. If noble Lords can come forward with a formula which they think is best and which will work for as long as the legislation lasts I shall be glad to welcome such a proposal at the Report stage.

Lord Hailsham of Saint Marylebone

I wish to make a very brief point which is relevant to that raised by the noble Lord, Lord Mishcon. I may have misread the point; I want therefore to check it against my noble and learned friend's opinion. I can quite understand that there may be circumstances which would lead the holder of a judicial office who is promoted to defer his election until a later date. Such circumstances have been enumerated. However, that prompts the further question which I wish to put to my noble and learned friend—the unexpected always happens.

Let us suppose that a judge who is promoted decides to defer his election until a later date—the election once made is irrevocable—and then the unexpected occurs. He is run over and killed by the proverbial bus, or some other misfortune occurs to him. What will be the situation then? That point occurred to me when the noble Lord, Lord Mishcon, was speaking. There are some matters, despite the desire of Parliament to retain control of the product of our legislation, in which regulations are an advantage to the subject and not a disadvantage.

3.45 p.m.

The Lord Chancellor

It follows from what my noble and learned friends Lord Hailsham of Saint Marylebone and Lord Ackner have said that there are certain competing considerations to be borne in mind. Some judges may want to settle these matters early and irrevocably. If one does that and the unexpected happens it may be difficult to do anything about it. But that is the problem that has to be faced by those who wish to decide early. I could easily have included, if I had thought it right, a provision about relating it to retirement, although not this provision for the reason that I mentioned. However, I feel that that would be likely to produce from time to time—not perhaps very often—hard cases which we cannot always envisage now. My noble and learned friend Lord Hailsham indicated one possible source: there may be others.

It is not easy to envisage all the possibilities that can arise. It is my experience of judicial pension schemes and related schemes that too rigid provision has produced injustice in particular cases. If it is in primary legislation it is usually impossible to do anything about dealing with the particular case. One has to bear the injustice and feel sorry for the person who has suffered it. My advice to the Committee is that this is a wise form in which to leave the provision, on the understanding, which I wish to make absolutely clear, that the Government's intention is that election will be permissible in respect of retirement. Obviously, some reasonably short time after retirement to enable someone to make up his or her mind would be a useful part of that. I certainly intended to include that in the phraseology I used in answer to the consultation.

Lord Mishcon

I wonder whether the matter could not resolve itself with everyone being happy if between now and Report stage the noble and learned Lord could produce a draft of the regulation that he would have in mind in order that at least we would be satisfied that we were starting with a regulation. It is obvious that we would completely trust the Government to see that a regulation eventually came out in the form that the noble and learned Lord had drafted. That would make us a little happier that we were looking at flexibility which produced justice rather than just shrugging off responsibility and hoping that a regulation passed in the future would be as flexible and as helpful as the noble and learned Lord suggested.

The only other way in which to produce complete flexibility is to say that it shall be a discretion of someone, but one never knows whether a discretion will be used harshly or in a sympathetic form. We would all be happier if, prior to Report stage, the noble and learned Lord could produce a draft of what he has in mind on the lines of what he has so helpfully talked about today. We would then know at later stages of the Bill whether we were happy with that or whether we ought to see it in primary legislation. At the moment I take the view—I say this with utmost respect—that we ought to take responsibility for putting the words in primary legislation.

The Lord Chancellor

As the noble Lord, Lord Mishcon, knows, I strive continually to please everyone. I have not found it a very easily obtainable goal hitherto, but I am certainly anxious to do what I can to make everyone content with the provision. I am certainly content to try to see what we can do in the way of producing our present thoughts on the type of order that would prescribe the time and manner. It is not a general discretion—it is a discretion as to time and manner only that I have in mind to prescribe. I shall certainly make an attempt to do that but I do not wish to withdraw my invitation to noble Lords to suggest a form of words for primary legislation that they believe will satisfy everyone in all conceivable situations and produce justice in the future. I should not like to withdraw that invitation. I undertake to do what I can to implement the kind suggestion of the noble Lord, Lord Mishcon.

Lord Ackner

In view of my noble and learned friend's assurance that he will give the matter further consideration, I beg leave to withdraw the amendment. However, I should make it quite clear, in case it has been misunderstood, that we are all concerned with the ability to operate the system flexibly. I have used the words "at any time prior to retirement" because that covers the whole span of the judge while in office. I have specifically drawn attention to the personal representative because that arises after his death. The need to have an ability to operate before retirement may be very rarely exercised. I do not suppose that there are many judges now to whom it would apply but I knew one or two who mountaineered during the long vacation. Some of those may wish to give particular thought to the provision in this Bill for spouses, which I hope we shall be able to improve substantially.

Amendment, by leave, withdrawn.

On Question, Whether Clause I shall stand part of the Bill?

Lord Hailsham of Saint Marylebone

I wish to make a plea to my noble and learned friend because yesterday I was put in a particular situation of embarrassment. I am sure that he will help me to get out of it. At about 6.30 yesterday evening, and long after it was possible to table amendments for this Committee stage, I received a whole sheaf of amendments from the Association of Metropolitan Stipendiary Magistrates asking me to table them. Of course, it was wholly impossible for me to do that.

I hope my noble and learned friend will assist me because I have sent them to him by post. I am sure that he will receive them in due course, whatever that may mean. I hope that he will advise me as to what his reaction would be in the event of those amendments being tabled on Report. Some of those amendments would have been to Clause 1.

The Lord Chancellor

Certainly I shall do what I can to help my noble and learned friend to deal with the anxieties of that very important body of judges.

Lord Mishcon

I was also the recipient yesterday morning of the self-same amendments. The noble and learned Lord, Lord Hailsham, never exaggerates, which is why we love him so much. In fact, there was not a host of amendments; there were four.

The Lord Chancellor

Perhaps I may add that that shows that the time limits can sometimes be difficult to attain.

Clause 1 agreed to.

Clause 2 [The judicial officer's entitlement to a pension]:

Lord Ackner moved Amendment No.3: Page 2, line 27, leave out ("65") and insert ("60").

The noble and learned Lord said: I make some brief observations which refer to a number of my amendments hereafter. I respectfully submitted on Second Reading that pensions are deferred pay. In order to ensure that members of the top salary field are paid appropriately, the Government have adopted the process of asking the Top Salaries Review Body to report on pay. As pensions are deferred pay, this would have been a wholly proper matter to refer to that body, which would have had the advantage of independent, expert advice. The Government could have adopted or rejected those proposals as they saw fit but would have no doubt been required to justify any rejection. There would have been nothing novel in the Top Salaries Review Body being asked to consider the appropriate new pension scheme. It was asked to do so in relation to Members of Parliament. It produced a scheme and the Government adopted it.

Instead of that, we have a procedure under which the Government, keeping at arm's length interested parties, produced a consultative document. They obtained from those parties their responses, which they never published. They then produced a scheme. I have been fortunate in obtaining the response from the Top Salaries Review Body and the majority, although not all, of the amendments which I have tabled are as a result of the wisdom contained in that response together with informal advice that I have managed to obtain on this expert field. That advice is directed to what is currently provided on a top private executive scheme. That is a scheme which the judges are entitled to expect to be offered to them, the more so since that scheme is to be put into primary legislation and, once there, is unlikely to be amended for many years to come.

My main criticisms will be that, as a result of not going to the Top Salaries Review Body or an independent expert, there are to be found in this scheme out of date concepts taken from the old judicial scheme which my noble and learned friend mentioned on Second Reading as going back many years.

I am heartened by the fact that I am told that there will be a substantial gap between Committee and Report stages. I hope that that will enable the judiciary to obtain an independent report from a consultant actuary so that it can have the benefit which it would have had if the appropriate steps had been taken to entrust the matter initially to the TSRB.

Having said that, I turn to the amendments. They seek to change the ages which are referred to in the clauses to which I have drawn attention. Clause 2(1) (a) refers to: any person … who retires from qualifying judicial office on or after the day on which he attains the age of 65". I endeavour to bring that up to date by changing it to 60 because 65 is becoming the top age at which people retire. The provision continues: who has, at the time of that retirement, completed … at least 5 years' service in qualifying judicial office". The current position as regards a High Court judge is that he earns a pension immediately on appointment to the extent of 25 per cent. of his salary and for a circuit judge it is 20 per cent. Those judges are now to be penalised by that useful situation being removed from them. However, that is not a matter of age but of qualification.

In Clause 2(2) (a) I seek to deal with a person who retires from a qualifying judicial office on or after the day on which he attains the age of 60. That should be reduced to the age of 55 and 65 should be reduced to 60.

Perhaps I may quote from the relevant part of the response of the Top Salaries Review Body. In its covering letter it said that, while it welcomed improvements embodied in the new scheme: We consider that there is scope for further enhancement within Inland Revenue limits and in line with good practice elsewhere". I turn now to the particular part which is relevant. The paragraph reads: The early retirement provisions are insufficiently flexible and fall short of good practice elsewhere. The Inland Revenue allow any pension earned to be put into payment after the age of 50 but without an actuarial reduction. However, most employers impose some actuarial reduction and we would suggest that this should apply to early pensions where members leave between the age of 50 and 60. Pensions of men and women retiring early over the age of 60 should not be subject to actuarial reduction in line with good practice elsewhere and rulings in the European Court of Justice".

In short, my submissions are that the age limits which have been imposed are out of date, they are not consistent with good practice and should be reduced to the modest extent—I emphasise those words—indicated in the amendment. I beg to move.

4 p.m.

The Lord Chancellor

I should comment on the general situation referred to by my noble and learned friend. In the light of the commitments that I made in this Chamber in connection with the passing of the Courts and Legal Services Bill, the Government agreed to review the judicial pension arrangements. The views of the Top Salaries Review Body were given in respect of the consultation document that we prepared. As my noble and learned friend is probably aware from the letter I recently sent to him, it advised that we should consult independent actuaries. We have done that and I gave a copy of that report to my noble and learned friend. I did not find it particularly useful in relation to the whole scope of the scheme, but I wanted my noble and learned friend to see it, he having asked about it. I know that if anything can be profitably made of it from the point of view of the judiciary he will be able to do it.

The situation in which we find ourselves is that I must attempt to produce a scheme which does the best it can for the judiciary within the general taxation principles adopted in primary legislation, taking account of the special position of the judiciary. It is important in that connection to say that I take the view that in our system it is right that judges should be appointed after they attain a level or standing in the profession which commends them as being demonstrably suitable for judicial office. That means that they must attain a distinguished place in the profession.

In order to accommodate the taxation principles which apply generally, it has been necessary to opt for a 20-year accrual system, to which we shall come later. But I regarded it as important to secure for this judicial scheme a system under which the benefits earned before appointment are retained. Under fast accruing schemes—notwithstanding what will be said later, in terms of the types of schemes that are considered for approval we are proposing a fast accruing scheme—the benefits which a person is able to provide for himself or herself under the taxation system during practice have normally to be taken into account. In other words, if one has in place under the self-employed arrangements a pension provision, that pension provision must be taken into account in deduction of the pension that may be allowed in the approved scheme. I sought to explain that in a note on taxation, a copy of which I hope was received by all noble Lords who expressed interest in the matter.

This is an extremely important exception which is valuable to retain. It is difficult to evaluate it. As my noble and learned friend the Lord Chief Justice pointed out at Second Reading, it depends to some extent on what the individual does. Overall, it is an important aspect of the provision. Incidentally, it is secured by Clause 18 of the Bill in respect of which there is a Motion not to allow it to stand part. I anticipate that when we reach that stage my explanation may allow it to stand part.

That arrangement is important for the judiciary. Therefore, in considering what it will be reasonable to obtain by way of tax benefits, one must take account of the fact that that specific provision was introduced. I understand that the position in relation to what was said by the Top Salaries Review Body is that the schemes to which it refers, certainly with regard to fast accruing, do not contain that feature.

It is important to retain that feature. To take 60 as the normal age at which a pension would be payable would be to make a considerable change to the scheme. That would have the effect of seriously damaging the possibility of the scheme standing as it does. The age of 65 which we proposed in the consultation paper was generally well received. In our response to the consultation paper we confirmed that 65 would be the normal pension age.

One must have some regard to the present position that for most of the judges affected by the scheme the present arrangement gives 72 or 75 as the ultimate retiring age. Accordingly, a change to 65 is a good step forward and I would invite the Committee to agree that that is the age which should remain in this part of the Bill.

Lord Wigoder

Perhaps I may ask the noble and learned Lord whether he disputes the proposition that the present amendment is more in keeping with best practice in the private sector at this stage.

The Lord Chancellor

Yes, I do. On examination one will find that the practice in the private sector to which the TSRB refers is practice in relation to schemes which do not allow the retained benefits. The retained benefits are extremely important. When I say "retained benefits" I mean retained separate so that they do not come into account in the state or public scheme. That is an important aspect of what is here provided for the judiciary which is not a feature of those schemes.

Lord Ackner

My noble and learned friend is overlooking the fact that the response which I read out from the Top Salaries Review Body was a response to the consultative paper, which made it perfectly clear that the retained benefits would not rank against the pension. That consultative paper made two aspects very clear which the judges were prepared to sacrifice. The first was the capping. The capping would place a ceiling upon the salary by which one could earn one's one-fortieth. That is a significant alteration in the financial pension. Secondly, and more important, the accrual rate would rise from 15 to 20 years.

The retained benefits have enough burden on their shoulders to account for those two major alterations in the deferred pay situation of the judge. They certainly do not justify the proposition that the scheme now provided for the judges would be grossly out of date. If they did, the TSRB would have said in its report "Of course, we note that a number of your proposals are not as generous as they might be, but then of course we bear in mind that the retained benefits have not had to be given up". They do no such thing and neither does the consultant from whom the Lord Chancellor's Department sought advice not—let me make it perfectly clear—on the whole scheme as we have it in front of us now, but merely on the consultative paper, for which I am indebted to my noble and learned friend for sending me a copy. In his criticisms, which, as my noble and learned friend anticipates, I shall certainly pray in aid, neither did that consultant say "Of course our criticism as to A, B and C is not a valid one because of the retained benefits provision".

The judges are required, in conformity under this Bill, to take the sacrifice resulting from capping and from the increase in the accrual period. It is quite unacceptable that in addition they should be landed with what I have heard described as an out-of-date scheme cobbled together from the Lord Chancellor's working paper and the old, and in many cases, very mean provisions of a very elderly scheme. As I indicated to the Committee, I hope that I shall have the advantage not only of the TSRB paper from which I have quoted, and the informal advice which I have outlined, but something more authoritative when we come to Report stage. On that basis I ask leave to withdraw my amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 4 to 8 not moved.]

Lord Ackner moved Amendment No. 9: Page 2, line 40, after ("retires") insert ("or is removed").

