Judicial Pensions and Retirement Bill [H.L.]

HL Deb 12 November 1992 vol 540 cc370-441

6.17 p.m.

Proceedings after Third Reading resumed.

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

Lord Ackner moved Amendment No. 2:

Page 3, line 18, leave out from ("65") to ("and") in line 20.

The noble and learned Lord said: Bernard Shaw said: Indifference to our fellow creatures is the essence of inhumanity",

I shall endeavour to show how pertinent that observation is as regards the provision in the Bill relating to an incapacitating illness for a judge and the way in which his widow is treated should he die of such incapacity.

For 160 years—that is since the pension legislation started in 1799—a judge who fell ill during the course of his office at any time, whether it was in the first year, the 10th year or the 12th year, automatically qualified for his full pension. There was no question of any limit because he had only served one year or two.

In 1933 the Peel Royal Commission suggested among other things that there should be a graduation in the pension payable on sickness. It was apparently not accepted by the Government for many years, perhaps because there was a note of dissent entered by Mr. Clement Davies in these terms: There is no doubt that many men who have accepted judgeships in the past have been obliged to make substantial financial sacrifices in so doing. The difference between the salary of a judge and the earnings of a successful practitioner at the Bar has increased rather than diminished in recent years and it is inevitable that similar and possibly heroic sacrifices will have to be made in the future. I believe that one of the several good reasons why the ablest lawyers have in the past been willing to accept a substantial reduction in their income is that the acceptance of a judgeship is in a very real, if indirect, sense an insurance against unexpected illhealth. For this reason alone I feel that it would be wiser and indeed fairer that a judge who is obliged to retire on the grounds of illness should receive his full pension as at present". That was in 1936.

It was not until 1959 that a graduation provision in pensioning was implemented. That provided for a judge immediately on appointment to qualify for one-half of his ultimate pension. His ultimate pension was one-half of his salary and therefore he qualified for one-quarter of his salary on appointment. Thereafter he achieved an increment of one-fortieth of his salary in regard to each year that he served.

Conveniently, the provisions which existed in 1959 and which exist today in relation to the High Court judge are set out in terms at the bottom of the Marshalled List of amendments. It is in fact Amendment No. 4. Perhaps I may give your Lordships an example of how the provision would work today. I take the income of a High Court judge and round it off at £80,000—it is, in fact, £87,000. I ask your Lordships to assume that the judge suffered a stroke in his first year. That is an experience which we know from the immediate past can happen and has happened on occasions. It is not surprising because the judge is appointed fairly late in middle age.

Under the present position the judge will immediately receive a pension of one-half of what his full pension would have been. His full pension would have been £40,000, which is half of £80,000. Therefore, he qualifies immediately for £20,000. If he dies during that year, as he well might, his widow will be entitled to one-half of the pension that he was enjoying; in other words, £10,000. Therefore, there is £20,000 to the disabled judge and £10,000 to his widow if he does not survive that year.

For reasons which have never been explained and which have nothing to do with conformity with tax law, the consultation paper which was issued by my noble and learned friend's department decided that that situation should be decimated. Instead of the fast accrual rate in the first five years, the accrual rate should operate on the basis of one-fortieth for each year or, in relation to the widow, one-eightieth for each year. So putting the clock forward into next year when no doubt the Bill will become an Act, the new judge becoming disabled by a stroke in his first year would achieve not £20,000 by way of a pension but £2,000. On his dying in that year his widow would achieve not £10,000 but £1,000.

That matter was immediately drawn to the attention of my noble and learned friend more than one year before the Bill was introduced in this House. It was drawn to his attention first by the Top Salaries Review Body, to which the reorganisation of the pensions was not entrusted—as was the case with Members of Parliament—but, in my respectful submission, should have been. The TSRB commented as follows: Pension benefits calculated on the basis of pensionable pay and past service but payable immediately in the event of retirement on the grounds of ill health could be more generous. An alternative approach would be to base ill health pensions on potential service to age 65".

In a letter to the Lord Chancellor's Department the Top Salaries Review Body advised it to retain the services of an independent consultant actuary, which it did. A few months later Mr. Alexander of the well-known firm of Watson and Sons wrote on this subject in these terms: On illhealth retirement an immediate pension is payable based on complete service. Where service is short the pension payable will be relatively small, whereas it can be urged 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 survey of NAPF in 1990) 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 that consideration is given to something simpler such as an inclusion of half the potential service". That of course will be up to the age of 70.

There was no reaction to those suggestions and the Bill was published. The Second Reading drew specific attention to this case, in particular the speech of my noble and learned friend Lord Morton of Shuna. Again there was no reaction. We drew attention to the issue in our debates in Committee but there was no reaction. The Committee ended on 30th June. That gave the judges the opportunity, to which I am sorry they were ever obliged to resort, to obtain advice from an independent consultant actuary. He provided the advice by the end of the July. A copy was immediately sent to my noble and learned friend the Lord Chancellor by my noble and learned friend the Lord Chief Justice. Time passed, and by the end of September we learnt from my noble and learned friend the Lord Chancellor that he was contemplating the possibility of making some alteration. Shortly before the Report stage we were told that he hoped to introduce at Third Reading a mitigation of the present system.

What we have sought, quite simply, is that there should be deemed service to the age of 65. Therefore, if at 50 a person is disabled, albeit in his first year, he would be deemed to have served from 50 to 65. The response to that amendment, which has existed ever since the Committee stage, is that the Government were prepared and are prepared and have so found in the amendments to offer exactly half.

That is the extent to which we have extracted a little humanity from the Government, but it is to be compared with what has so recently happened in relation to Members of Parliament. Recently I obtained from the Top Salaries Review Body its report advising what should occur for Members of Parliament. It stated: We have examined other minor improvements in benefits for which there is a strong case on welfare grounds. The cost of these would be relatively small", and I stress that. The report continues: We consider that for the calculation of ill-health retirement pensions and spouses' pensions in the event of the death of a member in service, years of potential pensionable employment to age 65 should be credited to replace the existing less favourable enhancement rules. The member would have had an expectation of pensionable employment to retirement age either in Parliament or elsewhere and there is a trend towards the adoption of the potential employment approach. The 1990 survey of the National Association of Pension Funds found that that basis had been adopted in 58 per cent. of pension schemes for spouses pensions and in 35 per cent. of schemes for ill-health retirement pension, with others having insurance schemes which supplement salary during prolonged periods of disability. The proposal would, at relatively low cost to the pension fund, correct the inadequacy of the existing low level of pensions for young MPs faced with retirement due to ill health or, if they die, for their surviving spouses; perhaps the group in greatest need of support for whom there is much concern in the House. In addition to improving the existing provisions greatly, the new basis of calculation would be simplified and MPs and their spouses would know in advance what their entitlement would be in the event of ill health, retirement or death. There would be consequential improvements for children". The recommendation thus read: We recommend that the grant of full years of potential pensionable employment to age 65 to replace the existing complex enhancement rules for the calculation of (1) ill health retirement pensions and (2) spouses pensions when MPs die in service". The result of that recommendation was a provision made in the Parliamentary Pensions (Amendment) Regulations 1992 made on 9th March 1992, laid before Parliament on 10th March 1992 and which came into force on 1st April 1992. I shall not read out the actual provisions. It is sufficient for me to read from the explanatory note which states: Regulation 5 replaces the existing enhancement rules in relation to ill health pensions by providing for an increase in the aggregate period of reckonable service equal to the full period"— I stress that— of potential pensionable employment to the age of 65". Therefore, not many months ago it was considered proper that Members of Parliament should have exactly what we have suggested in this amendment, with only one exception; that is, that their pensions are earned by the age of 65 and judges are to be expected to do 20 years to the age of 70. Therefore, what we have sought is not deemed service to the full pension but deemed service to the age of 65.

In view of the Autumn Statement which has so recently been repeated, perhaps it is pertinent to remind your Lordships of what was said quite recently on Report. It had been urged by my noble and learned friends Lord Donaldson of Lymington and the Lord Chief Justice, in relation to the debate on whether the accrual period should be 15 or 20 years, that the sad financial stringencies of the moment were irrelevant to what was being debated because we were talking of a pension scheme which would not be operating currently but, in all likelihood, would be affecting pay-outs only 15 or 20 years hence. That point was made, and stressed, by both my noble and learned friends.

In the debate my noble and learned friend the Lord Chancellor said: I also agree with the view that what we are seeking to set here is the system for pension payments for the future; in other words, I shall not refer to any present aspect of the economy or anything of that sort in dealing with the matters which have been raised".—(Official Report, 27/10/92; col. 1064.)

The amendment has the enormous corroborative support of what has been so recently applied to Members of Parliament. In my submission with regard to the concession made by my noble and learned friend the Lord Chancellor, to which I have just referred, since we are talking of the distant future we need not have regard to the present financial stringencies. We must deal with this matter as a question of fairness. That was so well stressed by the report from the Top Salaries Review Body, parts of which I read. I beg to move.

6.30 p.m.

Lord Rawlinson of Ewell

My Lords, I have never been able to check the reference but when Dr. Samuel Johnson moved to the Temple where the lawyers live it is reported that he said, "I do not like frogs and I do not like lawyers, and I am not going to have either of them hopping about in my chambers". Many people do not like lawyers. I know that some Members of this House find it tiresome that time is taken up on salaries and pensions of persons who are not themselves interested but who may be thought to be interested on behalf of a trade union.

I have never been a judge. I never wanted to be a judge. About 30 years ago I was a part-time judge—a recorder—at Salisbury. I showed such little aptitude and talent for that that I spent my time in a more lucrative way practising before the Bench. When I was first a law officer 30 years ago—and only the noble and learned Lord, Lord Simon of Glaisdale, has been a law officer before my time—I remember that extraordinary dislike of the bureaucrats by the lawyers. This Bill is a culmination of the triumph of the bureaucrats over the lawyers—two classes of people who are not generally liked.

I remember at that time that the law officer's department wanted to move the Attorney General's chambers from the Law Courts because it was said to be more convenient to move them away from there; and it eventually succeeded. It was said that law officers should not be in court but should be available for Cabinet and for Cabinet Committees; again, there was success in that respect. They have now become tame lawyers of the Government and the old tradition of law officers has really disappeared.

Now there is this assault—and it is an assault—on the judiciary. I have never been a judge but I know how vitally important it is that we should have the very best people as judges. Many people say that this is an unimportant matter, but it is not. It is vitally important. If the Government go rough-shod over judges' pensions, which are part of the pay and conditions, then they will not get the best judges. When Disraeli was here and asked what he thought about the place he said, "Dead but in the Elysian fields". We shall probably all be dead when the provisions of this Bill take effect. It may be said that we are sitting here going on and on about pay and conditions, and so on, but it is a more important matter than that.

I am glad that the retirement age for judges has been reduced. I gave up practising at the Bar eight years ago when I was 65 and I had to ask the judges to speak up. I thought that it was time to retire. I am glad that the provision has been introduced that judges should retire earlier than they used to; that is sensible and right. However, let us not forget that most good judges are old judges. It is important that proper pension provision should be made.

If a young man is to be asked to give up practising at the Bar to take a seat on the circuit Bench he may ask himself what will happen to him or his wife if he is ill. He may ask himself what will happen in those circumstances. Let us not be penny pinching as regards this matter.

When one is dealing with a Minister whom one likes very much personally and admires, I have always found it very difficult to oppose those things which he is doing, but I do oppose this measure. There was one bulwark who used to stand up for the judges. In my time they were called streetwise and by that I mean politically wise. I refer to Lords Kilmuir, Elwyn-Jones and also my noble and learned friends Lord Dilhorne and Lord Hailsham who is not here. With all the respect and affection which I have for my noble and learned friend, I beg him to stand up for the judges.

I know that the Treasury is saying to him, "Look, this is your department. This is the amount of money you have. You can only have this amount of money. The money for judges has to be reduced. You have to do something about it". I ask and beg my noble and learned friend to wag his finger and, if not, throw off his wig. I very much support the amendment.

Lord Benson

My Lords, at Report stage of this Bill the noble and learned Lord the Lord Chief Justice asked for some tables to be issued so that the House could appreciate the effect of its own decision. Those tables were eventually provided on Tuesday of this week. They included the proposals to be made by the noble and learned Lord the Lord Chancellor at Third Reading in the amendments now before the House.

On this particular issue the tables show that as regards a High Court judge, the pension payable in the event of retirement due to illhealth, and the pension payable to the spouse if death supervenes, are less than the pensions payable to judges and spouses under the existing scheme which was settled 11 years ago. The cuts are substantial. Sometimes they are as much as £3,000, £4,000 and £5,000 per annum. There are of course some upward adjustments of the lump sum. Those upward adjustments in no way compensate for the heavy cuts to which I have just referred in the annual pension. The position as regards the circuit judges is that under certain conditions similar cutbacks take place, but they are much less serious than in the case of the High Court judges.

Perhaps I may suggest that on retirement due to illhealth and in the event of subsequent death of the spouse, there can be no possible grounds for paying lower pensions to future judges than were thought to be fair 11 years ago. Even that comparison is unjust because the scheme settled 11 years ago is now long out of date. It is very ungenerous by modern standards. So the comparisons which I have put before the House are even more savage than outwardly appears.

The situation seems even more unfair than I have described because this Bill applies to two other classes of the judiciary; the district judges and the stipendiary magistrates. In both cases, except in one curious case which is a pure anomaly, the district judges and the stipendiary magistrates receive substantial increases in pension and in the lump sum. What is the justification for discriminating against the High Court judges and to a lesser extent the circuit judges? Why should the position of those judges be debased in this way?

Amendment No. 3 would help to correct the situation as the noble and learned Lord, Lord Ackner, has pointed out. It would be transparently unfair to let this Bill go forward in its present form unamended by Amendment No. 3.

6.45 p.m.

Lord Taylor of Gosforth

My Lords, I do not propose to speak at length on this matter, but on behalf of the judiciary I wish to support the amendment. The proposal contained in the original version of this clause was nothing short of shameful. The idea that the wife of a High Court judge who dies of a stroke in his first year should receive the princely sum of £1,000 is nothing short of shameful. The amendment or improvement which has been belatedly —and one has to say grudgingly—granted by the Government may not be shameful, but it is still mean in the extreme.

My noble and learned friend Lord Ackner has drawn a comparison between the proposal for judges and that for Members of Parliament. I seek briefly to give a different analogy. Let us compare like with like—that is to say, judges in this country and judges in other jurisdictions. I take Canada as the only example. I am informed that in Canada a judge becomes entitled on appointment to his full pension should he have to retire through sickness even in his first year. Moreover, perhaps I may add that in Canada that full pension is earned in good health in 10 years and not 15 years or 20 years.

I go further. It is a pension of full salary; not half salary. It is also index linked. Why should we be so mean to our judges when Canada, which has inherited our common law jurisdiction and seeks to follow the example which we have set in matters judicial and in the administration of justice, adopts a more reasonable and humane approach? Why should the mother country be the example of meanness in this matter? I strongly urge that this amendment be supported.

Lord Simon of Glaisdale

My Lords, your Lordships have heard my noble and learned friend Lord Ackner introduce this amendment with exemplary clarity, lucidity and force. He has since been supported by great expertise and experience. I hope that my noble and learned friend will not take it amiss if I earnestly hope that he will deal with each of the arguments put forward, especially that of my noble and learned friend Lord Ackner, and his comparison with the pension treatment of Members of Parliament, and that of my noble and learned friend Lord Taylor of Gosforth who dealt with the treatment of Canadian judges.

I intervene only in order to draw the comparison between the way it appears to the Government, particularly the Treasury, and the Chancellor of the Exchequer and the Lord Chancellor, in 1958–59. The Lord Chancellor was Lord Kilmuir, a stalwart defender of the judiciary both individually and collectively. The Chancellor of the Exchequer was Mr. Heathcoat-Amory whose background was agricul-ture, industry and banking. In addition to that wide experience he had an instinctive feeling for the constitution. He saw at once that if a judge suffered a disablement in his first year it was intolerable that he should be relegated to one-thirtieth of his salary and that if he died his widow should be relegated to one-sixtieth.

That compares rather favourably with the one-eightieth proposed in the Bill. Mr. Heathcoat-Amory saw at once that a society which treated its judges and its judges' widows in that way did not deserve a judiciary worth the name. That was a little beginning.

The way it worked out very quickly is illuminating, because two greatly loved and much respected judges were both stricken early in their careers: Mr. Justice Pritchard by a stroke and Mr. Justice Gerard by a heart attack. They were not ever to resume their places on the Bench but at any rate enjoyed a modest pension which enabled them to live in London and give very valuable service on the Council of Legal Education. They did not spare themselves. They were able to do that and, although they never spoke of it, I do not doubt that one of the reasons they never spared themselves was the reflection that if their exertions caused premature death, at least their widows would not be reduced to penury. I ask your Lordships to look on that picture and on this.

Lord Campbell of Alloway

My Lords, on the last occasion I supported the noble and learned Lords on the Cross Benches in their amendment but today I have considerable difficulty in supporting Amendments Nos. 2 and 3, to which I may speak under Clause 2 of the Bill. Basically, I waited to hear all that was said, but I remain unconvinced, having seen the actuarial tables and tried to assimilate them —I am not very good at figures but I tried—and having seen the effect of the amendments proposed by my noble and learned friend the Lord Chancellor. At the moment, subject to what else may be said in your Lordships' House, I would find it difficult to support Amendments Nos. 2 and 3 today. Those are under Clause 2 of the Bill concerned with entitlement to a pension.

I would speak also to Amendment No. 25 to Clause 5 of the Bill, the surviving spouse's pension. Also, inevitably, in taking the stance that I am taking, one has to speak to Amendments Nos. 7, 8, 9 and 10 to Clause 3 concerned with the appropriate annual rate. All those amendments, in one form or another, are designed to retain the existing accrual period for pension of 15 years—

Lord Ackner

My Lords, would my noble friend allow me to intervene?

Lord Campbell of Alloway

My Lords, of course: at any time.

Lord Ackner

My Lords, the accrual period has absolutely nothing to do with the amendment which I am proposing. The amendment I am proposing relates purely to sickness and to death resulting from sickness. The age of 65 has been put there on the basis that the accrual period remains as this Committee decided—20 years—and the retiring age too. That is why the grouping in no way touches on that clause.

Lord Campbell of Alloway

My Lords, I hear what my noble and learned friend says and I am grateful for his intervention. But in any event, irrespective of the point on which he seeks to correct me, one has to consider this matter, on any showing, in the light of the amendments which have been tabled in the name of my noble and learned friend the Lord Chancellor and which have affected, if I may say so quite quietly from these Back Benches, my mind. They give the reason why I am perhaps changing my stance, not that I always support the Government —noble Lords in this House know that I do not invariably do so—but that I think it is fair and reasonable on this occasion to do so.

Amendment No. 5 refers to enhancement for ill health: that is Clause 2. That is all part of this group. There is Amendment No. 21, death after retirement—for surviving spouses the enhancement. That is on Clause 4 in a subsequent grouping. I am not going into detail but just outlining the position which has led me to the conclusions that I am tentatively putting forward. There are Amendments Nos. 26 to 32 to Clause 6: the special widening of scope for the children. That is a subsequent grouping. There is the question of the pension, irrespective of remarriage and irrespective of the marital status of the children: a very substantial concession, as I see it.

Finally, there is the group on Clause 10: Amendments Nos. 35 to 44, 46, 53 and 54 relating to additional voluntary contributions up to the revenue limit. As all your Lordships know, and particularly noble and learned Lords, I know nothing whatever about tax affairs. However, I have made inquiries and I am told that, since the Report stage, the Lord Chancellor's Department has made a very satisfactory arrangement with the Revenue which did not exist before to cover the basis of these amendments. If I am wrong, perhaps the noble and learned Lord the Lord Chancellor will say so. I find these matters confusing and it is possible that I may have got this wrong. But I have to balance those advantages against what has been said, and indeed against what any other noble Lord will say, because inevitably I shall have an open mind until the end of this debate.

At the moment it seems that there is absolutely no point—I think the noble and learned Lord, Lord Ackner, is with me on this—in discussing further the question of the extension of the accrual period and there is absolutely no point in discussing the reduction of the retiring age. These matters have been decided by your Lordships whether we like the result or whether we do not. That is all spate water under the bridge. Without reopening the debate, therefore, I seek to look again at the aspects of the public interest—the very same aspects which were debated at Report stage when there was a Division and I supported the amendment—but without repetition of any of those aspects. I merely noted and read again in Hansard at cols. 1066 and 1067 that my noble and learned friend the Lord Chancellor referred to certain proposals that he would introduce, and those are the proposals which appear in the amendments which he has tabled today.

I have sought to assimilate the paper which has been placed in the Library by my noble and learned friend the Lord Chancellor, with its tables and comparative figures as between the new scheme under the Bill and the existing scheme which has been prepared with the assistance of the Government Actuary. I find it a very difficult document. However, doing my best and searching the tables with some care, I have found that it shows both advantages and disadvantages to the proposed new scheme as compared with the existing pension scheme.

Having studied these comparisons and having had the opportunity to consider the tables produced by the Government Actuary, I am no longer able to feel, as I did feel on Report, about the proposed new scheme as now put before your Lordships' House. I no longer feel that it is assuredly so that persons suitable to serve on the High Court or circuit bench may be discouraged. This may be established. I can no longer accept that the quality of justice will be substantially reduced. I can no longer accept—I am open to correction on any suggestion from any noble Lord if I am wrong—that these proposals will operate in any way contrary to the public interest, which is the only interest with which all noble Lords are concerned today. In these circumstances I find it difficult to support these amendments because I am not convinced that they will have this serious disadvantageous effect upon the public interest.

I always welcome the delightful way in which my noble and learned friend Lord Rawlinson of Ewell puts any case, and I totally understand the charming way in which he put the case against lawyers. We cannot dismiss that. After Report stage it was said to me, "You are one of these lawyers. What are you all doing pay bargaining in the House? The nurses and the doctors cannot pay bargain. What are all you lawyers doing conducting pay negotiations on the Floor of the House, taking up so much time when we have so much else to do? It is all lawyers speaking in lawyers' interests." I can say until I am blue in the face that we are not debating in our own interests—we are debating in the public interest, but nobody believes it. I must simply accept that that is so. It is very unfortunate, but one just accepts life as it is. It is very difficult because, once formed, the impressions made in your Lordships' House are very often not so easy to dispel.

As we enter a period of measures of financial constraint, although these matters will take root effectively some 15 years ahead, surely what really matters is what my noble and learned friend Lord Rawlinson said—that there should be fair pension provision for the judges. As far as I can see at the moment, it would be difficult to contend that the proposed new pension scheme, with the amendments that have been tabled by the noble and learned Lord the Lord Chancellor, could be said to be unfair or unreasonable if one takes into account the balance of advantage and disadvantage in the actuarial tables as compared with the existing scheme. If I have done my sums wrong, perhaps noble Lords will forgive me, but I have at least done them in good faith.

I would find it difficult to contend that the public interest would be substantially affected one way or another. For those reasons, therefore, although I accept that the noble and learned Lords' amendments are sincerely motivated and have been properly put forward in the interests of that which they feel that it is totally right to support, as presently advised I cannot support them in your Lordships' House tonight.