The noble and learned Lord said: Again, I am relying purely on the wisdom of the Top Salaries Review Body. In these amendments I am seeking to bring into a modern situation what applies in relation to illness. I seek to bring in to Clause 2(3) (a) the words "or is removed" after "retires" because illness may result in a person being removed as well as voluntarily retiring. I have taken the word "removed" from a later section where it is, I believe, inappropriate. The first alteration is therefore merely a drafting one to cover the position of incapacity which results in removal rather than voluntary retirement.

I then go on to amend the age of 65 to 60. As regards the state of a judge's health, which is covered under subsection (3) (a), I seek to amend, in subsection 3(b), at lines 4 and 5 on page 3, "the appropriate annual rate". If a judge has a stroke and is unable to work after a year, the appropriate annual rate is one-fortieth of his salary. The comment of the TSRB is: Pension benefits calculated on the basis of pensionable pay and past service, but payable immediately in the event of retirement on grounds of ill-health, could be more generous. An alternative approach would be to base ill-health pensions on potential service to age 65".

Having deleted the words "at the appropriate rate", I have added the words in Amendment No. 13, in regard to the pension, he would have obtained if he had reached the age of 65 or completed 15 years in his judicial office, whichever is sooner". That advice from the Top Salaries Review Body is in fact supported by the independent actuary consulted by my noble and learned friend. He comments as follows: On ill-health retirement an immediate pension is payable based on completed service. Where service is short the pension payable will be relatively small whereas it can be argued that it is precisely such individuals who need the greatest support. This is one reason why it is more common to provide a more generous basis of calculation in 59 per cent. of private sector schemes (see the NAPF 1990 survey) whereby some or all of potential service to normal pension age is included. For example, a somewhat complex enhancement formula is common in public service schemes. We suggest consideration is given to something simpler, such as inclusion or full or half of potential service".

I have made inquiries as to what happens in other jurisdictions comparable to ours; namely, America, Canada, New Zealand and Australia. They all provide for a significantly enhanced payment in relation to illness. I shall provide those answers in a moment because it means delving into a mass of papers which I have with me. It is shown that they consider, as we have always submitted, that a judge who embarks on his judicial career well on in his professional life, is in a special category of his own and requires this form of treatment. But according to both sources of pension expertise you do not need to be in a special category. That is what you can expect to get nowadays in any modern private scheme. I beg to move.

4.15 p.m.

Lord Donaldson of Lymington

I share my noble and learned friend's concern for the position of a judge who accepts appointment and, relatively shortly after that appointment, suffers some grievous affliction such as a stroke. As my noble and learned friend pointed out, that would mean in the first year one-fortieth of his salary as the basis for his pension. If he had the misfortune to die, it would mean a pension of one-eightieth for his widow.

I am not competent, and I do not wish, to get involved in the technicalities of pensions. However, I make this point. My noble and learned friend the Lord Chancellor, on a previous amendment, stressed the advantages that judges will derive from being able to put retained benefits on one side. I do not doubt that for the high-fliers practising in the High Court, particularly in specialties, that if they have been practising long enough they will have very significant benefits to retain. However, I question whether the average appointee to the Circuit Bench from circuit practice will necessarily have benefits which are of any real value to retain. We shall be discussing later on the age at which judges are appointed.

I should have thought it likely that with the cost of private education and other expenses which flow from having a family, and looking at the age at which they would be likely to be appointed to the Bench, it is relatively unlikely that there would be any surplus money to put by for the creation of benefits which, by courtesy of this Bill, they might be allowed to retain.

Lord Morton of Shuna

I wish to make just two points and shall try to make them as briefly as I can. First, I wholly agree with the noble and learned Lord, Lord Donaldson of Lymington, that we are not talking only about the eminent practitioners at the commercial Bar who are promoted to the High Court. In the Scottish context we are talking about people who are appointed as sheriffs. In my experience—it is only an experience of observation—people in the 40 years of age bracket who have families at fee-paying schools are not often in a position to have been able to pay vast sums into retirement pension provisions; and if they are in that happy position, they are not in the position of tending to be appointed sheriffs—and the sheriffs tend not to be the highest earners at the Bar.

The second point which I do not understand in relation to this amendment is why, standing the provisions in Section 2 of the Judicial Pensions Act 1981, which precisely provides that people who have to retire on the ground of incapacity receive the full 15-year pension, the Government have put forward these provisions which seem so radically different. They mean that if one has the misfortune to die in the first year one's widow receives one-eightieth of one's salary, and that if one is rendered speechless and unable to write as a result of, say, a stroke, one receives one-fortieth of one's salary. That is a radical change from the provisions of Section 2 of the Judicial Pensions Act 1981, and from what my noble and learned friend Lord Ackner has said, it does not seem to be modern pensions practice. Perhaps the noble and learned Lord will explain why the provision is necessary.

Lord Ackner

Perhaps I may give the figures that I said that I would be able to provide. If I may give the Committee an example in regard to Queensland in Australia, the figure is 75 per cent. of the maximum pension entitlement, plus 5 per cent. per annum in excess of five years, to 60 per cent. In Western Australia, it is 50 per cent. of the pension. Moving on to other jurisdictions, the figure in Canada is 663per cent. of last salary. In the United States it is 100 per cent. of salary and in New Zealand it is a minimum of 50 per cent. of salary.

Since I am on my feet, perhaps I may give the Committee the figure for the number of judges over the age of 50 who have been appointed to the Circuit Bench and to the High Court Bench in the past five years. There were over 180 Circuit judges and some 30 High Court judges—so five times as many judges are probably being appointed to the Circuit Bench than the High Court Bench. The noble and learned Lord the Lord Chancellor is on record as saying this—it is to be found on page 15 of the penultimate report of the Top Salaries Review Body: The Circuit Bench is the mainstay of the judiciary, to which it is vital to attract enough lawyers of the right calibre. They are clearly those who have, in my respectful submission, no great prospect of substantial private pensions—the more so if they are to be recruited round about the age of 45. Not only heavy mortgages, but the question of the children's education, will make any surplus cash very small".

Lord Mishcon

I, too, can put over my points briefly. First, I would wish to follow the noble and learned Lord the Master of the Rolls in what he said about the type of person whom one would wish to see in high judicial office. I tried to say this at Second Reading. Those of us who have spent many happy years in the law and who have had the privilege of looking at various judges from time to time—sometimes with admiration when one has won the case and sometimes with the opposite feeling when one has lost it—have realised to the full that it is not the high flyer by any manner of means who necessarily makes the best judge. It is very often the quiet, tranquil, sober-minded practitioner—I added the word "minded" on purpose—who catches the eyes of the judges, who then most likely might mention his name to the noble and learned Lord the Lord Chancellor as being of the temperament and the learning for such an office without having the dramatic effect upon a court and the public that some people might have. I look forward to the day when some of our academics serve in the Court of Appeal, to which they may be very well suited. We all know that academics will not have been able to contribute large sums for their pensions insurance policies during their academic careers.

I almost apologise for mentioning my second point—indeed, I do apologise to the noble and learned Lord, Lord Ackner. It is a point of semantics only. If I am mistaken about this I know that, with his large heart, the noble and learned Lord will forgive me, but I believe that he was making his case on this amendment on the basis of the retirement of somebody who is afflicted with ill health. Therefore, if I may say so, I would have hoped that his amendment might be worded something like this, "retires from or, by reason of ill health, has to cease holding qualifying judicial office". I say that because whatever happens in the rest of the Bill, the use of the word "removed" conjured up for me the image of a misbehaving judge who has to be removed from office but who then has the benefit of the noble and learned Lord's amendment—and I am sure that that is not what he intended.

Lord Ackner

Perhaps I may help the noble Lord, Lord Mishcon, on that point and direct him to subsection (4), which is just below line 5 on page 3 of the Bill. It refers to a removal for "incapacity or misbehaviour". I sought to take away the combination of incapacity and misbehaviour, which are clearly two entirely different concepts. I sought to use "incapacity" in subsection (3) (a) after the word "retires" in order to encompass the case of the incapacity that involves the removal. It seemed that that was the only way of effecting a divorce between "incapacity" and "misbehaviour" but, with my noble and learned friend's wide expertise in the matrimonial field, I bow to any suggestion that he may make.

Lord Mishcon

I shall not waste the time of the Committee and shall make only this respectful point to the noble and learned Lord. He is absolutely right that the word "removed" definitely comes later in Clause 2. However, using exactly the same word as is used for those who are removed for the objectionable reasons that are mentioned in the clause does not seem a happy choice of phrase. That was the only point that I was trying to make.

Lord Ackner

I entirely accept that point.

Lord Hailsham of Saint Marylebone

It is perhaps right that I should say in just a sentence or two that there is more in this than meets the eye. I was faced with two incidents that gave rise to the statutory provision relating to removal for incapacity or misbehaviour. My noble and learned friend could easily trace the cases. The first related to a very distinguished judge in the Court of Appeal who was stricken by a stroke. He wanted to retire—I do not think that there is any doubt about that—but he was quite unable to communicate his wish to anybody. I had then, before the Act came into force, to set up a little committee of his friends on the judicial Bench to find out whether they could possibly discern his real intention. They satisfied themselves that he wanted to resign, and he did so. In fact, I acted on those assumptions. However, the fact was borne in upon me inescapably that a situation may have arisen where it was quite impossible to find out the truth.

I turn now to the second aspect which is even more important to realise in such a situation. In the other incident, I was faced with a judge who had misbehaved. He was a minor judge in a lower position than that which I have just described. I was told that if he was made to retire gracefully from the Bench—which he certainly ought, in theory, to have done—he would lose his pension altogether. Therefore, I had to remove him in order to save his pension. That was the only way that I could do it. As I said, there is more in this than meets the eye. As I indicated on a previous occasion, I believe there is room for regulation, without being too precise, in the words of the statute.

4.30 p.m.

The Lord Chancellor

So far as concerns the first point, I believe that to insert the words "or is removed" in the first amendment, which is the one to which we are technically speaking, would introduce difficulty in understanding precisely the basis for removal. However, I take the point made by my noble and learned friend Lord Ackner that one has to read on into paragraph (b). Nevertheless, it is quite difficult to fit all possible grounds of removal into that provision. It would be inappropriate that a person who retires on medical grounds and a person who is removed for misbehaviour should be treated on the same basis. Therefore, I believe that it is important to make a distinction.

My noble and learned friend Lord Ackner said that there were two aspects of the new system which were, so to speak, being put before the judges for acceptance in return for the retained benefit: one was the 20-year accrual and the other was the cap. So far as concerns the cap, we intend to give a supplementary benefit in respect of that which is non-contributory. As a result, the capital sum which comes from that will be subject to taxation. However, there is an additional provision in respect of that part of the salary which is capped on a non-contributory basis. We have attempted to deal with that aspect and, therefore, it is not quite right to suggest that the cap has, as it were, damaged the position completely.

My noble and learned friend Lord Morton spoke about Section 2 of the Judicial Pensions Act 1981. My understanding of that provision is that, on ill-health retirement, the benefit accrued by completed years of service is what is payable; for example, because of the way in which the pension accrues under that system, the immediate pension payable on appointment is already l0/40ths of the total. What we are doing here is to mirror that fact.

Many Members of the Committee have mentioned the retained benefit. My noble and learned friend the Master of the Rolls pointed out that not everyone may have substantial retained benefit. One has to decide on the matter. If Members of the Committee take the view that the retained benefits exemption is not worth having, then, by all means, we shall remove it, thereby acceding to the proposal of my noble friend Lord Renton. As a result, I may well be able to obtain enhanced benefits in other parts of the scheme. However, I have taken the view—and if I am wrong about this Members of the Committee will correct me—that having regard to the general situation in the profession and the desirability of having people at all levels within the judiciary who have attained a degree of standing in practice, the probabilities are extremely high that this is a better concession than any other that is likely to be available.

The noble Lord Lord Mishcon, suggested that the day may soon come—although, perhaps, he did not use the word "soon"—when academics would be in the Court of Appeal. I am not sure how universally that statement was applauded when it was mentioned, but, of course, academics who came into the Court of Appeal, would presumably have been in employment in universities. In the days when I served in the universities there was a federated superannuation system in operation. I feel certain that there is still such an arrangement in universities; indeed, I would be surprised if there is not. Accordingly, as academics serve in a university they will be accruing a pension provision which would fall to be taken into account when considering their position. In my judgment it would not be appropriate to have the same—

Baroness Seear

As the recipient of an academic pension, perhaps I may assist the noble and learned Lord. Yes, indeed, academics will have such pensions. However, I have to say that they are at a very much lower rate than that which applies to any successful barrister. The percentage of salary that one is paid as an academic would not compare with even the most modest earnings of some circuit judges. Therefore, one should not be overwhelmed by the fact that such persons will already have some money from an academic pension.

The Lord Chancellor

I am greatly obliged to the noble Baroness whose experience of universities, and of receiving salaries in them, is probably much more up-to-date than mine. However, the point is that such academics do receive a pension and, therefore, the earlier service has been recognised. No doubt the academics would like to have a judicial system operating for them. But we are certainly not proposing that at present. It is important to remember that they are not without some pension provision and that they would also be affected if earlier schemes had to be taken into account in respect of their judicial position.

In my view, the distinction that the Bill makes between those who retire voluntarily and those who retire on medical grounds at the early stage is reasonably made. Those who voluntarily go, wishing an immediate pension, will receive only the actuarially reduced pension. If they are ill and have to leave on that account, the full value of their pension will be payable immediately. Otherwise, the full paid pension which has accrued is payable only at the age of 65. If the pension is taken immediately, it results in a reduction. That is a reasonable recognition of the difference.

Of course, I agree that there are hard cases. I certainly accept that fact. I should obviously like to do anything that is reasonable to deal with such cases. But, as has been pointed out, the fact remains that, basically, the pension is a deferred salary. Therefore, it is reasonable that it should bear some relation to the time which the person in question has given the service which is subject to the pension.

We have therefore achieved an improvement in respect of those who have to retire on account of ill health as against those who retire on other grounds. It is not perhaps as generous as my noble and learned friend would have liked, but it recognises the principle. As I said, although the rate of accrual is different in the present system under the Judicial Pensions Act 1981, the principle—namely, that the pension that has accrued is immediately payable in the case of retirement on the grounds of illness—is preserved.

Lord Ackner

Time has great therapeutic qualities about it. In view of the substantial interval which we know that we shall have this evening, I should like time to reflect on what my noble and learned friend has said. I hope that he will take like advantage by reflecting on what I have said. I therefore beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 10 and 11 not moved.]

The Lord Chancellor moved Amendment No. 12: Page 3, line 3, leave out from beginning to first ("the") in line 4.

The noble and learned Lord said: I should like to speak also to Amendment No. 14 which has a similar purpose, which is to clarify the drafting. The words to be omitted by the amendment carry the implication that subsection (2) would otherwise necessarily apply to subsection (3). That is not the case, hence the amendment.