7 p.m.

Viscount Bledisloe

My Lords, in the light of the various things which the noble Lord, Lord Campbell of Alloway, finds himself unable to accept, I venture to suggest that it may be useful to your Lordships to hear a voice from the practising Bar where real life is really lived. In my humble belief, this House is being asked to consider this matter without real regard to the true position.

In Committee, I suggested that people were becoming increasingly reluctant to accept judicial appointment and that the various changes for the worse contained in the Bill would enhance that reluctance. At that time, that seemed to be dismissed as being unreal, alarmist and lacking evidence. Since then, we have had dramatic proof that what I said about the increasing reluctance to accept judicial appointment is, in fact, so. Since 1st October this year, there have been two vacancies in the complement of six judges required for the commercial court. In short, that has caused chaos and has moved the learned judge in charge of that list to say that the very basis of the listing system of the commercial court has been seriously undermined. That is not a matter to be lightly dismissed.

The commercial court—its success and proper operation—is a vital part of the commercial life of this country and of the invisible earnings of the City. I am reliably informed that one of the reasons why those two vacancies remain unfilled is that the highly qualified persons who have been approached about accepting the vacancies have declined to do so. I am not saying that that reluctance is merely because they now have to start serving younger and to serve for longer in order to get their pensions, nor am I saying that it is merely because if they die young in office their dependants will receive only the miserable pittance that the noble and learned Lord is offering.

However, what I do say—and say with some force and from a real knowledge of how the potential candidates whom the noble and learned Lord or his successor will be approaching in the next few years really feel—is that each step which is taken or allowed by the noble and learned Lord which renders the Bench less attractive will make people more and more reluctant to accept appointment. The gloomy prognosis that I gave last time, has, in my view, been proved conclusively by the noble and learned Lord's inability to fill those vital places in the commercial court.

Lord Thomas of Gwydir

My Lords, I intend to restrict myself to the amendment that was moved by the noble and learned Lord, Lord Ackner, and to say that I entirely agree with the proposal and shall support it. I should like to point to the time, which is 10 past seven on a Thursday night. We have been restricted in time as a result of two very good Statements and we are therefore dealing with only the first of the major amendments tonight. It is important that we should consider these. I therefore intend to be very brief.

The proposal concerns the question of disability and death and the pension that is acquired on disability and death. I agree with the noble and learned Lord the Lord Chief Justice when he said that in the present situation, if a High Court judge were to have a stroke in his first year and was unable to carry on, he would be entitled today to half his pension. In other words, he would be entitled to about £20,000 pension. If he died shortly afterwards as a result of that stroke in his first year, his widow today would receive a pension of approximately £10,000. If the Bill is enacted, a High Court judge who has a stroke in his first year, would be entitled to a pension of £4,000 and his widow, if he died thereafter, to a pension of £1,000. The Lord Chief Justice said that that was shameful and I agree with him. I cannot follow my noble friend who said that, having gone into the matter, he thought that it was fair. I think it is most unfair and I support the proposal.

7.15 p.m.

The Lord Chancellor

My Lords, perhaps I should begin by saying that I propose to move Amendment No. 5, the result of which will be to make considerably different and better provisions than my noble friend Lord Thomas of Gwydir has in mind. In his earlier remarks my noble and learned friend the Lord Chief Justice referred to the situation under the Bill as unamended. I have recognised that and have made a change. The change that I propose in my amendment is to allow half of the service up to the age of 65 as an increment which will be the basis of the lump sum and pension. The result of that is a considerable improvement on what was previously in the Bill and it leads to a variety of situations which are shown in the tables to which attention has been drawn.

I must say, first of all—this has a particular bearing on what the noble Lord, Lord Benson, said—that the Bill endeavours to propose a pension scheme for the whole of the judiciary. In the present situation there are a number of different schemes for different parts of the judiciary. One of the consequences of that, of which I am sure my noble and learned friends who have spoken are aware, is that when a circuit judge, for example, is promoted to the High Court he is at a disadvantage in respect of the service which he gave on the Circuit Bench. One of my objectives in putting forward the Bill is to produce a scheme of judicial pensions that operate at all levels on the same principles; namely, by reference to the salary that the judge earns in the last year of his or her service. One of the reasons to which the noble Lord, Lord Benson, referred for querying this scheme was the fact that it produces some improvements as regards the district judges and so on. One must take account of all of those together in the arrangements.

As I said, I have recognised the need to improve the scheme in the way that I have just described and, assuming that the amendment were to fail, I shall move Amendment No. 5 to put in place that provision. As the scheme was prepared, it allowed a uniform accrual over the period of 20 years. The primary reason for that, as I have often explained, is in order that the scheme should have the benefit of being tax approved and therefore that tax benefit would accrue in respect of both the contributions and the lump sum.

I have therefore proposed that the scheme should be changed to provide for enhancement in respect of benefits which arise as a result of ill health or death. The figures to which reference has been made include some improvements over the present scheme in respect of the High Court Bench, for example, in relation to the lump sum. However, I do not believe that it is fair to look at the matter purely from the point of view of one part of the judiciary. One must look at the scheme as a whole.

As my noble and learned friend Lord Ackner said, it is true that Members of Parliament have a scheme under which, if they fall ill, they receive benefits on the basis of service up to the age of 65. However, on the other hand, Members of Parliament have an annual accrual rate which is less than the judges' annual accrual rate. If one looks at this matter overall, the judges receive better benefit on ill health than do Members of Parliament.

My noble and learned friend the Lord Chief Justice referred to Canada. The system here is very different from that in Canada and the amendment does not seek to emulate the situation in Canada. I believe that to make effective accrual up to 65 and divide it by 50 per cent.—that is to say, to take 50 per cent. of the service that would be credited up to 65—is an appropriate way of dealing with the matter and, in particular, it considerably enhances the benefits for the people who take up appointments young. The younger the person is appointed and the earlier the ill health falls, the greater is the effect of the enhancement. I believe that that is a fair method of proceeding.

The noble Viscount, Lord Bledisloe, indicated that he thought it was a difficulty as regards remuneration that prevented appointments being intimated in the commercial court. I am not sure of the precise basis of that information, but I certainly believe that I shall have distinguished appointments to the commercial court in early course. In the nature of things, those who have a busy practice in the commercial court often have substantial commitments. It is therefore difficult for them to be available as quickly as practitioners with less lengthy cases to handle. However, I can assure the noble Viscount that I certainly have the interests of the commercial court clearly in mind and that I expect to be in a position to advise on the appointment of distinguished members of the Bar who will fill those vacancies when commitments enable that to happen.

Viscount Bledisloe

My Lords, before the noble and learned Lord leaves the subject, can he please tell me, "yea or nay", whether or not it is correct that certain persons whom he has approached to accept that office have in fact declined to do so?

The Lord Chancellor

My Lords, it is correct that, from time to time, I have approached people who have had particular circumstances in a situation which have made it impossible for them to accept appointment at the time. However, in my experience, the number of such people is very small. Moreover, in none of the cases that I have in mind was the question of remuneration, pension or anything of that kind the reason for the refusal. The reasons were described to me in detail and they related to the particular situation. Therefore, I do not think that I should go into any great detail on the matter. I am certainly quite clear in my own mind that the only reasons that have ever been advanced to me for anyone not accepting a proffered appointment to the High Court Bench have been personal circumstances relating to a present situation. In quite a number of those cases the personal circumstances have changed in relatively early course.

Lord Ackner

My Lords, I have four distinct and different points to make in reply which I shall make very quickly. The noble Lord, Lord Benson, indicated that if the amendment of my noble and learned friend (Amendment No. 5, in regard to which we have tables) is put into effect, there will be certain cases where High Court judges and circuit judges will be worse off than they are at present. It may be interesting for your Lordships to listen to what was said 33 years ago when the Judicial Pensions Bill 1959 was moved in Committee in another place by the right honourable Sir Harry Hylton-Foster. While talking about the proposal which now exists, he said: The figure of one quarter"— which is one quarter of the salary or one half of the pension— was arrived at because it was felt that, in the case of a judge of the High Court retiring in a period under five years owing to infirmity, which is the circumstance this subsection envisages, it would be wrong to cast him off, in effect, with a pension of less than one quarter of his last annual salary … It was felt that to treat high officers of our judiciary who were stricken and forced to retire in these circumstances, through no fault of their own less generously than that would seem to show we put altogether too low a value on our judiciary generally".—[Official Report, Commons, 3/12/59; cols. 1457–8]. That is precisely what my noble and learned friend The Lord Chancellor proposes to do under his amendment in regard to those cases focused upon by the noble Lord, Lord Benson.

I turn now to my second point. I can assist the noble Lord in regard to Canada by adding several examples. The first is in Australia. In Queensland, the judge who goes sick in the first five years receives 75 per cent. of his pension with 5 per cent. per annum for the next five years. The figure of 60 per cent. applies elsewhere in Australia. In the United States the percentage is 100 per cent., while in New Zealand it is 50 per cent. of the salary. All of them are substantially higher.

My third point relates to the intervention of the noble Lord, Lord Campbell of Alloway, who sought to stress the generous provisions that we shall debate at a later stage. Perhaps I may remind him of the statement on page iii of the Explanatory and Financial Memorandum concerning the financial effects of the Bill which has not been updated in any way. It reads as follows: The difference in cost between the existing arrangements and the new arrangements will take some years to emerge, but the effect on public expenditure is expected to be broadly neutral". I think that the noble Lord, Lord Campbell has also overlooked the reference made in past debates to Table 7 on page 60 of the latest report of the TSRB which indicates that the cost to the Treasury per year for the pension of a High Court judge is about £25,000. If the judge has now to work five years longer, then, in regard to a judge who would have retired after 15 years, the Treasury is saving a little over £30,000 in respect of those years.

Finally, I do not understand—and I am sure, with great humility, that it is my fault—the answer which my noble and learned friend the Lord Chancellor gave in relation to the comparison with Members of Parliament. Of course, the accrual period is different for Members of Parliament. They do not arrive as MPs with an average minimum age of 50-plus. That is why the accrual period is different. It has been common ground throughout our debates that judges are sui generis: unlike their opposite numbers in Europe, they do not arrive on the judicial scene in their early 20s; indeed, it is almost at the end of the average person's working life that they take up the judicial position.

Perseverance keeps honour bright. I do not intend to withdraw the amendment.

7.27 p.m.

On Question, Whether the said amendment (No. 2) shall be agreed to?

^*Their Lordships divided: Contents, 35; Not-Contents, 60.

Division No. 1
CONTENTS
Ackner, L.	Mallalieu, B.
Annan, L.	Meston, L.
Archer of Sandwell, L.	Perry of Walton, L.
Avebury, L.	Pitt of Hampstead, L.
Benson, L. [Teller.]	Rawlinson of Ewell, L.
Bledisloe, V.	Rea, L.
Brandon of Oakbrook, L.[Teller.]	Redesdale, L.
	Richard, L.
Brightman, L.	Russell, E.
Carter, L.	Seear, B.
Clinton-Davis, L.	Simon of Glaisdale, L.
Darcy (de Knayth), B.	Taylor of Blackburn, L.
Dormand of Easington, L.	Taylor of Gosforth, L.
Graham of Edmonton, L.	Thomas of Gwydir, L.
Harris of Greenwich, L.	Turner of Camden, B.
Hylton-Foster, B.	Wigoder, L.
Jeger, B.	Wilberforce, L.
Lockwood, B.	Williams of Mostyn, L.
NOT-CONTENTS
Archer of Weston-Super-Mare, L.	Chalker, B.
	Chilver, L.
Arran, E.	Clanwilliam, E.
Blyth, L.	Clark of Kempston, L
Boyd-Carpenter, L.	Cochrane of Cults, L.
Brougham and Vaux, L.	Coleraine, L.
Cadman, L.	Colwyn, L.
Caithness, E.	Cranborne, V.
Campbell of Alloway, L.	Cumberlege, B.
Carnegy of Lour, B.	Denton of Wakefield, B.
Carnock, L.	Elton, L.

Ferrers, E.	Mountevans, L.
Fraser of Carmyllie, L.	Moyne, L.
Glenarthur, L.	Northbrook, L.
Goschen, V.	Orkney, E.
Hacking, L.	Parkinson, L.
Haslam, L.	Peyton of Yeovil, L.
Hayhoe, L.	Reay, L.
Henderson of Brompton, L.	Rodger of EarlsFerry, L.
Henley, L.	St. Davids, V.
Hesketh, L. [Teller.]	Shrewsbury, E.
HolmPatrick, L.	Skelmersdale, L.
Howe, E.	Strathclyde, L.
Lane of Horsell, L.	Strathmore and Kinghorne, E.[Teller.]
Long, V.
Lucas of Chilworth, L.	Swinfen, L.
Mackay of Clashfern, L.	Tonypandy, V.
Merrivale, L.	Trumpington, B.
Mersey, V.	Ullswater, V.
Monk Bretton, L.	Vaux of Harrowden, L.
Moore of Lower Marsh, L.	Wade of Chorlton, L.

Resolved in the negative and amendment disagreed to accordingly.

[Amendments Nos. 3 and 4 not moved.]

7.35 p.m.

The Lord Chancellor moved Amendment No. 5:

Page 4, line 27, at end insert: ("() in any case falling within subsection (3) above where, at the date of the retirement, the person has not attained the age of 65, the aggregate length of his period of service shall be increased by the addition of a period equal in length to one half of that which—

1. (i) begins immediately after the date of the retirement; and
2. (ii) ends with the day on which he would attain the age of 65;").

The noble and learned Lord said: My Lords, I explained the effect of this amendment in response to Amendment No. 2, and I have no need to detain your Lordships. I beg to move.

On Question, amendment agreed to.

[Amendment No. 6 not moved.]

Lord Ackner

My Lords, before I move Amendment No. 7, I should like to ask for clarification. I understood that we were adjourning for one hour, and that that was to be at 7 o'clock. We have of course passed 7 o'clock. I merely want elucidation as to whether this is a non-stop event or whether we shall have one hour for some form of nourishment. Can someone tell us that, because if the programme has been changed, it has not been announced.

Viscount St. Davids

My Lords, we are going straight through.

Lord Ackner

My Lords, it is nice to know. I thank the noble Viscount.

Clause 3 [The appropriate annual rate]:

Lord Ackner moved Amendment No. 7:

Page 4, line 43, at beginning insert ("Subject to subsection (1A) below")

The noble and learned Lord said: My Lords, the amendment arises in these circumstances: the first judicial pensions Act in 1799 provided that the period which the senior judges had to serve before earning their pensions was 15 years. That accrual period has remained the same since, and was applied to county court and circuit judges when their judicial offices were created. After 200 years, that provision has been set aside as a result of the failure of the amendment which was urged and divided upon on Report. Thus, hitherto, unlike our counterparts on the Continent, we have been treated as sui generis, but now it is said that that should no longer be the case.

As your Lordships will remember, it was on 27th October that the attempt was made to reinstate the 15-year period, and the House was specifically invited to support the amendment not in the interests of future judges, but in the public interest, because it was considered by those who moved the amendment that the quality of justice resulting from the calibre of judges who administer it would be diminished by the requirement that they should work on for 20 years.

The amendment, which was lost as I indicated, was of an unusual character. It was supported by the former Lord Chancellor; the former Lord Chief Justice; the present Lord Chief Justice; the former Master of the Rolls; 10 Law Lords, and two former Law Officers.

In his reply, my noble and learned friend the Lord Chancellor took as the first important point to be borne in mind that the judiciary have an opportunity when in practice, so far as concerns the tax law, to make provision for their retirement with tax advantage".—[Official Report, 27/10/92; cols. 1065–1066.] That is what is known as the retained benefits argument which earlier in the debate had been described as a red herring for four specific reasons particularised in Hansard at cols. 1059–1060.

Those four reasons could be summarised as follows. First, that the retained benefits rule (which is not in primary legislation, as I understand it, but is Inland Revenue practice) is applied to employees who, throughout their career, are in pensionable employ-ment. As they go up in the world in their employment or if they change their employment, their pension benefits have to be taken into account. That is contrary to the position of the self-employed lawyer who may or may not make pensions provision, may or may not invest any surplus he has in realty or somewhere else, or may not have the wherewithal to make any provision at all.

A further matter was pointed out that for years—certainly for the past about 40 years—where there have been tax advantages in making pension provisions, the retained benefits have never been sought by the Inland Revenue to be the subject matter of what should be taken into account.

It was suggested in the debate that there was a good reason in reality for that because if one said to the high flyers who had been able to save substantial pension benefits, "These must be taken into account in relation to any benefit which you earn as a judge", they would say, no doubt politely, but in substance, "Thank you for nothing. I shall remain at the Bar where my pension benefit will be better anyhow than I can obtain from becoming a judge". On the other hand, there would be those who have no retained benefits, and the Inland Revenue practice which it is now sought to apply to them would be quite irrelevant.

Those, in substance, were the reasons given for saying that retained benefits as an argument for supporting the rather mean treatment afforded to the judge were irrelevant.

During the debate on this amendment, particular anxiety was expressed by my noble and learned friend the Lord Chief Justice for the position of circuit judges who in future were likely to be appointed at under 50 years of age. Because of school fees, mortgages and other expenses, they were unlikely to have made any or any adequate pension provision before retirement. Your Lordships may remember that I specifically asked my noble and learned friend the Lord Chancellor, at an early stage in the debate on Report, whether, under the new system, with the obligation to work 20 years and to retire at 70, it was likely that judges would in future be appointed earlier. He indicated that it could well be the case.

That is particularly relevant to the circuit judge because, as I have indicated to your Lordships, he is far less likely to be able to afford any retained benefits with the ordinary expenses of education and mortgages with which he has to cope. It is particularly the case when the House bears in mind that a high proportion of the income of those barristers who accept the appointment as a circuit judge emanates from legal aid, where we all know that fees are being kept heavily down, or from publicly funded work, prosecutions work, where again the difference between fees earned from that source and fees earned from the privately funded part of the Bar are quite different.

The importance of the circuit Bench was recognised specifically by my noble and learned friend the Lord Chancellor in the reference which is to be found in the penultimate report of the Top Salaries Review Body's last report at page 15. My noble and learned friend the Lord Chancellor expressed himself in these terms: The circuit Bench is the mainstay of the judiciary into which it is vital to attract enough lawyers of the right calibre". Your Lordships may have seen a letter in The Times today signed by the president of Her Majesty's Council of Circuit Judges and the treasurer of that organisation. I was sent a photostat copy of the letter as sent to The Times by the council some days ago. The letter which was published is a much bowdlerized version of what was sent. I wish to quote the last paragraph of the letter as sent but which was not published, because it is particularly relevant to what we are now debating. This is how the letter ended, as sent to The Times for publication but not published: Circuit judges preside over the majority of both criminal and civil trials and their jurisdiction has been very substantially extended in the recent past. If, as we expect, there is a decline in the quality of the circuit Bench, its effects will be slow and insidious and difficult to measure. But when the effects upon which the quality of the administration of justice are felt, it will take many years to remedy the situation".

I stress the position of the circuit Bench because it is to them that this amendment is directed in essence.

What the amendment seeks to do is this: we lost the debate on the application of the 20-year new accrual rule. We lost it certainly for the reason first put forward by my noble and learned friend the Lord Chancellor because of the retained benefits advantage which he stressed that he had triumphantly achieved. That justification for the 20-year rule disappears if the option is given to a judge to say, "I will give up the pensionable equivalent of my retained benefit, provided I can return to the status quo. The suggestion that I must conform to the general tax law is really, in my respectful submission, the lightest of weight." The requirement for that conformity has not been made over the past 200 years.

My noble and learned friend the Lord Chancellor has on a number of occasions accepted that the judges are sui generis. The 15 year rule which has lasted over that time is not an idiosyncratic English rule. In America it is 50 per cent. less at 10 years. It is the same in Australia and in Canada. However, to be frank, I must admit that in New Zealand it is, at 16 years, one year more than our current 15 years. But the judges achieve the advantage which I am sure we all wish to achieve today; that is, a New Zealand judge receives as a pension not one-half of his salary but two-thirds, and it is tax free.

Therefore, the suggestion that there is a need for conformity is essentially a revenue-driven concept, which has no justification in history or in reality. The only justification provided is the retained benefits, and that is why I urge that those who have no retained benefits or no significant retained benefits should have the option to say, "I will give credit for the pensionable equivalent of any retained benefit that I have achieved but in exchange I should be entitled to return to the status quo and serve out 15 years, and not be obliged to serve out 20 years to gain my pension". I beg to move.

Lord Williams of Mostyn

My Lords, I speak to support this amendment. I support the thrust of the subsequent amendments which stand in the name of the noble and learned Lord, Lord Ackner, although I do not intend to speak to them. I begin with the simple proposition that the quality of the higher judiciary in this country is extremely high in terms of intellectual quality and rigour, political independence and financial incorruptibility. Those are not benefits that many countries enjoy.

I hope I may cast a few brief thoughts about recent history, although not the years 1933, 1953 or even 1963. I shall mention half a dozen instances that seem to me to matter. At Hillsborough there was a dreadful disaster. There was public concern. The present Lord Chief Justice was invited to report on that disaster. A large bank, BCCI, collapsed amid allegations of fraud, significant wrongdoing and inaction or negligence in high places in this country. Lord Justice Bingham was required to investigate that matter.

Further, the prisons exploded. Who was chosen to conduct an inquiry? That was Lord Justice Woolf. This week there have been suggestions of profound wrongdoing and Lord Justice Scott is to investigate that matter. Those matters are all being investigated or have been investigated at the request of the Government. The judge who quashed the certificates of public interest immunity was a circuit judge, Judge Smedley. Finally, when it was proposed to close down most of the mining industry in this country without five minutes' consultation, the National Union of Mineworkers and the Union of Democratic Mineworkers—each of which detests the other with a vigour rarely encountered—both curiously found themselves at the same destination: the Royal Courts of Justice. I give those recent illustrations because they demonstrate a significant point—that the quality of the judiciary in this country is extraordinarily high. It is brought to that state of quality by an infinite variety of subtle mechanisms.

The noble Lord, Lord Campbell of Alloway, spoke of lawyers and pay bargaining. This matter has nothing to do with pay bargaining of any kind. I must declare a pure disinterest in judicial pensions. The matter we are discussing is not pay bargaining and it is not a form of esoteric outdoor relief for elderly judges. We are discussing why judges become judges and why the quality of judges in this country is so high.

I suggest the reason the quality of judges in this country is high and the reason why our judges are not corrupt in any way, politically or financially, is because they regard judicial office as honourable, fulfilling and wanted by them. If we want the best, we ought to attend to that. I believe I am the junior of your Lordships present here this evening. In that position of juniority and innocence I listened to what the noble and learned Lord the Lord Chief Justice said on Report. I also listened to what was said by the former Master of the Rolls, the noble and learned Lord, Lord Donaldson of Lymington. Those were powerful speeches and they won the argument. The noble and learned Lord, Lord Ackner, said he had lost the debate on that occasion. The debate was not lost but the vote may have been.