Amendment No. 14 makes it plain that subsection (2) is not to apply. They are both drafting amendments. I beg to move.

On Question, amendment agreed to.

[Amendment No. 13 not moved.]

The Lord Chancellor moved Amendment No. 14: Page 3, line 5, at end insert (" (and subsection (2) above shall not have effect in relation to that retirement, notwithstanding that the conditions in paragraphs (a) and (b) of that subsection may he satisfied in the particular case).").

On Question, amendment agreed to.

[Amendment No. 15 not moved.]

The Lord Chancellor moved Amendment No. 16: Page 3, line 21, leave out ("on his retirement from qualifying judicial office").

The noble and learned Lord said: The purpose of the amendment is to ensure that if a judicial officer resumes service after he has retired and dies while his resumed service is continuing, the pension, in the form of a widow's pension, will continue to be payable as if no pension had originally been paid. As currently drafted, paragraph (c) continues the pension upon his retirement from service only. It does not cover the case, which is a possibility, of the officer dying while still serving. That is a point that should be covered. While considering the various possibilities that point occurred to us; and so I believe it right that the provision should be added. I beg to move.

On Question, amendment agreed to.

The Lord Chancellor moved Amendment No. 17: Page 3, line 25, after ("rate") insert ("or amount").

The noble and learned Lord said: This is a drafting amendment to cater for lump sum benefits. As currently drafted, subsection (5) (c) (ii) talks about rate of benefit. However, in the case of a lump sum it is not the rate but the amount that is relevant. I think it right to make that correction. I beg to move.

On Question, amendment agreed to.

Clause 2, as amended, agreed to.

4.45 p.m.

Clause 3 [The appropriate annual rate]:

The Deputy Chairman of Committees (Lord Murton of Lindisfarne)

Before I call the noble Lord, Lord Coleraine, perhaps I may say that if his amendment is agreed to I shall be unable to call Amendments Nos. 19 to 22 which would be pre-empted.

Lord Coleraine moved Amendment No. 18: Page 4, line 10, leave out subsections (1) and (2) and insert: ("(1) In the case of a person who at the time of his retirement from qualifying judicial office has completed not more than twenty years' service in such office the "appropriate annual rate" for the purposes of this Part is an annual rate equal to one-fortieth of his pensionable pay multiplied by the aggregate length of his service in qualifying judicial office (expressed in years and fractions of a year). (2) In the case of a person not falling within subsection (1) above the appropriate annual rate for the purpose of this Part is an amount equal to one-half of his pensionable pay plus an amount equal to one-seventieth of his pensionable pay multiplied by the aggregate length of his service in qualifying judicial office which exceeds 20 years of such service, but not extending beyond the date upon which he attains the age of 65 or completes 25 years of such service whichever first occurs (expressed in years and fractions of a year).").

The noble Lord said: I was not present on Second Reading when the noble and learned Lord explained that the Bill results from the review which he announced in Committee on the Courts and Legal Services Bill on 5th February 1990. I should perhaps remind the Committee, with some grief, that the amendment during which he made his announcement was my amendment which drew attention to the anomalies which affect lower judicial officers and in particular the accrual period of 20 years which they had to face. I then asked that the period be reduced to 15 years. Therefore I was sorry to read that the Government, for reasons of fiscal importance—as far as I can make out detached from the merits of the case—have had to insist that the 20-year accrual period should apply to all judicial officers. I shall listen with great interest to the debate on Amendment No. 19 which the noble and learned Lord, Lord Donaldson, will move shortly. I do not wish to pre-empt that amendment. I make it clear that this is a probing amendment which in due course I shall seek leave to withdraw.

The amendment provides additional pensions for judicial officers who complete more than 20 years' service at or before the age of 65; that is to say, to judicial officers who are appointed below the age of 45. In connection with the amendment I have been advised by the Association of District Judges. I have had an opportunity to read the reports from independent actuaries which the district judges have obtained. As I understand it, some 25 per cent. of district judges at present in post were first appointed before the age of 45. I also understand that the most recently appointed Chancery Master, who was appointed from the Bar, was under 45 when appointed.

Effectively, for judicial officers appointed at or under 45 the Bill would provide that they would have worked until they are 45 without obtaining pension rights for those years and without, during those years, having any opportunity to make proper, private financial provision for their own pensions.

The amendment would allow a pension of 1/70th of pensionable pay for each year served before the age of 45 and after the age of 40. I shall return to the reason why that fraction has been chosen. Were it not for the perceived need to bring pension arrangements within the requirements of the Income and Corporation Taxes Act 1988, it would be entirely fair for the fraction of 1/40th to be used. That is not challenged in the statement of the Government's intentions before legislation from which I shall read part of paragraph 4 which refers to the replies to the consultation paper and states: It was also suggested by some commentators that service in excess of 20 years should be allowed to buy extra benefits. This would exceed the limits allowed for tax approved schemes, and the Government has decided that service beyond 20 years should not count for pension purposes".

I hope that my noble and learned friend will be able to comment upon that statement because the advice that I have seen which was given to the district judges is that that statement is incorrect. As I understand it, the limit of pension imposed by the taxation statute is two-thirds of final remuneration, including the pension equivalent of a lump sum payment. The advice that I have seen is that the application of a 12:1 conversion factor, in accordance with Memorandum No. 108 of the Superannuation Funds Office of the Inland Revenue, to lump sum payments based on the pension earned by a 20-year accrual period would allow an additional 1/70th of pensionable salary for each year of service in excess of 20, up to a maximum of five such years.

I shall be interested to learn what can be said about that point. In the light of the advice that I have received it seems to me that that is a provision that should be looked at further. I beg to move.

The Lord Chancellor

One of the purposes of the Bill is to provide a uniform system of judicial pensions applying to all judicial officers. One of the difficulties of the present arrangement which has already been alluded to is that there are a number of different schemes and if a judge is promoted from one level to another it is often disadvantageous for him or her because of the aggregation rules.

The scheme as a whole is based on the way in which those matters are looked at by the Inland Revenue. That is the basis of what is said in the response to consultation, because the Inland Revenue of course takes account of the allowance in respect of retained benefits in its estimate, although it is impossible to have a calculation. The system is designed to deal with people who have attained a degree of standing in the profession before appointment. On that basis, until now the usual rule has been that a fixed period is set. Once that period has been served, the full pension is earned and thus matters are settled.

This is a different kind of provision, allowing for continuing the pension beyond the 20-year period for particular officers. I do not find it easy to reconcile that with the complete flexibility of the scheme. I am not sure, for example, what my noble friend has in mind for a person who is promoted from his present post to a higher judicial office. That would mean, for example, that because of the salary for the higher office he would receive a pension considerably above that of others in the same office who had served for comparable periods.

I do not know whether my noble friend has any comments on that aspect. At the moment I find it difficult to see how we could adapt the scheme while retaining the ideal of a single scheme in the way which he suggested.

Lord Coleraine

In answer to the point made by my noble and learned friend, I see nothing in the proposal which affects the scheme's uniformity. Obviously any judicial officer, be he a High Court judge or Chancery Master, would be able to take advantage of the proposals in the amendment if he happened to take up his first appointment between the ages of 40 and 45.

If I understand the other point which my noble and learned friend made, it would be correct that if a district judge or any other judge started in a post under the age of 45 he would, in the normal course of events and if he finished as a circuit judge, receive a slightly higher pension than the circuit judge who had served 15 or 20 years. This does not seem to me in any sense to conflict with the pension scheme which my noble and learned friend has in mind. It seems to follow quite naturally from the way his scheme is designed.

Obviously what my noble and learned friend said will need further consideration. Also I am sure that he will wish to consider the points I made about the actuarial advice which the district judges have received and which appears to conflict with the advice received by his department. For the time being, with the Recess ahead of us, I can do no better now than to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Donaldson of Lymington moved Amendment No.19: Page 4, line 11, leave out ("20") and insert ("15").

The noble and learned Lord said: I am extremely grateful to the noble Lord for withdrawing his amendment. That enables me in this amendment to raise a broad question of principle which does not depend on the nitty-gritty of some clauses of the Bill.

The Bill deals with two quite different but interrelated subjects: namely, judicial pensions and judicial retirement. The important point is that it does so in that order. First come pensions, then retirement. We have to go to Clause 25 before we discover at what age a judge is required to retire. It seems to me that this is to approach the matter from back to front. Both logically and chronologically what comes first is the normal length of a judge's service and at what age that service may be expected to end. Only when a view has been formed as to those two factors is it possible to evolve a sensible pension scheme.

Perhaps I may make it clear that in moving this amendment to restore 15 years as the normal length of a judge's service I am not directly concerned with benefits or advantages for the judge. My concern is with the quality of the administration of justice. In deciding what should be the normal length of a judge's service, the Committee must not lose sight of two features which are unique to judicial office. The first is that the appointment involves a real career change. Whether the appointment is of a solicitor or a barrister, the person involved leaves the practising branch of the profession and joins the judicial branch, which calls for largely different skills and qualities. Whatever the judges may think about it, that is not promotion. It is a new start and is likely to be irrevocable. That person will not be able to go back to private practice.

It follows that, while it is to be hoped that every judicial appointment will enrich the Bench, it is equally certain that every appointment to the Bench will impoverish the practising branches of the profession. It must never be forgotten that under our system the skills of practitioners are just as important in the administration of justice as the skills of the judges.

The second unique feature is that for the vast majority of judges—and as a ballpark figure it may be as high as 80 per cent.—there will be no promotion; therefore no change in their work pattern throughout their judicial service. What they do in the first few months after appointment they will continue to do throughout that service.

Taking account of those two factors, I can well understand why 15 years has for so long been the established norm for judicial service in the case of circuit judges and the Bar. I believe that it is right and that 20 years is far too long.

There are two reasons why 15 years is right. The first can be simply stated. If one does the same judicial job for more than 15 years one becomes stale. A stale judge is a bad judge. He has heard it all before and risks becoming cynical. I have been on the Bench for nearly 26 years and I hope that I have become neither stale nor cynical. But I have been lucky. I have had several changes of job. I even had a number of especially interesting changes in my work pattern during my service as a puisne judge, but I have been exceptionally lucky. As I said on Second Reading, I should have retired after 15 years if I had still been a puisne judge of the Queen's Bench Division.

The second reason why 15 years is right is related to the likelihood that in future judges will have to retire at the age of 70. As I understood the sense of speeches in the House on Second Reading, this was one feature of the Bill which met with universal approval. I have not done the calculations but that approval was despite the fact that the average age of noble Lords speaking in the Second Reading debate was 70.7 years.

If, as is proposed in the Bill, we reduce the retiring age by five years from 75 to 70 and add five years to the normal period of service by increasing it from 15 to 20 years, as a matter of simple arithmetic we reduce the normal age at which solicitors and barristers become judges by 10 years. Appointments would have to be made between the ages of 40 and 45 years and at the latest by the age of 50.

The situation is rather worse than that because, while the compulsory retirement date is the judge's 70th birthday, the normal retirement date is at the age of 65. That is indicated by Clause 2(1) (a). If a judge is not expected to serve beyond his normal retirement date, he must be appointed at the very latest before his 45th birthday. That is simply too early if we are to continue to have an adequate supply of skilled and experienced practitioners. I must emphasise the need for experience. It is at least as important as knowledge of the law and it is needed both by the leading advocates and by the newly appointed judges. This proposed lowered age of appointment would mean that some leaders of the practising profession and some newly appointed judges would not even have 20 years' experience of practice as solicitors or at the Bar and the quality of justice will inevitably suffer.

That brings me to the question of an appropriate pension scheme. With all respect to my noble and learned friend the Lord Chancellor, I must say that it is no good the Government simply saying that 15-year schemes are out of line with all other schemes. The fact is that service in a judicial office is out of line with all other forms of state service. It is no good the Government saying that 20 years' service must be the norm because otherwise there will be no tax relief. That is simply putting the cart before the horse.

If we impose 20 years' service and tax relief on pensions we shall have stale judges serving out their time. Given the new retiring age of 70, we shall also obtain an impoverished practising profession. If the Government opt for 15 years' service and no tax relief on pensions, judicial appointment will be so unattractive that it will be difficult to obtain candidates of the quality which the public interest demands. I invite the Committee to support this amendment and affirm that 15 years should be the normal period of judicial service. It will then be for the Government to decide whether they wish to sacrifice the quality of justice upon the altar of fiscal uniformity. I beg to move.

5 p.m.

Lord Taylor of Gosforth

I wish to support the amendment proposed by my noble and learned friend the Master of the Rolls. I gave my reasons for opposing the 20-year accrual span on Second Reading and therefore I shall state my position briefly.

The present 15-year period is not an indulgent aberration requiring correction. It flows from the unique nature of judicial office, the time of life when the candidate is ripe for appointment and, dare I say it, at the other end of his span, at the time of life at which he may become overripe. As the Master of the Rolls has said, the period of a judge's service may be punctuated by changes of diet or promotions. Then a longer judicial career than 15 years may be appropriate. However, for the majority, the circuit judges, who themselves constitute a large majority of the judiciary, 15 years in the same place doing the same work is often long enough. If they spend longer than that doing the same work, staleness, case hardening and impairment of patience may set in.

To require judges to carry on for 20 years to earn a full pension is therefore not in the public interest and the status quo recognises that. I say with respect to my noble and learned friend the Lord Chancellor that he somewhat overplays the factor of retained benefits. He sees them as the answer to all the disadvantages which are contained in this Bill for the judiciary. They are perhaps overburdened in answering so many different calls. However, as has been observed already, the extent of the retained benefits may be open to doubt. As the noble Lord, Lord Mishcon, said, many who are appropriate appointees to the Bench will not necessarily have been high fliers. The best advocates do not necessarily make the best judges. Some of those who have not had remarkably high earnings and who have had children to educate and mortgages to pay will have had some difficulty in putting aside those retained benefits by which the noble and learned Lord the Lord Chancellor places such store.

Accordingly I submit that one has to consider the need for most judges to earn a full judicial pension and therefore, if this clause remains unamended, to do a 20-year stint. Many circuit judges now retire at 65, feeling, quite justifiably, that they have done their duty. I fear that they will feel they must soldier on for another five years when they are not doing the job as well as they did and when they are disaffected. That cannot possibly be in the interests of justice.

The status quo also allows, as I understand it, that tax relief is applicable to the present 15-year pension scheme. If the Committee were to accept the amendment as proposed by the noble and learned Lord the Master of the Rolls and as supported by a number of noble Lords on Second Reading, it would do so because that was in the public interest. In my submission it would be wholly wrong to interfere with the present tax relief as a kind of punishment.

The amendment is proposed as being in the public interest. To remove tax relief—my noble and learned friend the Lord Chancellor kindly indicated to me that that would be the Government's riposte to this proposed amendment—would be to exert a punitive price for doing no more than what is in the public interest. It seems very like a proposal in terrorem. To impose that punitive price would not only be mean; it would also seriously damage the recruitment of judges.