I am not here as part of any lawyers' benevolent fund or to support the judges in all they do, but it is not in the public interest to have someone who has served as a first instance judge for 15 years clinging on to judicial office with whitened knuckles just for the pension. I hope noble Lords will forgive my levity at this time of night but we should fire judges when we see the whiteness of their knuckles. There is no useful purpose in making a judge sit on after 15 years simply for the pension. This amendment offers an alternative. After 15 years of lonely, highly stressed work, one ought to have the opportunity to say, "I have given of my best. It is time for me to go". That is the true public interest aspect of this matter, not whether or not high earning lawyers can be seduced from the Bar or from the City firms of solicitors in due time.

A judge's job is lonely, not in terms of social isolation although that is true in part, but the true loneliness lies in the absolute nature of the power that is wielded, often subject to no appeal. If a judge says in his conscience and in his heart, "15 years has been enough for me", then it has been enough for the public whose interest he serves.

Lord Taylor of Gosforth

My Lords, throughout the debates we have had on the various clauses at the various stages of this Bill my noble and learned friend the Lord Chancellor has prayed in aid in each instance the retained benefits as the balancing factor for all the disadvantages to the judges that are contained in this Bill. They have been his panacea for all the unfairnesses and meannesses to which attention has been drawn, clause by clause. In particular, the retained benefits have been the answer, and the only answer, to extending the accrual period from 15 to 20 years.

I and almost every other speaker, judicial and non-judicial, in your Lordships' House, have consistently argued that there are likely to be many judges, especially circuit judges, who will not have been able to store up any significant provision for retirement while practising in the legal profession. This is because they may not have been high flyers with huge earnings and because the years immediately prior to their appointment to the Bench are expensive years as they have to educate their children and meet mortgage payments and other family expenses.

This proposed option puts the argument of my noble and learned friend about the retained benefits to the test. In cases where he is right in assuming that there will be significant retained benefits, the judge in question will not wish to forgo them and will fall in with the Government's proposed scheme and its 20-year accrual period and take that option. However, where there are no significant retained benefits, and since they are the only answer given to our criticism of the government scheme, it would only be just to allow the judge to opt for 15 years and no retained benefits.

If the amendment is opposed by my noble and learned friend on the Woolsack it can only be because he fears that retained benefits may not be the panacea that his argument has assumed. I support the amendment.

8 p.m.

Lord Coleraine

My Lords, I was glad to hear the noble Lord, Lord Williams of Mostyn, say that he disagreed with the noble and learned Lord, Lord Ackner, and that the noble and learned Lord had not lost the debate on the accrual period when the matter was before us on Report. Against the advice of my noble and learned friend I supported the noble and learned Lords on the Cross-Benches on that occasion. We were defeated by five votes. I thought then, as I think now, that that should have been the end of the matter, but the noble and learned Lord, Lord Ackner, I am sure quite rightly, has brought before us an ingenious variation on the accrual amendment. It is that variation which worries me.

It seems to me that the arguments which the noble and learned Lord put forward work very well when one considers the case of a hardworking barrister considering preferment to the Bench who has mortgage and education expenses to bear. There are other cases where they work less well. The hardworking barrister who earns less but who has managed to scrape funds together to make proper provision for his retirement will be relatively disadvantaged if the amendment is agreed. On the other hand, no doubt there will be barristers with very high earnings who have wasted their substance and who will not have put money aside for their pensions. It is they who will achieve relative advantage under the amendment. That is the first point on which I feel the amendment fails.

The second point is a simple one of economics. Barristers aspiring to the Bench would be presented with financial distortions which would influence their decisions as to how they invested their money. That also goes against the amendment. I hope that when he has considered all the arguments the noble and learned Lord will not see fit to press the amendment to a Division.

Lord Wigoder

My Lords, when I first read the amendment tabled by the noble and learned Lord, Lord Ackner, I took the view that it was an ingenious device to circumvent the rules of procedure of your Lordships' House to allow us to have a re-run of the debate on the 15 or 20-year accrual period. Having listened to the speeches this evening I am now convinced that that view was entirely wrong and that what the noble and learned Lord, Lord Ackner, has put forward this evening is a substantially new proposition. It seems to me to have a great deal in its favour and to be an honourable compromise between the positions that have been taken up so far. I hope that the noble and learned Lord on the Woolsack will consider it in that spirit.

Lord Elton

My Lords, as a fascinated interloper I intervene on a very narrow point. If my noble friend Lord Coleraine is right and this is an ingenious device to address an issue already decided by this House, that is surely not something which this House would readily do because, having decided an issue, we leave it behind us. If it is, on the other hand, an entirely new departure introduced to the House for the first time at Third Reading I should have thought that equally that was something that we do not do. I merely make that remark from the touchline, and we shall see how matters develop in the next debate and whether it will be the same.

Lord Benson

My Lords, I am a little reluctant to speak because I get the impression that your Lordships are getting a little tired. However, the noble Lord, Lord Campbell of Alloway, made a long and penetrating analysis of tables which had come into his possession and arrived at conclusions so astonishing that I ought to put the facts before the House so that your Lordships know what the facts are.

On this issue the tables show that if a High Court judge or a circuit judge is appointed at 46 years of age, or after, and retires at 65, or if a High Court or circuit judge is appointed at 51 years of age or after and retires at 70, he will receive a materially smaller pension than he would under the existing scheme which was settled 11 years ago and was at that time thought to be fair. I do not know why it is now thought to be unfair. That materially smaller pension affects not only the judge himself; it affects in an equally unattractive way the spouse's pension and the children's pension. The reductions are substantial.

I take the tables which I have seen, which may be different from those which were used by the noble Lord, Lord Campbell of Alloway. The very first item on the schedule relates to a High Court judge who is appointed at the age of 40 and retires on pension. Under the existing scheme, settled 11 years ago and which is already out of date, he would receive £87,620 as a lump sum and a pension of £43,810. Under the scheme now proposed in the Bill before the House, the lump sum is reduced by £14,000 to £73,000. The annual pension is reduced by £11,000 from £43,000 to £32,000.

That cannot be right. The decision to reduce the pensions payable to judges in 20 years' time to a figure significantly lower than pensions fixed 11 years ago by a scheme which is now out of date seems to me totally inexcusable. I cannot see any argument in favour. I have not heard any argument in favour. I did not think that the noble Lord, Lord Campbell of Alloway, made a convincing case.

That reduction is in no way compensated for by increased lump sums. The contrary is the case. The lump sums to be paid out are lower. I have just given an example. It would be shameful for Parliament to pass a Bill which is so transparently unfair.

I again draw attention to the position of district judges and stipendiary magistrates. Those two classes of the judiciary are treated quite differently. In their case the pensions on retirement are not reduced at all. Moreover, some of the risk benefits payable to them are substantially increased whereas some of the risk payments payable to High Court and circuit judges are reduced. It is very difficult to understand why the High Court judges are discriminated against, particularly as they carry higher responsibility. Why have they been subjected to that humiliating position?

The noble and learned Lord the Lord Chancellor made the point that we must look at the judiciary as a whole. I agree. That is exactly what I am doing. I am pointing out to him that looking at the judiciary as a whole the High Court Judges and the Circuit judges are always discriminated against. That is what happens when one considers all of the members of the judiciary covered by the Bill.

I ask also that we should look at the common sense of the situation. The judges affected by the Bill have not yet been appointed, but when they are, it will have to be explained to them that in probably around the year 2010 they will be paid a pension which will be substantially lower than a pension scheme settled in 1981, which is already out of date. It means inevitably that the best candidates are unlikely to accept those conditions, particularly in view of the other unattractive situation which arises for judges, certainly for High Court judges, who have to go out on circuit for large parts of the year and who are locked into their position and cannot change. I draw attention again to the fact that the 1981 scheme is out of date.

We have looked at those figures, which are plain for the eye to see. They have not been seen by the House as a whole and not exposed to the public. When their deficiencies are exposed to the public, as I have attempted to do, they will be ashamed of the proposals on this subject made in the Bill.

Lord Ackner

My Lords, before my noble friend sits down, perhaps I may correct one point that he made. The 1981 Act was a consolidating Act. The present situation has been in force for 33 years and not 11 years, which I think somewhat strengthens the point he made.

8.15 p.m.

The Lord Chancellor

My Lords, I must start from what I believe is the fundamental proposition that the general tax law was changed in the provisions which were introduced in 1987 to allow tax approval only to those pension schemes which had a minimum 20-year accrual period. That means that tax alone would provide a disadvantage as regards more rapidly accruing schemes.

It is true that the Circuit Bench and the High Court Bench and above had a 15-year accrual period in the past. The lower judiciary did not. When looking for a scheme for the whole judiciary which is in conformity with the general tax law, it is inevitable that if people do not serve for the full accrual period there will be a disadvantage. But the fact is that the basic law having been changed in respect of taxation in 1987, the benefits of tax approval can only be received if there is a 20-year accrual period.

My noble and learned friend the Lord Chief Justice said that this tests out what I was saying about the retained benefits. But the retained benefits are by no means the whole story. There are two aspects to the matter. First, the general tax law requires that a tax approved scheme will not have an accrual period faster than 20 years as the general rule. That is fundamental. So far as concerns my noble and learned friend's amendment, if a judge opts for a 15-year accrual period, he will not have the benefit of tax relief in respect of that. It will not be an advantage to him. I submit that it will be much better for him to have the benefit of a tax approved scheme.

The general tax law is fundamental to that. I have said that the retained benefits have to be taken into account when considering other aspects of the scheme. It is in respect of those other aspects of the scheme that I have referred to the retained benefits, because the allowances of the retained benefits are in my view an important aspect of the scheme.

For example, the district judges in their response to the consultation paper that we put out said: We accept that continuing to leave retained benefits out of account confers an advantage on those joining a judicial pension scheme which may be of significant value to those who have actually made personal pension contributions before appointment to judicial office. We consider that any alteration in the current treatment of retained benefits could have a seriously adverse effect upon recruitment. We therefore welcome the proposal not to alter the existing position". Those are even more junior levels of the judiciary than the circuit judges. In their response to the consultation, they attach considerable value to the retained benefit provision.

The fundamental point in this amendment is that the 15-year accrual period for which my noble and learned friend asks will have to be subject to taxation. Perhaps I ought to point out what the absence of tax privileges would mean. There would be no tax relief on contributions to the scheme and the lump sum payable on retirement would be taxable. I believe that on that basis the amendment does not produce any benefit at all to the judiciary.

The scheme which is before your Lordships is a tax efficient scheme which enables any money put into it to be used in the most tax efficient way. Looking at particular aspects of the scheme over and above the accrual period, there is the additional fact that retained benefits have to be taken into account in a scheme that accrues as fast as this generally. Therefore, the particular situation of the judiciary, and the fact that beforehand they have an earlier career usually in private practice, is catered for by the allowance of the retained benefits, so that in their earlier employment and in respect of what they earned there, the tax benefit is available to them.

My noble friend Lord Coleraine explained how distorting it would be that those who had not taken advantage of that available tax relief would be in a position to get out of their public service a faster accrual than would others. After all, as regards remuneration for the public sector, surely one must give equal attention to all those who are in the same situation.

According to my information, the accrual rate in the new judicial scheme, which applies to all the judiciary, is about double the level applicable to most public service employees and, as I said earlier, about 50 per cent. more favourable than the provision applicable to Members of Parliament. Two-thirds of private sector employees who are members of occupational pension schemes are subject to an accrual rate of one-sixtieth; only 10 per cent. of private sector employees enjoy accrual rates higher than one-sixtieth and only a tiny minority have an accrual rate as high as one-thirty-fourth. In broad terms, the judicial pension arrangements are worth about twice the typical provision made for either public service or private sector schemes.

I should also mention—because it is important to deal with people who have not, for one reason or another, been able to take advantage of the arrangements for self-employed pension schemes—that by my amendments to Clause 10 and Schedule 3 there is the possibility of additional tax free contributions to increase their pension entitlement within revenue limits. That is a considerable improvement on what has been available so far. I believe that it covers the situation and enables another route to be taken by those who may not have taken full advantage of the tax benefits available on pension provisions when they were in private practice. Accordingly I cannot commend the amendment to your Lordships.

Viscount Bledisloe

My Lords, before the noble and learned Lord sits down, perhaps I may ask him to explain one matter which mystifies me. If this general tax rule of 20 years' accrual must apply to the judges, however curious it may be, and the noble and learned Lord said that it must apply to the whole of the judiciary, why is there one member of the judiciary to whom the rule does not apply? I refer to the noble and learned Lord himself and his successors. Why does the Lord Chancellor not have to serve for 20 years or else bring into account his retained benefits? Is it the noble and learned Lord's intention in due course to amend the legislation to produce that result?

The Lord Chancellor

My Lords, the Lord Chancellor, the Speaker of the House of Commons and the Prime Minister have arrangements under their particular Act for no accrual period. There is no rate of accrual. A day's service in the Lord Chancellor's Office entitles the Lord Chancellor to the Lord Chancellor's pension under the Lord Chancellor's Pension Act. Of course if the Lord Chancellor seeks to make use of service in other capacities as a judge to enhance that pension, then he is subject to the same rules as the remainder of the judiciary in respect of that. However, so far as concerns the Lord Chancellor, the provision is for that particular office. There is no accrual rate.

Viscount Bledisloe

My Lords, I am fully aware of that. If the general rule is appropriate for the whole judiciary, why is there one member of the judiciary for which it is not appropriate?

The Lord Chancellor

My Lords, it is hard to understand how one could apply a 20-year accrual. I do not believe that it is possible to apply the accrual rates to a system under which there is no accrual provision. I can understand that the general accrual rate provisions should apply to cases in which there is a rate of accrual. But I cannot see how such a rule can apply to special provisions in which there is no accrual.

Lord Ackner

My Lords, this may be a very ambitious beginning to my reply since, compared with the noble Lord, Lord Elton, I am a child in matters of procedure, if not in other matters too. However, I understand that he must have in mind the Companion to the Standing Orders 1989. Under the heading "Amendments on Third Reading" the penultimate paragraph states: It is considered undesirable that an issue which has been fully debated and decided upon at a previous stage of a Bill should be reopened by an amendment on Third Reading". As I understand it, in this case the procedure was that it was considered by the Public Bill Office as to whether or not the amendment raised a new issue. That office decided that it was certainly arguable. Accordingly, the Leader of the House was not asked for his view and the amendment was put down. I therefore believe that I am standing in a white sheet in that regard.

Quite apart from procedure, I should have thought that it follows as night follows day that when one puts up what is really a compromise, the compromise is the new issue. One is not re-litigating the same matter. One is trying to reach an agreement. In order that the noble Lord follows the point, the result of our amendment, if carried, would simply be this. Those who have retained benefits of any significance would have to work the 20 years. That is what my noble and learned friend the Lord Chancellor wishes to achieve. The amendment seeks to make an exception in regard to those who have no retained benefits. They should be entitled to the status quo. That seems to me to be the clearest possible new issue. That is no doubt why those in charge of those matters raised no final objection to the amendment being put down.

I understand the point raised by the noble Lord, Lord Coleraine. I say that with humility because I made the point myself.

Lord Elton

My Lords, since the noble and learned Lord has referred to me, perhaps I may make clear that I am familiar with the Standing Order to which he referred and the procedure through which I assumed that he had gone. I did not refer to Standing Orders but to the customs of the House, which on some occasions are a little narrower than Standing Orders. I stated that we shall see what happens in the next debate. It seems to me that one can have one debate on a compromise between, as it were, a ping and a pong, but if that is to be the procedure for the remainder of the lengthy Marshalled List your Lordships may find it a little tedious.

Lord Ackner

My Lords, perhaps my friend could rely on the maxim that hope springs eternal; and when we come to that which he already anticipates—without applying the usual principle of hearing the other side first—I hope to put his mind equally at rest.

I accept the point raised by the noble Lord, Lord Coleraine. I made it myself on Report, when I pointed out that it was quite inequitable to apply what occurs in regard to retained benefits in the employed sector. In the employed sector as a general rule everyone receives a pension. Therefore the pension that they have achieved at an earlier employment can obviously be had regard to. The self-employed person may make no arrangement either because he is idle, he cannot afford it or he believes that he can invest his money better in other resources. That is why it is irrelevant to seek to apply a retained rule—which is only a rule of the Revenue and is not embodied in primary legislation—to a situation for which it was never intended: the self-employed person who arrives on the judicial scene aged 50 or thereabouts.

Lord Coleraine

My Lords, when the noble Lord reads the Official Report tomorrow he will find that he has not understood the point I made, for which I am sure I am responsible.

Lord Ackner

My Lords, I turn then to the other matters which were raised by my noble and learned friend the Lord Chancellor. When we debated the 15-year, 20-year accrual situation, we dealt with the retained benefits as essentially the first and principal argument in relation to their retention. Perhaps I may remind the House what was said. In Hansard of 27th October at col. 1065 it states: My noble and learned friend Lord Simon of Glaisdale mentioned the previous system and my noble and learned friend Lord Ackner pointed out that for certain judges from 1799 there was a 15-year accrual. One has to look at the position from the point of view of the present general tax law. First, people working in a profession on a self-employed basis have opportunities for laying aside money for pensions out of their earnings, with tax relief. That started off in a very modest way and has gradually improved as regards the way in which tax relief is allowed. Fortunately, we are in a tax regime which is a little more benign than it was some years ago. The basic allowances have been considerably improved over what they were when the allowance started. Therefore, the tax system of this country allows people at the cost of the Exchequer to make provision for a pension while they are working as self-employed people. I submit to your Lordships that that is the first important point to be borne in mind when considering the special position of the judiciary: that they have worked in the profession with an opportunity, so far as concerns the tax law, to make provision for their retirement with tax advantage". It was for that principal reason that this alternative suggestion was put forward. Despite the arguments that have been put forward as an answer for rejecting the option which has been put forward—which I find, with respect, quite unsatisfying—I shall not press the amendment. I therefore beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 8 to 10 not moved.]

8.30 p.m.

Lord Ackner moved Amendment No. 11:

Page 5, leave out lines 7 to 18 and insert: ("(a) a person's "pensionable pay" is the greater of the following amounts, that is to say—

1. (i) the highest pension-capped salary payable to him in respect of his service in qualifying judicial office in any one of the five years ending with the day on which he retires from such office, and
2. (ii) the highest annual average of his pension capped salary in any three consecutive years out of the ten years immediately preceding the day on which he retires from such office,

provided that where pension-capped salary is calculated by reference to any year other than the last complete year ending on the day on which he retires from such office, pension-capped salary shall be increased in proportion to any increase in the retail price index (being the index of retail prices compiled by the Department of Employment) from the last day of that year up to the said day.").

The noble and learned Lord said: My Lords, on previous occasions my noble and learned friend the Lord Chancellor has said that he has managed to achieve a scheme which is as tax efficient and as tax effective as possible. As a result of that I raised in Committee the aspect of pension practice which is known rather dramatically as "dynamisation". The system is not as impressive as the word sounds. It means that the Revenue allows the pension to be calculated on earlier years than your last year if you believe that thereby, through the advantage of applying the variations in the retail price index, you gain a larger figure. That is all well established in the Inland Revenue practice; reference IR9/91.

The amendment seeks to provide that possibility for a judge who can point to the indexing system thus working to his advantage. It was thought appropriate in particular because the Top Salaries Review Body in its last report, which although not treated with much enthusiasm by the Government never had any of its detail contradicted, pointed out that during the past seven or eight years the private sector had risen in real terms some 40 per cent. and the senior members of the top salary earners within its remit had gone down in real terms by 3 per cent.

I therefore put the matter before my noble and learned friend the Lord Chancellor on 27th October. Basically, his answer was, "I don't think this will do you any good". I bridled somewhat because I would not have put it forward unless I were confident that from the point of view of the mathematics it was to that advantage. I so informed my noble and learned friend that I should be able to establish that in relation to the High Court judges and above it would make a difference of several thousand pounds a year. I offered to send my noble and learned friend the figures and he was kind enough to say that he would be prepared to consider any material that I put before him. He also said that he was willing to look at any information that I was able to provide.

I provided that information by letter dated 5th November. Your Lordships may be interested to know that it made the following difference. As at 1st November the final basic earnings of the High Court judge was £86,095. If the dynamisation system were operated as the Revenue allow it to be operated within the private sector that figure would rise to £90,332. The salary of a Lord Justice at that date was £95,037. The dynamised figure is £99,650. The salary of a Lord of Appeal in ordinary as at that date was £99,109 and the dynamised figure is £103,854. Therefore, I have made out the case that there is a significant difference.

My noble and learned friend was kind enough to write to me acknowledging my letter in the following terms: Dynamisation is permitted by the Revenue and I accept that there can be circumstances where the measure of guaranteed uplift it provides could be advantageous; for instance, where pay increases are staged. Revenue rules are not, however, the only consideration"— I interpose to say that they always appear to have been throughout our debates. My noble and learned friend continued: Dynamisation is a cumbersome mechanism which is not available in other public sector schemes. Furthermore, it carries a cost with it for which the Government has not budgeted and which would need to be offset by reducing other benefits in the new pensions scheme". The rest of the letter deals with other matters.

I wish to deal with the two points that my noble and learned friend made. First, he stated: Dynamisation is a cumbersome mechanism". I inquired of the reactions of our consultant actuary who had produced the figures which I sent to my noble and learned friend the Lord Chancellor. He said, "True, it was cumbersome when clerks used quill pens but now that we have the benefit of computers it is a matter of pressing two or three of the right buttons, which is exactly what I did for you and produced the figures you wanted". So much for that.

The other observation I found astonishing was: Furthermore, it carries a cost with it for which the Government has not budgeted and which would need to be offset by reducing the benefits in the new pensions scheme". Not long ago I quoted what my noble and learned friend the Lord Chancellor had said in approving the observations made by my noble and learned friends Lord Donaldson of Lymington and the Lord Chief Justice in the debate on Report relating to the 15 to 20-year accrual issue. He confirmed that he had accepted that we are not concerned with present cost problems of the current recession because we are dealing with a scheme which will not operate for 15 or more years and that, therefore, the present unfortunate situation is not one that has any relevance. I do not, therefore, understand the point: This will carry a cost with it for which the Government has not budgeted and which would need to be offset by reducing other benefits in the new scheme". I believe that I have dealt adequately with the two suggestions put forward in the letter as to why judges should not obtain the advantages open to them were they still in the private sector. I beg to move.

The Earl of Clanwilliam

My Lords, would the noble and learned Lord, Lord Ackner, advise me whether his actuary took the dynamisation figure over the best three previous years of the judge's previous 10 years, which is the usual system for dynamisation in the occupational pensions schemes, or whether he referred only to the final year?

Lord Ackner

My Lords, there are a number of methods of dynamisation. I am not an expert on this subject. I think that you can take a three year period or you can go back for five years, but you must not go back more than 10 years. I cannot tell the noble Earl which method the actuary adopted; but knowing his competence, I assume that he adopted the permissible method which produced the most favourable result.

The Earl of Clanwilliam

My Lords, in that case, does not the noble and learned Lord agree with me that as judges' salaries are constantly increasing, it is unlikely that any previous three years will be better than the latest three years which the judge has before he retires?