A pension at only 50 per cent. of salary does not compare favourably with judicial pensions in other jurisdictions. If the pension were also to be deprived of tax relief, I fear that that would constitute a serious disincentive to accepting judicial office. I therefore not only support the amendment proposed by my noble and learned friend the Master of the Rolls but also submit that it should not be used to trigger a fiscal set off by removal of tax relief.

Lord Benson

I support these amendments. My approach to this problem is the following. The 15-year rule is a benefit the judiciary has had for a long time. It is unreasonable to cut away longstanding benefits without compensating for that adequately in other ways. I do not think this has been done. In future a judge is to be sentenced to five years of additional hard labour in order to earn a full pension. The only compensating factor I can discover in the Bill is that he is offered a tax free lump sum of one-eighth more than he is already entitled to at present. Subject to advice from a competent actuary that I have not been able to secure, it seems to me that this action is wholly inadequate and unfair.

Apart from the transparent unfairness of it, there is a more serious point here. It is a point to which the noble and learned Lord the Lord Chief Justice has just referred. Since this Bill was published the noble and learned Lord the Lord Chancellor has written to the noble and learned Lord the Lord Chief Justice to state that if the 15-year rule is to be maintained the Government will take their pound of flesh by depriving the judges of the taxation advantages of their pension schemes which they presently enjoy.

That is a distasteful way of doing business. I am disturbed that the judges should be put in that position. I do not think that the contents of that correspondence have been seen by the judges at large but when they see them I think they will be restive. I hope therefore that the noble and learned Lord the Lord Chancellor will see fit to withdraw that threat.

Further, I am concerned that the proposals in the Bill will mean that a number of second raters will be appointed to the Bench and the quality of the Bench will deteriorate. A top-ranking barrister should normally be appointed to the Bench in his early 50s because it is at that time that he has achieved the experience and maturity which is necessary for the job. That means that he can no longer earn a full pension at the compulsory retirement age of 70 and still less at the normal retiring age of 65. He will also take a large cut in earnings. Normally he will have to work more years than previously. At present he receives a full pension after 15 years. Those restrictions mean that the best people will not accept appointment and those who do will be stale at the end of their appointment.

For all those reasons I support the amendments.

Baroness Seear

As a non-legal person I intervene in the debate with the greatest possible diffidence. It is now eight years since I was a member of the Top Salaries Review Body, on which I served for 13 years. I doubt whether the major issues and principles on which one tried to work or the lessons which one learnt have changed very much in the intervening period.

The first thing that I learnt was that comparability is an extremely crude instrument. In fact, if one considers it in detail it is an instrument which works scarcely at all except as a very rough and ready guide. One was constantly in the position of trying to make comparisons between jobs which were so different that no valid comparison could possibly be made. Indeed, the same applied to the rewards. Endless arguments were put forward by the eloquent spokesmen who came to speak to the Top Salaries Review Body on behalf of a variety of different groups. For example, we heard endless arguments about the relative value of an indexed pension against a chauffeur-driven car. Those are not scientific comparisons. Such considerations went on and on.

Perhaps I may digress for a moment—and this has a bearing on this discussion—and mention one particular intervention from the government department concerned which I found very curious. A circular was issued which stated that under no circumstances whatever should judges' lodgings (I nearly said digs) be provided with grape cutters. That type of intervention did not seem to me to have any relevance to the rewards which were to be given to the judiciary. I remember suggesting to Edward Boyle that we should send the judges a set of silver grape cutters since the authorities were not prepared to provide them.

The point that I am trying to make is that to talk in terms of comparisons with other occupations is beside the point and that the judiciary is a sui generic group. It is not the only one. So are Members of Parliament and, indeed, in relation to allowances, are Members of your Lordships' House. One needs to move away from the concept of comparability and to accept that the group is sui generic and consider the rewards not so much on the basis of comparability but on the basis of what the unique nature of this particular occupation requires.

Listening to the debate I get the impression that once again the Inland Revenue tail is wagging the judiciary dog, if I may describe it in such unflattering terms. That cannot be right. Can we not accept that the job is sui generic and that it is up to the Lord Chancellor and the Lord Chancellor's Department to make that point as strongly as possible to the Inland Revenue and to obtain the appropriate adjustments? Otherwise we shall never get this right.

In relation to the question of the 15-year period, I remember the discussions which went on on such matters. Different Lord Chancellors from both parties who came to talk to the Top Salaries Review Body over those 13 years made the point that they were having real difficulty in recruiting people of the quality that they needed for a first-class judiciary and that they were not getting the people they needed. That, after all, is the first consideration: under what conditions will one recruit the right judges? As other noble Lords have said, and I shall not repeat the arguments, if it is a 20-year period one either has to appoint young people or older people who will continue for 20 years in order to qualify for a pension. It seems to me that it is extremely improbable that that will make for the best possible judiciary.

The purpose of my intervention is primarily to beg the noble and learned Lord the Lord Chancellor to look at the matter as sui generic and not to be influenced by comparisons with other occupations—comparisons which are largely bogus.

5.15 p.m.

Lord Coleraine

It seems to me that the amendment applies to all judicial officers but the noble and learned Lord who introduced it directed his arguments to the preservation of the rights enjoyed by the higher judiciary to a 15-year accrual period rather than to the desirability of the accrual period for lower judicial officers being reduced from 20 to 15 years. His amendment had that effect but he did not appear to be concerned with that aspect of the matter.

I had not intended to intervene in the debate but I do so now merely to say that what is sauce for the goose should be sauce for the gander. The work done by the lower judicial officers—the stipendiary magistrates, the district judges and masters—is of the first importance to those who go to court for justice. It is of the greatest importance to those who practise before those judicial officers. If the noble and learned Lord, Lord Donaldson, felt at some point that if he had stayed on the High Court Bench for more than 15 years he would have given up, I feel sure that he and all others concerned in this matter will realise that those who serve in the lower offices have what is often a tedious job and that not only they but also those who appear before them and those who they serve would probably join in saying that 15 years is enough for them.

Lord Mishcon

I contribute to this debate a very short speech. Whatever the noble and learned Lord may say in reply to the debate I wish to pay him this sincere compliment from this Bench. The opposition to the amendment comes not from the broad mind of the noble and learned Lord the Lord Chancellor, but from the narrow concept of the Treasury. Whatever I may hear in this debate nothing will convince me otherwise.

As has been said, and I apologise for repeating a truism, the only consideration in this debate is this: how do we produce the best possible judiciary? And if ever the best possible judiciary was required it is at this hour. I believe that was said at Second Reading and, if so, I apologise for repeating what others may have put much better. In relation to the judges who are in charge of criminal trials, is it not important—especially in view of the unfair criticism of some of our judges in recent trials at which there were what are called miscarriages of justice—and is it not our duty to the public, especially at this hour, to see that in passing legislation of this kind we set the stage so that those who enter our judicial system are the best possible minds and the best possible characters within the legal profession?

There is no sense in hiding from the points that have been made. The points about please do not force the very young—unwarranted it may be—into being the only people who feel that they can enter into the judicial arena. Let us not force them, because of their age, to have to stay 20 years in a judicial post in order to get the full pension. That is not the way to do it. It is not the most brilliant and those in their early 40s who necessarily make the best judges. The best judges are those who have shown by their experience that they are worthy to hold judicial and high judicial office. If the object is to ensure that judges do not stay on until the very last moment—we want to encourage those who have had the experience and are able to ascend the judicial ladder—is it sensible to force those who start at the age of 50 to continue until they are 70, however they may feel about retirement? As I see it, those are the only considerations. I hope that the Committee will support the amendment.

Lord Wigoder

I do not know whether I need the leave of the Chamber to follow the arguments of my leader, my noble friend Lady Seear. I wish only to say that there are arguments in favour of both sides which will be weighed up seriously in the course of this discussion. In favour of the 15-year accrual period there is first the argument that it has worked satisfactorily for many years. It would require a powerful argument to change it. Secondly, as many noble Lords argued at Second Reading, perhaps for a number of judges 15 years is long enough before incurring the real risk of deterioration in the high standards expected of those who sit on the Bench. That applies particularly perhaps to circuit judges who often try routine crime of the same sort day after day and year after year.

The arguments in favour of the 20-year period are twofold. First, to be taken into account for the 20 years compared with the current 15-year period are accrued benefits which can be retained in addition to the present pension. I understand that. Particularly in relation to those who go on the High Court Bench, there may well be many members of the Bar who take with them substantial accrued benefits and for whom the accrual period, whether it be 15 years or 20 years, is not a highly material factor.

I doubt whether that applies to the great majority of circuit judges. The last figure I saw showed that their average gross income before going on to the Bench was something in the region of £70,000 a year. Out of that, those who are married and have children and mortgages are very unlikely to have put sufficient aside to compensate for the length of the accrual period.

The other argument in relation to the proposed 20-year period is the one upon which the noble and learned Lord the Lord Chancellor relied at Second Reading when he said that the 20-year period, is not…an arbitrary one. It is the limit fixed by the Finance Act 1987 as the minimum accrual period for a tax approved pension scheme to provide maximum pension benefits".— [Official Report, 16/6/92; col. 120.] As I said, the Government's intention is that the new judicial scheme should, for tax purposes, be brought more into line with the pension arrangements applicable to other members of society. I ask the noble and learned Lord whether he meant that he would prefer to go over to a 20-year rather than a 15-year accrual period simply for the sake of uniformity; or is there anything further involved?

As I understand it, the present 15-year accrual period has operated perfectly satisfactorily since the Finance Act 1987 came into force, without any tax disadvantages to either the recipients or the scheme itself. In those circumstances I can see no reason, if the Government so wanted, why the present period could not continue. If that is the situation, although I appreciate that there are arguments on both sides, I venture to think that those who suggest today that the present period should continue perhaps have the balance of the argument in their favour.

Lord Renton

We have heard powerful speeches about the need to avoid the danger that the quality of the judiciary may not be as good as we would wish it. Perhaps I may make a further point that we have to consider in the years to come—not the next few years but before too many years have passed. It is whether, with a 20-year accrual period, we shall get enough judges. My noble and learned friend Lord Hailsham of Saint Marylebone at Second Reading made a powerful speech based on his experience. The clear inference from that speech is that we must be careful to ensure that we get enough judges—not only enough judges of the right quality, but enough judges.

The early argument of my noble and learned friend the Lord Chancellor in response to that powerful plea was that there were certain financial considerations which should be observed. As a scheme had run since 1987—incidentally, we have managed without it for five years for the judiciary—and in order to get uniformity of financial treatment, there must be a 20-year period. I suggest that financial advantages are frequently inapplicable. Where they apply they are mostly marginal. As has been mentioned, my noble and learned friend the Lord Chancellor was good enough to send to those interested a paper which surveyed the pension arrangements of those in employment. They are irrelevant; nevertheless, they are the personal pension schemes. It is perfectly clear from the paper that such advantages as there are and such benefits as can be carried forward are of a marginal character.

I appreciate the point made by my noble friend Lord Coleraine: the Bill has a very wide application. It applies to a wide range of people doing whole time and part time judicial work, including people who are now called district judges and who were formerly called district registrars. It may well be that they and a few others should be treated differently under the Bill from the way in which the noble and learned Lords the Master of the Rolls and the Lord Chief Justice, among others, have suggested in this amendment. I see no reason whatever why we should not have a differentiation within the terms of the Bill in the description of the categories of judicial officer to which the Bill applies. That would at any rate enable some of the obstacles in the mind of my noble and learned friend the Lord Chancellor to be overcome.

The case has been put very strongly, not for the first time. I hope most sincerely that my noble and learned friend the Lord Chancellor will reveal that he has an open mind on the matter and that Treasury persuasion (which is always important) is not the over-ruling factor. Indeed it cannot be the over-ruling factor in the circumstances to which the amendment refers. Let us bear in mind that it is a matter of only marginal effect.

5.30 p.m.

Viscount Bledisloe

I venture to add to the debate by expressing my view as a practising advocate. I do so without any need to declare an interest since I know quite well that I stand no prospect of being offered any form of qualifying judicial office and therefore of drawing a qualifying judicial pension.

However, as did the noble and learned Lord, Lord Donaldson of Lymington, I speak on this basis. If one has a retiring age of 70 and a qualifying period of 20 years one would have to seek to appoint people before they are 50 if they are to attain their full pension. The noble Lord, Lord Donaldson, feared that that would lead to a shortage of experienced advocates. That is a possible consequence. However, speaking as a practising advocate, I fear that it is much more likely that there will be a shortage of people willing to take the judicial offices in question. Taking judicial office is becoming ever increasingly unattractive. Very often those who do so are putting their duty before their own personal advantage.

A factor which may not have occurred to some Members of the Committee is that nowadays people tend to have children at a distinctly older age. It may be because they are older when they marry or if they marry at a younger age they postpone having children. It means that someone under 50 is highly likely to have children of school age and still paying for their schooling, or, if he is not making such payment, whom he will be reluctant to leave at home while he goes on circuit and so on. I therefore seriously suggest that if one has to be appointed to the Bench before one is 50 in order to obtain one's full pension, in due time people will not take the appointment.

As the noble Lord, Lord Mishcon, so rightly said, if that policy is dictated by the Treasury it is being very short-sighted. Once it becomes habit and is fully acceptable not to go to the Bench, and once the shortage occurs, then the salary will have to be doubled or trebled in order to reverse that habit. At that stage the Treasury may be very much worse off.

The Lord Chancellor

The situation at present is that within the judiciary there are a number of different judicial pensions with different rates of accrual. In particular, there is a different pension scheme for circuit judges than there is for High Court judges. The rate of accrual for circuit judges happens to be the same as for High Court judges, but they are different schemes. In Scotland, the corresponding officer to the circuit judge is the sheriff. Reference was made earlier in the debate to sheriffs. Their rate of accrual is at present 20 years. As my noble friend Lord Coleraine said, district judges and others have higher rates of accrual than High Court judges. Some judicial officers have accrued pension provisions of 30 years.

One of the primary objectives of the Bill is to have a single system applying to all judicial officers which will make promotion from one level to another much easier. I believe that that is important for a number of reasons. My noble and learned friend Lord Donaldson of Lymington referred to one reason: that of seeking to avoid staleness and cynicism. Promotion seems to be a very good cure for some of those ills.

However, the primary reason for seeking to alter the present arrangements for the higher judiciary is that the general tax law was changed in the finance legislation to which I have referred. As a result of that change, the general law is that tax exemption will not be given to a scheme which accrues more rapidly than on a 20-year basis and which exceeds the £75,000 a year cap. That provision came into effect some time ago. My noble friend Lord Renton said that we have managed quite well in the interim. We have; but it was on that basis this Bill was being prepared. The consequence is that that general law has not yet been applied to the judicial pension system because, as the consultation paper makes clear, we sought to build a new judicial pension system within those general tax rules.