Lord Ackner

My Lords, I cannot argue the toss. We have a consultant actuary who has been in agreement with the actuaries employed by my noble and learned friend the Lord Chancellor and the Top Salaries Review Body's expert on all the contentious matters. The figures which we provided by letter to my noble and learned friend the Lord Chancellor came back uncriticised. Therefore, I assume that the government actuary or one of his minions worked on the figures, because they were easy to work upon. As I understand it there was no issue as regards the mathematics. We are concerned here with the principle.

The Earl of Clanwilliam

My Lords, I was not referring to the mathematics but to the simple facts. Judges' salaries are increasing all the time. Therefore, to a simple human being like me, it seems unlikely that any dynamisation could improve matters.

The Lord Chancellor

My Lords, I should say at once to my noble friend that the calculations which my noble and learned friend Lord Ackner sent to me show that there are some circumstances in which up-rating by reference to the retail price index can produce a higher figure for the dynamised salary than for the actual salary and payment at the end. However, those circumstances do not necessarily occur; it depends somewhat upon the situation.

As I said in my letter, this method is somewhat cumbersome. It may be that an actuary's computer system may be able to deal with it. However, dealing with the ordinary pension calculations of the whole judiciary creates a certain amount of difficulty and a certain degree of haphazardness about the result.

I must say that the figures which my noble and learned friend have produced are for the salary. The difference to be made in pension would be half of that.

The reference to cost is a reference to the cost of the scheme as a whole, trying to balance out the various changes that have been made in respect of the judiciary. My own feeling about that is that there are some other aspects of the scheme which we have sought to improve which are more meritorious than this method, principally because of the slightly haphazardous way in which it may operate, depending on previous histories and on which three years were chosen.

Therefore, I am not in a position to agree to this amendment. I am extremely grateful to my noble and learned friend for sending me the figures because they illustrate the extent to which dynamisation could help. My earlier view was that the amount was likely to be rather small in comparison with the whole matter in issue. My noble and learned friend has shown that the amounts may be somewhat larger than I thought when I spoke previously. However, they are not of an order which would make it right to opt for this variation on other public schemes. I accept, as the letter says, that the Revenue allows this but here we have a public scheme. I believe that the benefits that I have sought to provide in the other amendments which I have proposed are more appropriate.

Lord Ackner

My Lords, I am bound to say that the oft repeated refrain of my noble and learned friend the Lord Chancellor, "I have achieved for the judiciary a scheme which is as tax efficient as is obtainable under the existing law", has a hollow, if not mocking, ring about it.

This is permitted by the Revenue. Initially it was resisted by the Lord Chancellor essentially on the basis that it was a waste of time because it did not produce anything. When we show that it is not a waste of time, that it produces something and that it should be allowed to the judge, we are told that it is too expensive. With disappointment, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

8.45 p.m.

Lord Simon of Glaisdale

My Lords, I beg to move, That the House do now adjourn the business for one hour.

Those of us who are interested in Questions have been here since three o'clock. We had to sit through two long Statements, in which those who are interested in the Autumn Statement certainly retained their seats.

It is perfectly intolerable that your Lordships' House should be treated as though it were a sausage machine, churning through government legislation. We are now only half way through the list of groupings. I see that the noble Lord the Chief Whip and the Deputy Leader of the House are present. I give them an opportunity to justify the way in which we have been treated, particularly bearing in mind that they must have known that there were two long Statements to be interposed so that we only reached the second amendment at six o'clock this evening.

Moved, That the House do now adjourn the business for one hour.

Lord Hesketh

My Lords, the first point that I should make as the Chief Whip is that in the usual way the usual channels discussed the best way forward. As we intend to finish the business on the Order Paper this evening, it was felt that we should continue through with the business as it stood. It is fair to say that a number of the amendments have taken a considerable period of time to be dealt with which is very much at odds with the traditions of this House on Third Reading.

Lord Graham of Edmonton

My Lords, perhaps I may say from these Benches that a dilemma was posed by the slow pace of business. On the basis that we wish to finish our discussions on this Bill at a reasonable hour—that is, before midnight—one had to balance that with taking out an hour within which there was very little business to be done. Had there been an hour's business to be conducted during the adjournment for pleasure, it may have been useful to take an hour for it. However, the remaining business, which must be dealt with at the end of our discussions on this Bill, is very short. When I was consulted, I agreed that we should make better progress with the Bill, albeit to the discomfort of noble Lords, if we forwent the time to have a meal break. It is not a happy situation but it is designed so that we make the best progress possible with the Bill.

Lord Simon of Glaisdale

My Lords, I am grateful to the noble Lord the Chief Whip and to the Opposition Chief Whip. However, I am bound to point out that the Chief Whip made no mention of the two long Statements, which he must have known would take a considerable time, interrupting the business on the Bill so that we did not reach the second amendment until six o'clock.

This Bill is of great constitutional importance. Anybody who heard the speeches on Report of my noble and learned friends the Lord Chief Justice, Lord Donaldson of Lymington and Lord Hailsham of Saint Marylebone can be in no doubt as to its constitutional importance. A substantial number of noble Lords who listened to those three speeches from the government Benches voted for the amendment.

Naturally, the noble Lord the Chief Whip has his masses in reserve outside the Chamber who did not listen to the debate. I ask him to realise the importance and controversial nature of this Bill and not simply to drive us on hour after hour without any opportunity for refreshment. As I say, it is not treating your Lordships' House in the proper way.

Lord Hesketh

My Lords, perhaps I may make an observation on the basis that it is my habit to be in your Lordships' House every day. I have had the privilege of serving on the Front Bench for several years. On many previous occasions, both recently and in the past, we have sat during a regime which was considerably more testing than the one which has been in existence this afternoon and this evening in your Lordships' House.

Lord Simon of Glaisdale

My Lords, I certainly do not accuse the noble Lord the Chief Whip of being innovative in the burdens which he places on your Lordships' House. He is right that many times in the past we have had to suffer. There is no reason why we should go on doing so. He has not answered the main point as to how intolerable it is to keep those who are interested in this Bill waiting hour after hour without opportunity for refreshment. However, I have no doubt that the noble Lord has his troops massed in reserve on the reverse side of the hill. In those circumstances, I beg leave to withdraw my Motion.

Motion, by leave, withdrawn.

[Amendment No. 12 not moved.]

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

Lord Ackner moved Amendment No. 13:

Page 6, line 20, after ("him") insert ("at his election").

The noble and learned Lord said: My Lords, I am sorry that the noble Lord, Lord Elton, is not here because I had prepared myself for him to pounce on me on the basis that this amendment was out of order because it had already been argued previously. I must put up with that disappointment as best I can.

Perhaps I may explain the situation. This amendment is a great deal stronger in its context than the option which I moved unsuccessfully a short while ago. The position is quite simple. In all pension schemes there is an entitlement to commute a portion of one's pension. In the private scheme it is usual for the pension to be two-thirds of the final salary, but the person who has that pension almost invariably commutes a portion of it so that he gets a half of his final salary, but three times his pension as a lump sum tax free as his pension.

Perhaps I may give an example. Assuming that his final salary was £100,000, he would take as a lump sum £150,000 and a pension of £50,000. Generally speaking, in the public sector the position is that the person does not commute. The pension provides in terms for a pension of half the last year's salary and a lump sum of three times. As regards the judges, they have been lagging behind on this particular aspect of pension provisions.

In moving this amendment we are in the unhappy position that when the scheme came forward in which the lump sum was increased (from 2 to 2.25 times, but capped—which means that anything it produced over£75,000 was taxed and in all probability at 40 per cent.) one was therefore back where one started—when the matter was put out for consultation by the Lord Chancellor's department, the Top Salaries Review Body, which is a wholly independent organisation, wrote advising the Lord Chancellor's Department that the lump sum should be three times and that 2.25 was the wrong multiplier.

My noble and learned friend the Lord Chancellor got in substance the same advice from the consultant actuary whom the Lord Chancellor's Department retained to advise it. The consultant actuary to whom we went, produced the same answer. This is important: the same answer is that both in the public and private sector the right multiplier is three times. So for once we were not faced with the argument, "You are relying on the private sector and its approach; you are now in the public sector and you must conform"—a favourite word of the Government—"with what is in the public sector". Here there is unanimity between both the public and private sectors.

It could not be said that there is some quirk of the tax law that obliges the Government to accept a lesser figure than three times. The only justification put forward by my noble and learned friend the Lord Chancellor is to be found in the debate on this subject in which he said: the reason for this system is the retained benefits arrangements which I have described and which I believe is extremely appropriate in the case of the judges".—[official Report, 27/10/92; col. 1104.]

The retained benefits system is not "extremely appropriate" if you have not got any retained benefits. What is being suggested as regards this amendment is that if the retained benefits is the only argument—it is the only one put forward by my noble and learned friend the Lord Chancellor —for not allowing the judges to have the same multiplier as everybody else is entitled to have, then the option makes the situation exactly as he would have wished. Those who want the advantage of the retained benefits are to accept the smaller multiplier of 2.25 and those who cheerfully say "I will give credit for the pension equivalent of my retained benefits, if any" should be placed in the same position as the other persons either in the public or the private sector, who have no retained benefits to take into account and who are entitled to the multiplier of three.

That is not the same issue as was debated previously. It is not an issue to which the answer is, as with the 15-year or 20-year periods, "You, the judges, must now, after 200 years, conform with the ordinary tax law because you are not sufficiently sui generis to be differentiated". This is purely a question of retained benefits or no retained benefits. I beg to move.

9 p.m.

Lord Renton

My Lords, my noble and learned friend the Lord Chancellor has told us throughout that the main purpose of the Bill is to bring judicial pensions more into line with other pensions, especially those in the public service. If the noble and learned Lord, Lord Ackner, is right that his amendment would achieve similarity not only between judicial pensions and other pensions in the national service, but also with those in the private sector as well, then I should have thought that his amendment deserves great support. Of course one would be interested to hear what my noble and learned friend the Lord Chancellor has to say, but so far it seems to me that the noble and learned Lord, Lord Ackner, has had logic on his side.

The Lord Chancellor

My Lords, I think I should explain just a little bit more the situation about the cap. Some reference was made to it on the last occasion and I am not sure that it was made absolutely clear as to how it operates.

The cap bites on benefits under Part I of the Bill by virtue of the concept of pensionable pay. The pension payable to a scheme member who completes 20 years' service is one-half his pensionable pay. Pensionable pay is determined by reference to pension-capped salary, so the pension under Part I has already been subject to the effects of the cap before we come to calculate any derivative benefits.

The lump sum under this provision is 2.25 times the annual rate of the pension and is entirely tax free, even if it exceeds the level of the cap, which is at present £75,000. This is because the cap operates on the salary by means of the definition of pensionable pay, not on the lump sum. A judge whose final salary exceeds the cap, however, will also receive a pension payment in respect of that part of his or her salary—that is the later provision. A lump sum payment which will be 2.25 times the annual rate of that part of the pension derived from above the cap will also be payable. This part of the lump sum will be taxable at the rate of 40 per cent. It would not be correct to say, therefore, that if the lump sum derived under Part I of the scheme were to exceed £75,000 it would be taxed; it would not. Only that part of the lump sum derived from the salary earned above the cap of £75,000 would be liable to tax.

The 2.25 formulation already contained in the Bill exceeds by about 50 per cent. the normal Inland Revenue maximum for lump sums where the accrual rate is such that retained benefits are not taken into account. The situation is that so far as two people in the scheme are concerned they should be treated in the same way. It cannot be right that you get more in respect of your work in the public sector if you have not taken advantage of the tax scheme for self-employed pensions when you were in the private sector than you would otherwise. That seems to be an utterly unfair comparison.

But of course if my noble and learned friend is seeking to say that he would like retained benefits to be taken into account and in that way get the three times, that is certainly a possible modification of the scheme. However, I do not believe it can be right or fair as between two members of the scheme to say, "You get a bigger pension, Judge X, or a bigger lump sum, than Judge Y", the only reason being that Judge X did not put any money away under the tax arrangements, which he could have done when he was in private practice, whereas Judge Y took advantage of those arrangements. That cannot be fair as between them. It must be one thing or the other.