It has been suggested that I have issued something in the nature of a threat. Such matters depend on how one looks at them. From my point of view that is the general law and is therefore likely to be applied to the judiciary. I seek to produce a scheme which will carry appropriate benefits to the judiciary in a system which will make those benefits as tax efficient as possible for the judiciary. If one keeps the 15-year rule it will have tax liabilities as a consequence. The capital sum will be subject to a 40 per cent. income tax and the payments for contributions for widows' and children's pensions will he taxable in so far as that contribution exceeds £100. Those are the disadvantages. If one wishes to keep the 15-year accrual rate, that is what the general tax law will provide. I have sought to produce a scheme which will attain for the judiciary the maximum tax benefit available. This scheme attempts to do that.

I agree entirely with the noble Baroness, Lady Seear. One has to take account of the special situation of the judiciary: that the judiciary, generally speaking, comes to appointment after attaining a degree of success in the profession. It is because of that special aspect of the judiciary that, in contradistinction to the general law affecting fast accruing schemes of this kind, the retained benefits are not taken into account. In other words, a person who has made provision under tax efficient systems before appointment will be entitled to keep that benefit along with the pension that accrues.

My noble and learned friend Lord Donaldson said that the Bill is back to front; that the pension provision comes before the retirement provision. Of course, one can consider the matter either way. The pension is deferred remuneration. But the Bill sets no obligation on anyone to work for the accrual time of a full pension. The pension accrues evenly over the period of service. The shorter the period of service the lower the deferred remuneration will be. That seems reasonable. The remuneration will he in proportion to the time served, but because it accrues in that way tax benefits will be available to the judiciary.

A good deal has been said about the difficulty of getting judges. The noble Viscount, Lord Bledisloe, no doubt underestimating the risk that he might be subjected to such treatment, says that he has no interest in these matters except the purely public interest. I have responsibility at present for seeking to obtain people who are willing to serve as judges. My noble and learned friend Lord Ackner, in connection with an earlier amendment, quoted words I used seeking to obtain from the TSRB consideration of the position of the circuit Bench. These are aspects of their remuneration which have to be taken into account. But I believe, first, that the proposal in the Bill to move to a uniform accrual rate for all judicial officers is itself right, and, secondly, that it is right that that accrual rate should be fixed at such a rate as to attract the maximum tax efficiency that is available under the general law. The general law has not yet been applied to the judicial scheme because this proposal was then under preparation. All I have said is that, if this scheme were not to conform under the tax principles, general fairness would seem to suggest that the general tax law should be applied. That is what I indicated in the note I wrote to the Lord Chief Justice. It appears to me therefore that the proposals in the Bill take proper account of the very different position of the judiciary from many other people and do so within the constraints of the general taxation law.

My noble friend Lord Renton suggested that we might differentiate between the various categories within the judiciary. That is turning the clock back and is one of the disadvantages of the present scheme. To seek to differentiate between different levels of the judiciary would involve a lack of flexibility which enables people to be readily promoted from one level of the judiciary to another without suffering either financial or fiscal disadvantage.

Lord Renton

Does my noble and learned friend not realise—I am sure he must—that there is a tremendous difference between the responsibilities of and the qualities required from, at one end of the scale, district judges, who were formerly district registrars, and at the other, High Court judges?

The Lord Chancellor

Of course I understand that and the difference is reflected in the very different salary scales that apply. That is perfectly true. On the other hand, I do not believe that it is wise to differentiate as well as on salary scale by reference to the rate of accrual of their pensions. Surely if one serves well in one degree it is very natural that a person should be eligible for promotion. In introducing the amendment my noble and learned friend Lord Donaldson commended promotion as a good way of avoiding staleness and cynicism, and in his case, if I may say so with all respect, it has proved an extremely effective remedy against that if there was ever any risk of it, which I do not believe there was.

So far as concerns members of the lower judiciary, as has been pointed out, the very fact that their responsibilities are less may well mean that the longer they serve the more risk there is. Therefore, we must attend to them. I must have concern for their interests as well as for the interests of the higher judiciary, although I appreciate fully the fact that the higher judiciary have different and very heavy responsibilities.

That is why I believe it is right to have a uniform scheme. The distinctions that exist at present in the judicial schemes are a source of great anxiety and—bitterness is too strong a word—resentment in some groups in the lower part of the judiciary. One of my aims in the general structure of the Bill is to remove those anomalies.

I sum up by saying that the Bill does not seek to set a minimum time of service related to 20 years. It seeks to produce a remuneration system which will do the very best that can be done for the judges within the general lines of the tax regime of general application. In the light of my explanation I hope that your Lordships will feel that the amendment should not be supported.

5.45 p.m.

Lord Mishcon

Before the noble and learned Lord sits down, on rather a dismal note does he not agree that even Finance Acts do not imitate the laws of the Medes and Persians? He has said—and I am sure that this may well have been as a result of his persuasion —that the Treasury and the Inland Revenue were content—knowing that a Bill was about to come before Parliament—to allow a different situation to apply in respect of the period of 15 years to judges. Is he not prepared to convey to the Treasury and the Inland Revenue the feeling of the Committee in regard to the different provision for judges as against other people and also say that the Committee seems to be of the view that it is no compensation that benefit can be taken from private insurance policies that may have been entered into in another career?

I hope that the noble and learned Lord is prepared to go back; otherwise noble Lords will be put in a difficult situation when they consider the Bill at Report stage. If we are being told that passing the amendment will mean that no tax benefit will accrue to the judges in future, that is a matter which the House will have to consider. Can the noble and learned Lord not use his powers of advocacy, which have never been better used than on this occasion when meeting the opposition of the whole Committee, as I understood it, to see that what has happened between the passing of the Finance Act and now can continue?

Lord Wigoder

Perhaps I may add to what was said by the noble Lord, Lord Mishcon, by asking a question. I do so in a state of profound ignorance. Is the noble and learned Lord saying that the tax exemption status of the 15-year accrual rule for the judiciary since 1987 has simply been a matter of concession by the Inland Review and that it can now be revoked purely by administrative decision?

The Lord Chancellor

No. What I am saying is that the general law was changed by the Finance Acts in respect, first, of the accrual rate, and, secondly, of the cap. It was changed by Parliament. Parliament put into the legislation a system which overrode the rules of private schemes that were approved but it did not do so in respect of the judiciary on the understanding that I would conduct a review of the system taking advantage of the tax regime in such a way as to produce the best I could for the judiciary. Basically, what has happened is that the general law has not been applied to new judges since that time.

The distinction was made at that time between those who were already in position under previous schemes and those coming into schemes after the operative date of the Finance Act in question.

The arrangement which is put before the Committee is the result of my review of the pension provisions for the judiciary to take account of the tax scheme and to produce a system which is as tax-efficient as possible.

Because the matter has been raised I shall illustrate it by the way in which I have dealt with the cap. Although there is a cap on the tax benefit I have produced provisions which will enable us to have a supplementary scheme for the judges to which they will not need to contribute—if they had to contribute their contributions would be taxable—in order to give them a further pension and a further lump sum. That lump sum will be taxable because it is not tax exempt, but the scheme is as tax-efficient as I can make it. I have sought to produce for the judiciary a uniform system which is as tax-efficient as possible under the general law. I do not believe that this is a matter which can depend on anything except the general law.

My position is that the general law is as I have stated it and my thorough belief is that it is for the ultimate benefit of the judiciary and gives them the best possible system. My noble and learned friend Lord Ackner raised certain anxieties in connection with subsidiary parts of the scheme. However, the main thrust of the scheme is designed to achieve the best and most tax-efficient arrangements which the general law will allow. I commend the scheme to the Committee on that basis.

Lord Wigoder

Is the noble and learned Lord saying that if the Inland Revenue wishes to do so, as from tomorrow it could revoke the present tax exemption basis of the existing judicial scheme?

The Lord Chancellor

I thought that I had already said that that is not the case because the general law was not applied by Parliament to the judicial scheme, as it was then, in order to give me time to produce a scheme for the judiciary which was tax efficient. Therefore, that would not happen tomorrow. Under the general law, schemes which accrue faster than 20 years and which go above the cap presently provided are taxable or, perhaps I should say, they cannot be tax approved and therefore they do not have the benefits which I mentioned. Of course, those benefits can vary from circumstance to circumstance. In this case, the benefit of tax approval is that the lump sum in the tax approved scheme is not taxable and the contributions which judges pay for widows' and children's benefits over £100 are not taxable. But if it was not for the tax approval, which is implied in that, the capital sum would be subject to 40 per cent. income tax at the standard rate and the annual contributions that are made above £100 would be taxable.

Lord Renton

My noble and learned friend has confined his reply to the tax effects without answering the extremely powerful points put to him about the quality of the judiciary. Perhaps he will deal with that.

The Lord Chancellor

I thought I had answered that but I shall try again if my first effort was not sufficiently successful. Benefits for the judiciary are provided in the most tax-efficient way of which I know. The level of those benefits depends on what are, from year to year, the salaries of judges. Members of the Committee may take it that I am as conscious as anyone of the problems associated with the recruitment of judges. I spoke of those as forcefully as I could to the Top Salaries Review Body. A consequence was that the TSRB made substantial recommendations for the improvement of the salaries of circuit judges. That was a year or two ago.

As my noble and learned friend Lord Ackner said, the TSRB will have regard to the whole situation from year to year. The Government must take decisions from year to year on levels of remuneration. This is basically a system to ensure that those benefits, when given, are provided to the judiciary as regards pensions in the most tax-efficient way possible.

Lord Ackner

Before my noble and learned friend sits down, in achieving what he has achieved—in particular, increasing the 15-year accrual period to 20 years—he emphasised that he has obtained the best possible tax efficient scheme. Has my noble and learned friend reflected upon the fact that in increasing the accrual period from 15 to 20 years he has doubled the 10-year accrual period which exists in the United States, Canada and Australia? If the best that can be done is to double the accrual period in this country, does he not agree that that is an extremely depressing situation for the judges?

The Lord Chancellor

I do not believe that my noble and learned friend has taken what I said fully in context. I said that, as I see it, this is the most efficient system that can be devised within the law of the United Kingdom. I may be fortunate or unfortunate in not having to operate under the laws of the United States. I know that in earlier debates in this Chamber views have been expressed that in some respects at least the practices of the United States in the legal field are not particularly to be emulated here.

In this matter I have to deal with the general tax laws of the United Kingdom. This system and method of accrual of pension provides the best and most efficient tax arrangement available under our existing law.

Lord Taylor of Gosforth

Perhaps I may crave the indulgence of the Committee for speaking a second time on this important amendment but, because we are in Committee, the tendency is to focus on the relevant clause. Perhaps we can stand back for a moment and look at the Bill as a whole. We have concentrated on the pension aspect, but the other aspect is the retirement date. The thrust of the Bill in that regard is to reduce the age of judicial retirement.

It seems to me absolutely clear that if a 15-year period of accrual is to be increased to a 20-year period, then certainly on the circuit Bench judges will be sitting for longer than they have sat before. It is all very well for my noble and learned friend the Lord Chancellor to say, "You do not have to stay; you can go when you want on whatever proportion of your salary to which you may have become entitled at that stage". For those who have been able to put by a large nest-egg—the very high earners at the Bar—that may be a sufficient solace. However, as regards the circuit Bench, I envisage that instead of retiring at 65, as many judges do now, they will feel the need to go on until they are 70. The result of that will be that the average age of the judiciary will be raised and not lowered. Therefore, that end of the Bill will be working in opposition to the other end of the Bill. I believe that my noble and learned friend the Lord Chancellor has not addressed the problem which has been raised by several Members of the Committee; namely, that judges will sit on to an age when they are not at their best. They will sit on not because they want to or because they feel that they are doing a good job but because they have to to earn their pension.

If the Committee decides that that is an undesirable state of affairs, and that therefore this amendment should be accepted, it would be wholly undesirable that that view should be defeated by the threat of removing tax relief. Therefore, I strongly support the suggestion made by the noble Lord, Lord Mishcon, that between now and Report stage my noble and learned friend the Lord Chancellor should consult the Treasury in order to find a way to make the appropriate adjustments to the general tax law that will enable the 15-year period to be maintained. As has been said, the tax laws are not the laws of Medes and Persians; tidiness and uniformity are not always in themselves virtues. I ask that the noble and learned Lord the Lord Chancellor reconsider the matter.

6 p.m.

Lord Browne-Wilkinson

The tax laws, I understand, provide that judges, under their existing pension schemes, are not to be taxed otherwise than in other pension schemes. There is a 15-year accrual period. It is said that it is desirable to produce uniformity. Do I understand that in order to remove the tax exemption from judges' pension schemes there will need to be an amendment to the Finance Acts? Is it therefore a matter entirely within the control of the Government as to whether or not tax exemption continues to be enjoyed? I ask that that be a matter of record.

Secondly, has the Treasury been approached on the basis, not that there is a special exemption for judges, but that what is special about judges—there may be others in the same situation—is that they start in paid employment, if what Members of the Committee have said is right, when they are appointed as judges at 40 to 50 years of age? What is needed is an accrual period for people whose paid employment under the scheme starts at that age.

I suggest to the Committee that there is no uniformity. We are speaking of a class of person who takes paid employment for the first time in middle age. Has the Revenue been approached with a view to considering whether that class of person is a special class, which would include judges? Perhaps the noble and learned Lord the Lord Chancellor can help.

The Lord Chancellor

There are a number of pension schemes which apply only to those who join them for the first time in what my noble and learned friend Lord Browne-Wilkinson describes as middle age. They are all subject to the general tax laws. The private pension scheme rules were overruled by the Finance Act to give effect to its general principles which apply to those who entered a pension scheme after the Finance Act came into operation.

The position with regard to judges is that their present provision is a scheme that operated before the Finance Act came into being. Therefore judges appointed before that time were subject to the old regime just as people in other pension schemes were subject to the old regime. But those who came into pension schemes after the relevant date are subject to the general rule that an accrual period of 20 years or more is required to obtain tax exempt status and that the total benefit is capped. The rules are those decided by Parliament. They are therefore contained in the Act of Parliament in question. That is the basis on which I made my earlier response.

Lord Benson

Perhaps the noble and learned Lord the Lord Chancellor can help me on a technical point which I raise as a layman. Judges' pension schemes require a special Act, such as that we are now considering, because they are a special class of person with special circumstances. If a special Act is required to deal with special business, why is it necessary to force into it a specific clause from the general law? That is something I cannot comprehend. To put it even more directly from a layman's point of view, why not leave Clause 18 where it is? The proposal is to remove it. Why not leave it there?

The Lord Chancellor

The problem is what Parliament will think is right in relation to the general tax law. It is fair to say that the general tax law would probably have applied to everyone were it not for the possibility of a scheme being prepared which is the basis of the Bill before us. Therefore I feel that judicial pensions should not be the subject of the general law immediately; but that the correct system is for us to attempt to produce a scheme which is as tax efficient as possible under the general law, making the appropriate provision for judges.

The general law can apply whether or not there are special provisions such as those before us. I believe that the principles of the general tax law mean that in order for judges to have the most tax efficient system, it must be on the lines I described.

Lord Mishcon

Perhaps the noble and learned Lord will especially forgive me for sounding somewhat persistent. Having heard the view expressed from all sides of the Chamber—it appears to be a unanimous Committee—that we want 15 rather than 20 years, is he prepared to inquire of the Treasury whether or not we can produce a situation where the tax threat—I do not mean that offensively—is removed? The views of the Committee can then at least be tested with the Treasury.

The Lord Chancellor

I have explained the position as fully as I can. It is for the Committee to make a decision in view of the action my noble and learned friend decides to take.

Lord Donaldson of Lymington

I cannot overemphasise that I do not believe that any Member of the Committee who has spoken today has done so with a view to obtaining a better deal for judges. The sole concern of the Committee has been to produce a system which will provide better judges and a better administration of justice.

I understand the difficulties of my noble and learned friend. He rightly says that it ought to be possible to promote judges from one post to another. He does not say that it does not happen, for good and extraneous reasons, except in a minority of cases. I appreciate his difficulties. He has been forced into the position of speaking as though he were a tax accountant advising lay clients on the best means of avoiding the incidence of taxation as it exists. I am a sufficiently old advocate to know that if one is not in a position to receive instructions to depart from a specific situation, all one can do is battle on and wait for the adjournment. As I see it, that is what my noble and learned friend has reasonably been doing.

It would be unkind if the Committee were to express its view at this moment. I believe that it would be better for me to withdraw the amendment and reintroduce it, if necessary, at Report stage, giving my noble and learned friend the Lord Chancellor the opportunity to change his position. I would certainly not withdraw the amendment on any other basis. I hope that we shall have better news in the light of further and better instructions by the time this matter next comes before your Lordships. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Lord Chancellor moved Amendment No. 20: Page 4, line 13, leave out ("Part") and insert ("Act").

The noble and learned Lord said: This amendment and Amendment No. 21 are purely drafting amendments. The expression "appropriate annual rate" appears otherwise than in Part I of the Bill. I move this amendment so that the interpretation applies wherever the phrase arises in the Bill. I beg to move.

On Question, amendment agreed to.

The Lord Chancellor moved Amendment No. 21: Page 4, line 16, leave out ("Part") and insert ("Act").

The noble and learned Lord said: This amendment is for exactly the same purpose. I beg to move.

On Question, amendment agreed to.

[Amendment No. 22 not moved.]

Lord Ackner moved Amendment No. 23: Page 4, line 24, leave out ("in the period of twelve months ending with") and insert ("on").

The noble and learned Lord said: This is a small but important amendment. It is another case in which the value of the judges' pension has been downgraded, to which no doubt retained benefits will be produced as the constant answer. I ask Members of the Committee to turn to Clause 3(3) (a) where they will see that: a person's 'pensionable pay' is the greater of the following amounts, that is to say—(i)"— which is this paragraph with which I am concerned — the pension-capped salary payable to him in respect of his service in qualifying judicial office in the period of twelve months ending with the day on which he retires from such office". I understand that that is known as the actual salary paid approach.

The current position is that the pension is paid on the basis of the rate in payment at the time of retirement. This is an important matter for this reason. I can do no better than to quote what the senior magistrate, Sir David Hopkin, said in a note that he sent me which arrived today after I had tabled my amendment: The pay of public servants always lags behind that of their counterparts in the private sector. Annual increments invariably reflect the increased cost of living which those concerned have been paying since the last increase. And infrequent, periodic reviews are intended to bring up lagging salaries to provide some sort of parity with the private sector and reflect job weight. For political and economic reasons payment of the salary then determined to be appropriate for the job is staged over a number of years. Accordingly, even under the present arrangements, a judicial officer retires with a pension based on a figure lower than the job is deemed to be worth. The new proposal would aggravate this state of affairs by basing the calculation on a salary that would be even more remote from the proper rate payable at the date of retirement".

That comes very much in the context of events of the next fortnight or so. We believe that the TSRB report will not only be published but considered and decided on by the Government. We have been told in the newspapers—I am privy to nothing else—that it will suggest a large figure (say 30 per cent.). The newspapers have suggested that the Government will probably divide that by five, so it is 6 per cent.

As the Government indicated some time ago, let us assume that my assumed 6 per cent. increase is backdated to 1st April. Anyone who retires on or after 1st April will get, as matters stand at the moment, his current salary plus 6 per cent. as the basis for the calculation of his pension. Of course if the accident of birth results in persons being born before 1st April they will not gain that advantage. But accidents of birth produce all kinds of oddities. The Government are proposing that, with the pay addition of my assumed 6 per cent.—which merely indicates that the particular job has got an increase, although it is considered by others still to be grossly undervalued —if one retires on 2nd April one gets basically nothing as a result of that increase because one's pension will be calculated on the basis of the salary for 30th March or 1st April 1992.

Therefore, the net result is that in future there is to be taken away from the person who retires after, immediately after or some weeks or months after a pay increase the right to have his pension based on that new salary. It will have to be averaged over the year he retires. That not only affects the retired judge but his widow and his children if they qualify. So this matter is of far-reaching importance. The only justification provided by the Government that I understand is that their amendment will produce some solace or consolation in the judge who fortuitously happens to have been born sometime between 2nd April and 30th March of the following year. He will no longer be able to say, as some have said, "I wish my parents had been thinking of other matters for a few weeks before they decided that I should emerge on the horizon some nine months later". That is all this provision is designed to do.

On a rational basis it saves the Treasury money and that, as we know, is sometimes a motivating factor. It is quite unacceptable that a judge should lose the advantage in his pension of a pay increase which, when accorded, is out of date because it reflects past inflation and past lagging behind of his salary comparable to other salaries. In addition, it may be in the process of this dreary staging device which is designed to produce mathematics which are more saleable to the public media. I beg to move.

6.15 p.m.

Lord Morton of Shuna

I support this amendment. Another factor comes into it. If someone knows that a pay rise is coming and has to wait 12 months before the full effect on the pension appears, he may continue for that 12 months, although wishing that he were not there, having completed his full period of service, whether it is 15 or 20 years. It would seem much better that the pension should be based on the salary at the date of retirement rather than on this somewhat mean approach.

Viscount Bledisloe

Reluctant though I am to imperil my career by criticising any argument advanced by the noble and learned Lord, Lord Ackner, he lives somewhat in a world of unreality if he believes that commercial salary increases are not based on past data and past inflation. On any board on which I have ever sat when one is looking at salary increases one is also looking at inflation over the past year. One is looking at comparables which have been awarded by other companies. The passage that the noble and learned Lord read from the words of the chief magistrate seems to describe precisely how salary reviews are conducted in any form of life—and the judiciary is, I fear, no different in that. Therefore, I take my life in my hands and say that I do not think that the way in which judicial salaries are reviewed is, if so described, any different from the way in which any other salaries are reviewed.

Lord Ackner

If I may make this perfectly clear, I was not suggesting that it is. All that I am pointing to in relation to the judicial salary, which I am glad is fortified by my noble friend's intervention, is that it is universal—namely, that any award is for the past. That fortifies my proposition that once the award is made the salary should then be the new salary and all calculations should take effect on that salary.

The Lord Chancellor

The present system puts a high importance on the salary in payment at the date of retirement. The question is: is that the fairest system having regard to the various people who may be affected? My noble and learned friend instanced the case of persons who either died or retired on 31st March on the one hand and on 1st April on the other hand when on that 1st April there was a very large step in salary as a result of an award from the TSRB. I am not of course referring to this year in particular.

It seems to me that what we are proposing, which is to take the year's salary that was actually paid, is the fairest system and does not produce an unfair emphasis on the actual date of retirement. There would of course be a difference between the amount paid in respect of 1st April and 31st March—if there was a step in salary on 1st April—but it would not be large. If the step was significant, the difference would possibly be significant, but it would not be so large as to be unfair. I should have thought that, in the judicial pension scheme above all, fairness would be an important criterion.

The noble and learned Lord, Lord Morton of Shuna, suggested that judges may wish to stay on for the purpose of maintaining their pension. That applies particularly in the present system. Assuming that such motives ever enter the minds of judges—and the noble and learned Lord is a judge and it is he who has suggested that at least it might—it is perfectly possible for someone to do that under the present system. Our system would at least mean that if the judge were to do that he would have to work for some period on the new salary rate instead of simply getting the benefit of it and immediately retiring. Therefore, even if one allows such cynical motives to enter into the calculation, I believe that our system is fairer than that proposed in the amendment and I invite the Committee not to accept it.

Lord Boyd-Carpenter

Can my noble and learned friend say whether the system to which the noble and learned Lord, Lord Ackner, apparently objects is general in respect of public service pensions? I refer, for example, to the Civil Service and the armed forces.

The Lord Chancellor

Subject to being corrected, my understanding is that what we are proposing is quite a general system. I do not say that it is universal but I understand it to be general. Perhaps, however, I may give that answer subject to checking it—

Viscount Astor

I am advised that the answer is yes.

The Lord Chancellor

Yes, it has been checked and the answer is as I have said. The system that we are proposing is a quite general one.

Lord Boyd-Carpenter

Is it the case therefore that adopting the suggestion of the noble and learned Lord, Lord Ackner, would put the judiciary in a privileged and special position compared with other public services?

The Lord Chancellor

That is so. I do not say that putting the judiciary in a special or privileged position would necessarily be wrong but I do say that in this particular respect it is somewhat unfair as between the members of the judiciary who may be affected by it. The present system means that someone who believes that a salary step will be implemented on a particular date may attribute undue importance to that date if that person was influenced in the way in which the noble and learned Lord, Lord Morton of Shuna, has suggested.

Lord Coleraine

We are outside the problems of taxation on this occasion and my noble and learned friend the Lord Chancellor has suggested that retaining the old system would be unfair as between members of the judiciary. However, when it was a case of dealing with the taxation problems of the accrual period, he was quick to say that the judiciary should make up its own mind and that if its members felt that they wanted a particular scheme they could have it but they would have to lose the possible tax advantages.

I do not know whether the judiciary agreed that the old scheme should continue, but we have here a case where it seems that the effect of the Government's proposals is to produce a small but appreciable reduction in pension rights across the board. Is this also not a case on which my noble and learned friend should invite the judiciary to say what it wants and how it considers that its members should be treated if the prime consideration is fairness between them?

The Lord Chancellor

I hope that I made it plain when I was talking about the tax situation that those were options that existed. The provision of benefits in the form of salary and pensions for the judiciary is not of course a matter only for the judiciary. I was indicating that one cannot have it both ways very readily even if one is a member of' the judiciary. That is what I was trying to say, because we still have a responsibility—and the taxpayer particularly has an interest in these matters.

Although at this time, as at all other times, it is ultimately for the Committee to decide on an amendment, I submit that the amendment would produce a less fair system than the one that I am advocating. Therefore, I invite the Committee to decide, if called upon, that the amendment should not be agreed to.

Lord Ackner

I do not know whether I made this clear to my noble friend Lord Boyd-Carpenter: I am merely seeking to retain the status quo. This is something that exists at present. It is another feature in the reduction in the value of the judicial pension. As I understand it, the only justification that has been given is that some persons may feel bitter that they were not born later. I do not look upon that as being an adequate explanation. I should like to discover what happens in the private field in this regard, and as we are hoping between now and Report stage to obtain expert advice, I therefore beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Viscount Colville of Culross moved Amendment No. 24: Page 4, line 30, at end insert: ("and in either case where increases in rates of salary have fallen behind the cost of living index the pensionable pay shall he deemed to have been increased annually in accordance with that index").

The noble Viscount said: This amendment is part of the same argument. For a substantial period of time the position has been that when the Top Salaries Review Body makes a recommendation about the salary of judges among other people the recommendation is not introduced or accepted as it stands; it is brought in in stages. The noble and learned Lord, Lord Ackner, has just given an example of the sort of thing that can happen. Although it is not exactly a promise, the Government are committing themselves over a period of time to meeting the improvements in salary which the TSRB has recommended.

I am afraid that I have not drafted the amendment with great elegance. Somewhere on the statute book is a method of expressing the inflation-proofing of pensions because it is something which is legitimate. I am sure that my noble and learned friend the Lord Chancellor will tell the Committee that it is something which the Revenue is prepared to accept. Therefore, in order to deal with the question of stages, my amendment suggests a minimum process.

My noble and learned friend will perhaps be able to say that the Government will never do less than increase judicial salaries—and, therefore, pensions—to take account of inflation. If that is the case, there cannot be any harm in having a fallback position of this sort because it would never have to be implemented. If, on the other hand, a government decide for some reason not to maintain the judicial salaries in line with inflation, this would at least be a legitimate method of providing for the pensions, not just of the judges but, as has been said, of the widows and children also, to be kept in line with inflation as it increases, I am afraid, virtually year by year. Therefore, to some extent, the proposal is in line with the previous amendment; but it is one that I think is also in line with what is now accepted practice in the world of taxation about which we have heard so much today. I beg to move.

6.30 p.m.

The Lord Chancellor

The amendment as proposed would be quite difficult to apply. My understanding is that it is against the accepted practice for public sector schemes, including, of course, the present judicial scheme under the 1981 Act. I cannot perhaps do better than quote the words used by my right honourable friend as she then was (now my noble friend Lady Thatcher) as Prime Minister in a parliamentary Written Answer on 13th April 1984: It is the Government's intention that, if in future it is necessary to delay or stage the implementation of Review Body salary recommendations, this principle will be applied, and the pensions of retiring public servants in the group concerned will be calculated on the basis of rate of salary payable at or in the period before the date of retirement and not on notional or deemed rates of salary which were not in payment on that date". [Official Report, Commons, 13/4/84; col. 383.] That remains the Government's position.

As regards Amendment No. 26, I am not sure whether my noble friend wishes to speak to it separately.

Viscount Colville of Culross

Yes, I would rather deal with the amendment separately.

The Lord Chancellor

In that case, what I have said completes my answer to Amendment No. 24.

Viscount Colville of Culross

The situation here is very much the same as it has been on previous amendments; namely, that although we have had introduced to us a Bill which deals specifically with judicial pensions, and of course judicial retirement, apparently there has to be imported into it an absolutely irreversible reliance upon what is the general policy for everyone else. It seems to me that that falls very much into the same category as what has been said on other occasions. Those words may have been said by the noble Baroness when she was Prime Minister. However, it does not follow, as Members of the Committee have pointed out, that just because it has been said it is necessarily the only way in which we should legislate on the subject. After all, Parliament is sovereign. If we choose to take a stand on the matter there is nothing to stop that. For all prime ministerial announcements, we can make amendments. I am not suggesting that Members of the Committee should do so today but it is a matter that I should like to study.

I am afraid that I am not particularly convinced by the quotation introduced by my noble and learned friend. However, I do not intend to step out of line with what has been happening in the Committee thus far and ask for a Division on the amendment this evening. I shall study the matter. I hope that we may perhaps be able to improve the situation before Report stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Lord Chancellor moved Amendment No. 25: Page 4, line 36, leave out ("any") and insert ("the").

The noble and learned Lord said: The purpose of this drafting amendment is to make clear that there is only one scheme established by Part I of the Bill. I believe that it is important that one scheme applies under the Bill to all judicial officers. I beg to move.

On Question, amendment agreed to.

Viscount Colville of Culross moved Amendment No. 26: Page 4, line 45, leave out from ("within") to ("he") and insert ("five years").

The noble Viscount said: Amendment No. 26 covers a different aspect; it is a probing amendment. I am sure that my noble and learned friend appreciates that fact. One has to assume that a member of the judiciary—of whatever rank—has fallen sick and that there is some prospect of his or her recovery and return to full duties. The present drafting of the Bill would require that person to decide at the end of three years that there was no hope of returning to a full-time job. If he or she did not resign at that moment, the reduced salary which would be inevitable as a result of the disability would, as I understand it. be the basis of the pension. Therefore, unless one could go back beyond the beginning of the disability to a time when the salary was being paid in full, there would inevitably be a reduction.

I simply wonder whether Members of the Committee will follow me in the idea that three years may be too short a period. The proposed five-year period will not in fact make a very great deal of difference; indeed, I imagine that there would be very few cases where it would apply. However, it would at least give the judge concerned a little longer to see whether there was any prospect of returning to full-time service. I should like to know what my noble and learned friend has to say on the matter and why he has introduced a cut-off point of three years. I beg to move.

The Lord Chancellor

It is important to note that this matter applies in a rather restricted way: it applies only to judicial officers whose salary and pension benefits are funded out of money provided by Parliament. In the ordinary case of more senior judges, sick leave is normally without effect on salary. That applies where, during sickness, people are given six months' leave on full pay and thereafter sick leave on half pay, subject to a maximum of 12 months' sick leave in any period of four years or less.

The idea is to try to mitigate the effect of loss of salary so far as concerns pension. We have taken three years because that seems a reasonable period to even out the effects of the sick leave and return possibly to a time when the officer was in full-time employment. Obviously, five years goes back even further. In the current climate, I should have thought it unlikely that that would be much better for the officer. That would be my general judgment.

The provision is very like what one finds in comparable schemes. However, if my noble friend has any specific cases in mind where a five-year period would have made all the difference, I would find it useful to consider them. There is no particular basis for the three-year period, except a kind of empirical judgment that it is a reasonable period to take in the context.

Viscount Colville of Culross

I am grateful to my noble and learned friend for his reply. I do not in fact have a particular case in mind. However, I suspect that there may be such cases. Now that we know that the three-year period is based on an empirical judgment, I shall see if I can ascertain whether there are cases where hardship would arise under the provision. I intend to pursue the matter, but I shall not do so today. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Deputy Chairman of Committees (Lord Aberdare)

I must remind Members of the Committee that if Amendment No. 27 is agreed to I cannot call Amendment No. 28.

Lord Renton moved Amendment No. 27: Page 5, leave out lines I to 24.

The noble Lord said: The amendment proposes to leave out lines one to 24 of Clause 3 on page 5. That would be the same as leaving out subsections (4), (5) and (6) of the clause. The subsections enable regulations to be made by "the appropriate Minister" with Treasury concurrence in the circumstances mentioned. It is not the first time that a Bill has included power to make regulations; indeed, we discussed an example in Clause 1. Other examples are to be found in Clauses 9, 10, 12 and 19—each of which contain powers to amend or amplify the primary legislation contained in the Bill. I have tabled amendments to enable Members of the Committee to discuss each of those clauses.

In view of the importance of the independence of the judiciary established by the Act of Settlement, and bearing in mind that the financial independence of the judiciary is a necessary part of it, we need to ensure that that independence is not impaired by the Government having the opportunity to alter the law on judicial pensions or salaries laid down by Parliament.

When we were discussing Clauses 1 and 3 my noble and learned friend Lord Hailsham pointed to the advantage, as he saw it, of regulations to obtain flexibility. There are some circumstances in which in matters of detail it could be an advantage, but the payment of judges' salaries from the Consolidated Fund was a manifestation of the financial independence of the judiciary. Bearing those important constitutional factors in mind as background, I invite the Committee to consider those three subsections of Clause 3.

In subsection (6) we find that the regulations are to be made by the appropriate Minister. Clause 30(1) tells us that it is the Lord Chancellor who is the appropriate Minister. I hope and believe that he is the only one. That is what the Bill makes clear, but it says that he is to have the concurrence of the Treasury. Why should he have that in a matter affecting the independence of the judiciary of which he is the head? It is worth noting that where there is a similar power to prescribe, in regulations, given in Clause 1(7) it is merely the Lord Chancellor who is to do that, and the concurrence of the Treasury is not required. Why should it be required under Clause 3?

Clause 3(4) provides for pensionable pay and pension-capped salary to be determined—by the appropriate Minister in regulations—in the circumstances then detailed. In other words, the Lord Chancellor will have the power to alter primary legislation. In considering the extent of that power, we should be sure about what we are doing. The subsection provides: such regulations may, in particular, provide for such a person's pensionable pay and pension-capped salary to be determined for the purposes of this Act as if he had served in his qualifying judicial office … throughout the whole of the period of 12 months mentioned in paragraph (a) above and had been paid in respect of that service a salary of an amount determined by reference to the annual rate of salary payable in his case"— there has been an amendment— in respect of service in that office in that period".

It is a complicated provision, but it will determine what the pensionable pay and pension-capped salary shall be. Surely that should be clear from the primary legislation without our having to rely upon and refer to what is done by regulations. In subsection (5) we find part-time judicial service is dealt with—for example, recorders, of which I was one once but never received or expected a pension or an opportunity of a pension for such service. Recorders are barristers or solicitors who remain in practice, with a few exceptions. The few exceptions being full-time recorders.

Subsection (4) provides for the amount of salary and pensionable pay to be reduced; that is, reduced bearing in mind that the office is part-time and reduced from what presumably it might have been if it had not been part-time. Here again, we have uncertainty. It would have been much better, although it might have been a fairly long clause, to have that provision put into primary legislation. Clearly some provision must be made for such reductions but it should be done by Parliament. I hope that my noble and learned friend will consider the effect of those three subsections, and the regulation-making power that he is given by them, and replace them with primary legislation on Report. I beg to move.

6.45 p.m.

The Lord Chancellor

The type of calculations required in the cases covered by the regulation-making power contained in Clause 3(4) and (5) are appropriate for subordinate legislation, the primary legislation granting the necessary powers. The primary legislation is in some detail. As I said earlier, the subject is complicated and it is difficult to envisage all possible circumstances in respect of which regulations might apply.

By seeking to require that this matter should be covered by primary legislation, my noble friend is advocating a course contrary to the proposals of his own distinguished committee aimed at shortening legislation. To try to deal with all such possible cases in primary legislation is unwise.

The circumstances in which the regulations are to be made are circumscribed by the terms of subsections (4) and (5). They are appropriately made with the concurrence of the Treasury because they affect the charge that may be involved.

The appropriate Minister is the Lord Chancellor in the case of England and Wales but the Secretary of State in the case of Scotland because he is the Minister responsible for the judiciary in Scotland. That is why the phrase is used in that way. The Lord Chancellor is the appropriate Minister in respect of Northern Ireland.

Lord Renton

I am grateful to my noble and learned friend for that explanation. Perhaps I may correct him on one thing, and that is our committee's recommendations. In our recommendations contained in Chapter 17 (Recommendation 70 and onwards) we conceded that there was necessarily some complexity in fiscal legislation. We were dealing with primary legislation. Where the citizens' interests are concerned, in financial matters it has always been conceded —in Finance Bills, for example—that we cannot avoid stating precisely what it is that the citizen is entitled to expect: what deductions are to be made in respect of taxation, and so on. On that point, with deep respect—I hate to disagree with my noble and learned friend on such a matter—I must say that I do not go along with him.

Of course, any provisions made to carry out the purposes of subsections (4) and (5) are bound to be complex, but the question is whether that complexity should be set out in a Bill—which Bill Parliament can amend—or whether they should be set out in regulations which Parliament cannot amend but can only approve or disapprove of.

My noble and learned friend and I must beg to differ at this stage. Nevertheless, I hope that he will bear in mind the discussion we have had and may think better of the matter between now and the Report stage. In that hope, and without committing him, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Lord Chancellor moved Amendment No. 28: Page 5, line 13, leave out ("to him-) and insert ("in his case").

The noble and learned Lord said: This is a drafting amendment to make clearer that this provision is concerned with the actual rate of salary of a judicial officer that is applicable in his case. I beg to move.

On Question, amendment agreed to.

Clause 3, as amended, agreed to.

Clause 4 [Lump sum on the judicial officer's retirement or death]:

Lord Ackner moved Amendment No. 29: Page 5, line 27, leave out ("two and one-quarter") and insert ("three").

The noble and learned Lord said: This amendment relates to the tax free lump sum. I wish to make clear at the outset that I only move the amendment on the basis that the 20-year accrual scheme stands. It is not an attempt to improve the lot of the judge as it stands at the moment. Speaking entirely for myself, though I believe also for many other judges, in this legislation we seek, apart from modernising some of the provisions, to retain the status quo; that is, the 15-year accrual period and a lump sum of twice the pensionable pay.

My noble and learned friend the Lord Chancellor, quite rightly I am sure, took me to task for quoting him back during discussion of a previous amendment. I made a note that my noble and learned friend had achieved the most tax efficient scheme available. He courteously nods agreement. However, that does not seem to be borne out either by the Top Salaries Review Body or by the independent consultant actuary who is retained by the Lord Chancellor's department.

Perhaps I may indicate straightaway what the TSRB said on the subject. In its response to the noble and learned Lord, the Lord Chancellor, it highlighted a number of points. Under the heading "Main Points", the first comment states: Tax free lump sum. Under the proposed scheme an annual pension is payable plus an immediate tax-free lump sum. The maximum annual pension, accrued over 20 years, will be equal to half pensionable pay (capped). The maximum lump sum will be equal to 2 x annual pension x 9/8". That is, two-and-one-quarter. I stress the following words: However, it is normal in public service pension schemes for the lump sum to equal 3 x annual pension. It is noted that a factor of 2.25 is the maximum now allowed in the calculation of the optional lump sum under typical private sector final salary pension schemes. That factor applies to the pre-commuted annual pension, with a maximum of two-thirds of final salary. The maximum lump sum calculated on that basis is … equal to the automatic lump sum of 3 x annual pension under typical public service schemes. In the Review Body's view, the lump sum under the proposed scheme for the judiciary should be improved from 2.25 x to 3 x annual pension". I emphasise the words, the lump sum under the proposed scheme". It would be apparent to any expert that the proposed scheme made clear that retained benefits were permitted.

I refer to the advice which the noble and learned Lord the Lord Chancellor received from his own expert on the subject: there has been a clear trend of improvement in this area amongst pension schemes generally, and good practice is represented by a lump sum of three times pay".

I now turn to the justification for the 2.25; that is, two-and-one-quarter times the amount, as provided in the Government's consultative paper. The consultation paper proposed that there should be a death gratuity … Some commentators thought that this rate should be increased, but the Government has decided that the rate proposed is a reasonable one".

There is no reference at all to this being the result of the remarkable achievement of hanging on to retained benefits.

I find it difficult in these circumstances to be persuaded by my noble and learned friend's protestations that he has achieved the most tax efficient scheme available. Quite clearly, according to the experts, what is available to be paid under this scheme—and it is good practice which occurs in both the public and the private sector—is not 2.25 but three times. Hence my amendment. I beg to move.

Lord Benson

I support the amendment on the same grounds as those given by the noble and learned Lord, Lord Ackner. It would help to alleviate the manifest unfairness of raising the 15-year rule to 20, thereby imposing a sentence of five years' hard labour on the judge before he could earn the full pension.

That is the only reason I support the amendment. It is only a second-best solution. The best solution is to retain the 15-year period and the appropriate rate for the tax-free lump sum. Whereas in the private sector the tax-free lump sum usually works out at about three times, it might possibly be reasonable and fair to make it slightly less, or much less in the case of judges, if the 15-year rule were retained simply because judges do not have to bring into account the retained benefits earned prior to appointment to the Bench.

Lord Morton of Shuna

I believe that everything has been said. I confess that I find it difficult to see why, not withstanding the advice which the department of the noble and learned Lord has received, the Bill contains a provision contrary to that advice. Therefore I support the amendment to "three times".

Lord Wilberforce

Is there not another argument for increasing the two-and-one-quarter to three? It is that under the Bill the lump sum and pensionable salary is split between two parts —the capped part and the separate scheme which is introduced by Clause 19. As the noble and learned Lord said earlier this evening, the uncapped portion of the lump sum which is paid under Clause 19 is taxable. It is not subject to tax benefit. Under the present figures it may be as much as one-third or one-quarter of the lump sum payable. So one-quarter of the lump sum under the scheme will be subject to tax of 40 per cent. Therefore, is there not reason for compensating for that by increasing the 2.25 to three? That is a separate point from the one urged by my noble and learned friend Lord Ackner.

The Lord Chancellor

First I wish to deal with the point I was making about the passage to which my noble and learned friend Lord Ackner referred. I said that it was the most tax efficient scheme that could be devised. I was not saying that it was the highest possible benefit anyone could think of. I am sure that I would not need the variety of your Lordships' talents to be able to think of a great variety of higher benefits. I was thinking of the tax efficiency of the scheme and we were dealing at the time with the rate of accrual and the capital sum. As my noble and learned friend said, the TSRB suggested in its comments on the consultation paper that three would be a good multiplier. The independent advisers I referred to also took that view.

One has to take account of other matters, of course. Perhaps one of the most important is a matter that my noble and learned friend Lord Wilberforce referred to. The capped provision is contributory in respect of widows' and children's benefits. The uncapped provision is not contributory at all. It is true that the tax will be calculated on the lump sum and exacted from it but that is an aspect of the new provisions which is more generous in respect of the actual benefit paid than the old provisions. As far as we could, we considered the matters referred to by TSRB. In the light of those considerations the Government concluded that 2.25 was a reasonable figure in respect of the lump sum accrual.

Lord Ackner

Before my noble and learned friend sits down I hope he will explain why the principle of conformity has to be applied so inflexibly to the accrual period. Apparently we must go up from 15 to 20 years because five years ago Parliament said other people must have a minimum period of 20 years. Yet on this matter, where the TSRB states that it is normal in public service pension schemes for the lump sum to equal three times the annual pension, the principle of conformity goes out of the window.

7 p.m.

The Lord Chancellor

It is relatively easy to distinguish between the two positions. I was talking about the tax law which is a general provision and which, apart from exceptions, covers the situation. As regards the matter we are discussing, it is a question of looking at all the conditions of the schemes. It is true that the TSRB thought the multiple of three was normal in public service schemes. However, not all public service schemes accrue at the rate of the 20-year period. Many do not. One has to take account of those factors as well as of the contribution regime that applies.

I do not think it is a particularly cogent argument to take the tax law on the one hand and other types of conformity on the other and seek to equate them. I certainly did not seek to do so. One has to look at all the circumstances of the scheme in taking account of it. I acknowledge, of course, that the TSRB and R. Watson, the independent advisers, drew our attention to that aspect of the matter, but having considered all the material they referred to we concluded that this was a reasonable figure.

Lord Ackner

I am bound to say with the deepest respect that this clause is merely characteristic of a Bill which seeks to provide not the most efficient tax scheme available but one in which the judges are expected to take as low a figure as is possibly arguable on a number of items. As we shall return to this type of question on Report, and in view of the hour, I do not propose to ask the Committee to divide on the amendment. However, in my submission, it is perfectly clear that no satisfactory answer has been given to a point which has the support not only of the independent expert retained by the noble and learned Lord the Lord Chancellor and his department, but also of the Top Salaries Review Body which was set up in order to give independent advice. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Ackner moved Amendment No. 30: Page 5, line 34, leave out subsection (3) and insert: ("(3) Where a person dies within five years of retirement his personal representatives shall be granted a lump sum equal to five times the annual rate of pension less any annual sums paid to him by way of pension.").

The noble and learned Lord said: This amendment again is of the same type. The informal advice that I have received—I hope it will be confirmed subsequently formally—is that once a lump sum has been put, as it is in Clause 4(3), at one and a half times the pay, or three times the pension, the subsection adds precisely nothing to the situation where there is death early in retirement. I am instructed that a modern top executive pension scheme would provide that which I have set out in the amendment, namely that, Where a person dies within five years of retirement his personal representatives shall be granted a lump sum equal to five times the annual rate of pension less any annual sums paid to him by way of pension".

That is the modern example of what one would expect to find in a scheme which the judges, in my respectful submission, are entitled to receive. I beg to move.

The Lord Chancellor

The amendment seeks further enhancement. It is certainly possible that an amendment of this kind could be given effect to without damaging the scheme from the point of view of tax efficiency. When reference is made to other schemes one has to look at them in totality. However, this is a matter which I should like to consider further. At present there is no such provision and the measure proposed would certainly be a change from the general scheme that presently exists. However, it is certainly a matter which could be further considered.

Lord Ackner

Even a glimmer of hope sometimes springs eternal. On that basis I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 4 agreed to.

Clause 5 [Surviving spouse's pension]:

Lord Ackner moved Amendment No. 31: Page 6, line 8, leave out paragraph (b).

The noble and learned Lord said: If one really required an indication of how out of date this scheme is, one has only to see how the surviving spouse is treated. In the old days there used to be a clause called a dum costa clause which required, for a pension to continue to be paid, that a surviving spouse must remain chaste, whatever that may mean. That has gone but lingering far behind in the past is this clause which involves the surviving spouse not remarrying without the loss of her pension.

In this day and age is it really necessary to give the following advice to an expiring judge: "Do not forget to tell your widow-to-be that she should live in sin and on no account remarry"? I raised this point with a friend of mine recently. My friend told me that his uncle, who was aged 90, had recently decided to marry a sweet young thing of 84. When he proffered his hand in marriage, she, with great wisdom, said, "Ah, but what about my pension"? As she was 84 years old the pension had been taken out 50 or 60 years ago and there, lo and behold, was the same kind of clause as we have served up now. They wisely said, "Let's write to the insurance company". So they wrote to the insurance company—not, I emphasise, the Treasury. Back came the answer: "Certainly we will continue to pay your pension. Please let us know the date of your marriage because we would like to send you a handsome gift". It is my lack of confidence that that would be the reaction of Her Majesty's Treasury that impels me to ask that the modern scheme be introduced into the Bill.

As can be discovered quite simply, the modern scheme is that a surviving spouse, whether she lives in sin or remarries or whatever she does, receives the pension so long as she is a surviving spouse. Quite rightly so. As my noble and learned friend Lord Morton of Shuna wisely points out, the surviving spouse may be left, as a result of a decease a year after the judge is appointed with 1/80th of his salary, and she a young woman. She is to lose even that if she remarries. In the case of a widow who is a good deal older the position is not so bad.

This is an indication of Treasury meanness, insisting on an out-of-date provision. It justifies the phrase which I have repeated earlier, and which is not of my making: it is a scheme which is cobbled together with a few Treasury demands and a number of out-of-date provisions. I beg to move.

The Deputy Chairman of Committees (Lord Alport)

I have to advise the Committee that. if the amendment is agreed to, I shall not be able to call Amendment No. 34.

Lord Morton of Shuna

I support the amendment. My noble and learned friend Lord Ackner did not deal to any great extent with the terrible difficulties that are presumably envisaged by the Treasury in respect of Clause 5(1) (b). It seems that by that provision the Treasury wishes to prevent any retired judge from marrying. Whether or not that is an invitation to live in sin I am not sure, but I question why it is necessary to have the requirement that no pension should be paid to the widow of a retired judge who dies very shortly after his retirement and very shortly after his marriage. Must all judges before they retire make sure that they are married? It seems a curiously out-of-date provision.

Lord Benson

I support the amendments. I find the clauses extremely difficult to comprehend. They seem to have the result that if a judge marries the day before he retires his widow will receive a pension on his death, but if a judge marries the day after he retires his widow will receive nothing on his death.

If a judge marries before his retirement and then dies, his widow may remarry. On remarriage the question of whether the pension should continue will be the subject of a means test settled by the Treasury. The Bill is silent on the amount of the means test and I suppose that the matter will be settled on an ad hoc basis by Treasury sleuths. The means test under subsection (3) will have to be monitored regularly by the Treasury, presumably annually. That means that the widow and her new husband will presumably be required to make annual returns of their income and their assets.

I find the proposals wholly offensive, for five reasons: first, they are mean and penny-pinching; secondly, a judge's widow needs a pension to support herself and the date of marriage is totally irrelevant: thirdly, the cost of imposing the Treasury sleuths will, I suspect, be far more than anything that the Treasury is likely to save in pension; fourthly, it may not be intended, but there is a clear implication in the clauses that judges and their wives will conduct their marital arrangements in a way which will fiddle pension entitlements out of the Treasury; and, finally, as has already been pointed out, it will encourage judges' widows to live in sin or, as the modern jargon puts it, to shack up. I believe that to be contrary to the public interest and I believe that the Church would take the same view.

I hope that the noble and learned Lord the Lord Chancellor will delete the offending clauses without delay.

Lord Wilberforce

Perhaps I may raise a question, which may be a totally ignorant one. Is not the whole of this discussion assuming a sexist element? Nothing is said about widows or wives; the Bill refers to "spouse". Indeed, if the Bill said anything else it would be an offence against the Sex Discrimination Act. Therefore, one must assume that, as its language indicates, the Bill applies equally to widows and widowers, and in that case the whole of the provision is even more out of date and unworkable.

7.15 p.m.

The Lord Chancellor

Certainly the Bill applies to both sexes and the word "spouse" is used on that basis. I do not see why that should make the provision unworkable.

The basis of the provision is that arrangements are made in respect of those who are married to each other at the date of the judge's retirement. I submit to the Committee that the provision reasonably selects for the payment of a widow's pension one who was married to the judge at the date of retiral. The provision is made on that basis and I see no reason why that should not work.

In relation to Clauses 2 and 3, to which my noble and learned friend Lord Ackner directed his remarks in relation to his amendments, they are drawn up on the basis that the pension is paid from public funds and that one has to have regard to the situation as at the date on which the funds are paid. The powers resting with the Treasury are discretionary. In other words, there is no absolute cut-off of the pension, as my noble and learned friend may have implied in some of his remarks, but a discretionary power in the Treasury to take account of all the circumstances.

In that situation I submit to the Committee that the proposals are perfectly workable. I submit that they are fair in their general operation.

Lord Ackner

Before my noble and learned friend sits down, since I raised a number of clauses which include the same proposition, can he tell the Committee, seeing that we are dealing with primary legislation, whether the Government have any intention of ensuring that the scheme is in a modern form?

The Lord Chancellor

If and when the Bill becomes an Act of Parliament it will be in an extremely modern form.

Lord Ackner

I am sure that my noble and learned friend knew exactly what I had in mind. I spell the matter out because my question was obviously misunderstood. Is it the Government's intention, since they are involving this subject in primary legislation, to ensure that clauses dealing with spouses, disability, sickness, orphans and early retirement are to reflect, or are not to reflect, what one finds in a modern pension scheme? I hope that I have made my question clear on this occasion.

The Lord Chancellor

There are many varieties of schemes promulgated at the present time and many of them have different provisions dealing with these various matters. I had understood the question from my noble and learned friend to relate to the form of the scheme. So far as concerns the substance of the scheme, the precise form that it will take will have to depend on the decisions taken in this Chamber and in another place. Obviously the arguments about what are appropriate provisions to be made in respect of the various contingencies with which the Bill deals may to some extent depend on what other recently promulgated schemes do. In such an operation account has to be taken of the various circumstances of the schemes. The noble Baroness, Lady Seear, pointed out the difficulty of comparability in this area. It is quite difficult to take account of the varying circumstances to which other schemes may apply.

Lord Ackner

I have listened as always with interest to what my noble and learned friend said. I shall reflect upon it and undoubtedly return to the charge at Report stage.

Amendment, by leave, withdrawn.

[Amendments Nos. 32 and 33 not moved.]

The Lord Chancellor moved Amendment No. 34: Page 6, line 19, at end insert: ("( ) Where the deceased died while holding qualifying judicial office, his death shall be treated for the purposes of subsection (1) (b) above as his retirement from such office.").

The noble and learned Lord said: This is a drafting amendment. I shall also speak to Amendment No. 40 which has the same purpose. The Bill provides for a surviving spouse (and an adopted child) of a deceased judicial officer to receive a pension provided that he marries the spouse (or adopts the child) before he retires from qualifying judicial office. The amendment covers the case in which the officer dies before retirement by treating the death as his retirement for the purpose of the pensions being payable. I beg to move.

Lord Morton of Shuna

I am sorry but I am an ignorant Scot and I find great difficulty in Amendment No. 34, which reads: Where the deceased died while holding qualifying judicial office, his death shall be treated for the purposes of subsection (1) (b) … as his retirement from such office". Subsection (1) (b) states that the marriage took place before the deceased retired.

I cannot see any sense in that, unless in some way the marriage has taken place after the death, which I cannot think is what is meant. It seems to be a totally unnecessary provision. If the man dies in office, he is dead and therefore there is a widow—or a spouse. If he has retired he has not died in office. I just do not understand what is talked about here.

The Lord Chancellor

I certainly accept that if he dies he is dead. The point is that the benefits are predicated on the situation. What is dealt with is the situation in which the marriage took place before the deceased retired from qualifying judicial office. We want also to take account of the case in which there was a marriage and then the person died while still in office.

Because the measure was expressed as requiring retirement from office, it is necessary to have some provision that takes account of the possibility that the deceased did not retire from office but died before that event took place and of course obviated that event altogether. It is in order that the other provisions should properly be attractive.

Lord Morton of Shuna

I am much obliged. I shall read with great care what the noble and learned Lord said. However, Clause 5(1) starts off with a person dying and leaving a surviving spouse. I think I can understand that. Then paragraph (b) states that: their marriage took place before the deceased retired". I can understand that. But why is it necessary to say that if the deceased died before he retired he is to be treated for the provisions of Clause 5 as having retired on the date he died? It seems unnecessary because it is the qualification of the whole clause that the person has died.

The Lord Chancellor

The point is that the conditions required for the surviving spouse to be entitled to a pension for life are (a) and (b). Paragraph (a) requires that he leaves a surviving spouse. We are agreed on that. My noble and learned friend says that he understands that passage so I do not need to pause too long on that. Paragraph (b) states that: their marriage took place before the deceased retired from qualifying judicial office". If he did not retire at all but died, there is at least an argument that the spouse does not qualify because that condition is not satisfied.

This amendment is to make sure, just in case the matter is read closely, that where the deceased dies rather than retires—leaves office by death rather than retiral—the surviving spouse provision applies. That is the purpose of it. I do not think that my noble and learned friend should he all that puzzled. I feel certain that he has had more difficult problems of construction to deal with and has dealt with them very successfully.

On Question, amendment agreed to.

[Amendment No. 35 not moved.]

Lord Ackner moved Amendment No. 36: Page 6, line 31, leave out from ("pension") to end of line 36 and insert ("had he reached the age of 65 or completed 15 years in his qualifying judicial office, whichever is the earlier.").

The noble and learned Lord said: Again, Amendment No. 36 is designed to produce a modern provision where there has been death in the payment which the widow should receive. The amendment is in the same terms as earlier; namely, that instead of the widow receiving the one eightieth after a year's service by her husband, she would receive the pension had he reached 65 years of age or completed 15 years' service in his qualifying judicial office, whichever is the earlier. At the present moment she is treated in an out-of-date, mean fashion. This amendment is another attempt to bring the scheme up to date. I beg to move.

Lord Morton of Shuna

At Second Reading I spoke on this point; namely, that the provisions for a widow or a widower of a judge who dies early after his appointment are quite mean. In the hope that it will produce something better for the surviving spouse—if I may use that word with no sexist connotation —I support the amendment.

If someone dies in middle age (if that is defined, as it has been in the Chamber today, as between 45 and 50), the spouse is liable to have children and be at the stage where pension arrangements must be good if they are to be effective. It is at that age that pension is most needed by the surviving spouse. It is at that age that these pension provisions are at their most mean. I hope that the noble and learned Lord will be able at least to take this matter away and consider the position.

The Lord Chancellor

The arguments are precisely the same as the arguments advanced in respect of the amendments to Clause 2. I have explained and need not repeat the reasons for the way in which the Bill is framed on this aspect.

Lord Ackner

I accept that the arguments are the same, but they have the merit of growing stronger every time one finds a new situation to which that out-of-date approach applies.

Along with the other matters, I shall invite the Chamber to reconsider the point at Report stage. Accordingly I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 5, as amended, agreed to.

The Earl of Strathmore and Kinghorne

I beg to move that the House do now resume. Perhaps I may suggest that the Committee stage begins again at half-past eight.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.