So far as I am concerned, if the retained benefits are taken into account, the figure could be three, but that would have to apply to the whole scheme. If retained benefits are not to be taken into account, then 2.25 appears to be the appropriate figure.

Lord Ackner

My Lords, I have had the greatest difficulty in following what my noble and learned friend has said. It is not my fault, I assure him, because I have had behind me in support of my contention the expert report to my noble and learned friend the Lord Chancellor from the Top Salaries Review Body, the report from Mr. Alexander of Watsons, retained by my noble and learned friend, and the report of Mr. Wynne-Griffiths, the expert actuary retained by us. All three have stressed that it is wrong to limit the judges to 2.25. They are experts on tax legislation and they are experts on the present situation, generally speaking.

The only answer my noble and learned friend the Lord Chancellor gave in Committee—and it was one which did not take us totally by surprise because we had heard it before —was, "You, the judges, have the advantage of not having your retained benefits taken into account and that is why you are being kept down to 2.25". There was nothing about this capping complication; nor could there be, because our experts, one would have assumed, would have got the point straight away.

What is happening is a gross unfairness. Let me explain why. The persons who become judges who have large retained benefits are the commercial silks, the silks specialising in patent work, in intellectual property work, who earn, as we all know, very large figures and whom one would assume would put in large sums for a pension. What is the result? They have large retained benefits and they suffer the disadvantage, on the philosophy of my noble and learned friend the Lord Chancellor, of being kept down in their lump sum to 2.25. But the wretched junior practitioner, who is usually the backbone of the Circuit Bench and who has no real retained benefits, is being sacrificed so that they can have the advantage of their retained benefits which he has not. He is thereby deprived of what he would get in the public sector and in the private sector, three times. That cannot be just. It cannot attract the argument, "You are seeking not to conform with general tax law". That is exactly what we are seeking to conform with, as requested and required by my noble and learned friend the Lord Chancellor.

At this stage in the evening I will make no friends—although that perhaps in itself is not a total inhibition—and I shall achieve no success in dividing the House. However, I invite my noble and learned friend the Lord Chancellor, who has emphasised how anxious he is to be fair, to take this into account because all the experts, including the department's own expert, have advised that this is what should occur. The only answer provided is the retained benefits. They rejected that by implication because they knew the retained benefits were being allowed to be kept. We have now met what we thought was a spurious point and we are told there is some other and, as I find, unintelligible resistance to justice being done.

I shall beg leave to withdraw the amendment with great reluctance largely because we have been thwarted by the two lengthy Statements from bringing this amendment on at a time when a Division would, I think, have been attended by the reasonable prospect of success, but that prospect now no longer exists. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 14 and 15 not moved.]

Lord Ackner moved Amendment No. 16:

Page 6, line 22, leave out subsection (2) and insert: ("(2) Where a person dies within five years of retirement his personal representative 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: My Lords, this amendment is concerned with the payment which a widow should be entitled to receive if her husband dies within a very few years of retirement. I believe that it is now accepted by my noble and learned friend the Lord Chancellor that the Bill as drafted provided a provision which, in reality, was quite useless. By the time the various deductions were made as provided in the clause as drawn, the widow who experienced the disadvantage of the early death of her husband would have achieved absolutely nothing of any significance.

My noble and learned friend the Lord Chancellor appreciated this and hinted in Committee that he would think about it. By the time we came to Report he had thought about it and had decided that he would produce something which could provide the widow with a benefit of a more attractive kind. Your Lordships will see from Amendment No. 21, that that is what is now on offer. My noble and learned friend is taking out the words, one and a half times his pensionable pay and inserting, five times the annual rate in force in respect of that pension immediately before his death". The difference between that and Amendment No. 16, which I am moving, which would insert the words, Where a person dies within five years of retirement his personal representative 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", is that the only deductions which fall to be made from the sum which represents five times the annual rate of pension are, in my amendment, only annual sums which had been paid to him by way of pension prior to his death. We are advised that this is the modern way of dealing with this sad situation where the judge dies within five years of his retirement, leaving a widow.

What is provided in my noble and learned friend's Amendment No. 21 involves deducting not only the annual sums which have been paid to the deceased judge before his death by way of pension, but also the lump sum that he received. The result, so I understand, is this: figures have been taken on the basis that future increases under the Pensions (Increase) Act 1971, which deals with increasing the pension for inflation factors, have been taken on the basis of assumed increases under that Act of 4 per cent. per year compound. It further assumes that a High Court judge retires on 1st November with a pension of one-half of his pensionable pay. It ignores the cap and incidence of tax on the lump sum and therefore this is the most favourable approach that can be adopted.

The consequences for illustrative purposes are these: if the judge died within one year after retirement, the lump sum that the widow would receive under the provision of my noble and learned friend, which requires this extra deduction of the lump sum to which I have referred, is, in round terms, £75,000. That may be said to be some significant compensation. However, if he dies two years after retirement, the lump sum which the widow receives goes down to £39,000 in round terms and, if he dies three years after retirement, the lump sum goes down to £1,500 in round terms and thereafter it disappears into thin air. So, although we have managed to persuade my noble and learned friend the Lord Chancellor by our amendment, first put down in Committee and repeated on Report, to make some gesture which is of real value, he has produced a formula which is of significant assistance only to the widow if the judge dies one year after retirement, of not much advantage if he dies two years after retirement and thereafter one can almost forget about the value of the provision.

Perhaps I may outline the support for my amendment. It is modern in terms. It provides an effective sum for the widow because it deducts only the annual pension sums that the judge has received after retirement and while he survives. It therefore produces, as is to be expected it being an ordinary term in a modern scheme, some reasonable compensation for her loss and not one which is almost a fictional one unless he dies within two years after retirement. I beg to move.

9.15 p.m.

The Lord Chancellor

My Lords, the purpose of both this amendment and of my Amendments Nos. 17, 19 and 21 is to alter the basis on which the additional lump sum under Clause 4(2) is calculated. This lump sum is paid to the personal representatives of a retired scheme member who dies shortly after retirement and is intended to act as a form of diminishing life cover so that the estate of a judge receives additional benefit if he dies so soon after retirement that he has received little by way of pension benefits from the pension scheme. The purpose of the proposal is to compensate for loss of pension as a result of early death.

As drafted, the Bill guarantees that, leaving aside spouses' and children's pensions, the pension scheme will pay in respect of a member at least an amount equal to one and one half times his pensionable pay following his retirement, notwithstanding the fact of his death. My amendments replace that guarantee with a better one: that the scheme will pay out at least five times the annual rate of a scheme member's pension following his retirement even if he dies shortly after it. So, if a scheme member dies before a time when the aggregate of the sums paid to him in respect of his annual pension and the lump sum paid on retirement equal five times the rate of his annual pension, his personal representatives will be paid an additional lump sum to make up the difference.

This is where my amendments differ from those of my noble and learned friend Lord Ackner. Amendment No. 16, which my noble and learned friend has just moved, does not require the lump sum on retirement to be taken into account in assessing the value of the benefits already paid to a retired officer before his death and therefore requires the scheme to pay out a greatly increased additional lump sum in the circumstances covered by this provision.

Those of your Lordships who have seen the examples that I have circulated comparing the new scheme with the existing arrangements will have realised that the provisions I now propose constitute a significant improvement on the present scheme. High Court judges, for example, will in every case do better under this scheme as modified by my amendments than under the present arrangements. The personal representatives of a High Court judge who is appointed at or before the age of 55, retires at age 70 and dies a year later would receive an additional lump sum under the new scheme of between £57,000 and £76,000 where at present they would receive nothing.

The benefit offered by my amendments could not, therefore, be said by any stretch of the imagination to be niggardly. In the same circumstances, but if my noble and learned friend's amendment were passed, the sum would be between £131,000 and £175,000 which they would not receive under the existing arrangements, and this in addition to the lump sum on retirement of between £73,000 and £98,000 that they had received but a year earlier. I do not believe that there is any justification for this and, in any case, the arrangements that I propose are a reasonable solution to this problem, designed to cover the situation of death soon after retirement. The inclusion of the references to the Pensions (Increase) Act 1971 in my amendments is to clarify that it is the annual rate of the pension received by the deceased at the time of death which is at the centre of the provision, not the annual rate of the pension at the time of his retirement; in other words, if the pension has been improved by the uprating provision, it is that pension which will be used for the calculation.

I submit to your Lordships that Amendments Nos. 17, 19 and 21, which are tabled in my name, are a very reasonable improvement on the proposals in the present Bill and also on the present schemes. I hope, therefore, that your Lordships will agree to incorporate them in the Bill and that, in the light of my explanation, my noble and learned friend Lord Ackner will feel able to withdraw his amendment.

Lord Cocks of Hartcliffe

My Lords, I should like briefly to express my support for the amendments to which the noble and learned Lord the Lord Chancellor has just spoken. I had not intended to speak this evening but, rather like my contribution in Committee, I really think that someone should place on record the fact that some Members of your Lordships' House wonder whether we should perhaps be going into such detail about the conditions of service of a particular group of public servants, especially on a day when the Chancellor of the Exchequer in another place has announced that pay settlements in the public sector should be restricted to a maximum of 1.5 per cent. in the coming year.

I bow to no one in my respect for an independent judiciary. I have long said that members of the judiciary should be well rewarded. We all know the historical reasons why judges should be above any sort of financial consideration. I have always supported that view throughout my political life, such as it has been. However, as a layman, I find it distressing to see the noble and learned Lord the Lord Chancellor, who is the head of our entire legal edifice, constantly being besieged in these proceedings by his Praetorian guard.

There is a certain unreality when examples are given of lump sums; indeed, the figure of £100,000 has been mentioned and the question of a tax rate of about 40 per cent. has been raised. My former constituents in Bristol would have been delighted to pay a 40 per cent. tax rate. It was something beyond their wildest dreams to move into that sort of tax bracket. I appeal to noble Lords who are pushing forward these amendments to consider whether it is entirely seemly to pursue such matters at this time. I made the point previously that if the mining community had had the opportunity of discussing their pay and conditions, moving amend-ments and speaking to them in Parliament, then perhaps things might have been different in recent months.

As I said, I support the noble and learned Lord the Lord Chancellor. I shall bring to bear any influence that I may have in that respect. I hope that his amendments are successful. As a former manager of business in another place, I must say that to suggest that the timing of particular votes has an effect on the result is not really in keeping with the dignity of Parliament.

Lord Ackner

My Lords, I do not think that the noble Lord was present earlier in the debate when I read out your Lordships' specific agreement with my noble and learned friends Lord Donaldson of Lymington and the Lord Chief Justice who stressed that the present difficult financial situation of the country had no relevance to a scheme which will not be operating for 15 to 20 years. My noble and learned friend the Lord Chancellor replied in words which I read out earlier today. He said: I also agree with the view that what we are seeking to set here is the system for pension payments for the future; in other words, I shall not refer to any present aspect of the economy or anything of that sort in dealing with the matters which have been raised". I shall merely say this in regard to the figure of £100,000 mentioned by the noble Lord. He is perhaps unaware that the salary of the Lord Chief Justice of England and Wales is 50 per cent. lower than that paid to the senior newscaster employed by the BBC. The Lord Chief Justice, the head of the administration of law in this country, who makes vital decisions, receives £50,000 less. If one reads out the news, one receives £50,000 more.

The only other matter to which I wish to refer is that I sought to point out how the formula that my noble and learned friend has put up dwindles away to virtually nothing after the third, fourth and fifth years. The formula is meant to make provision for what should happen where death occurs within five years. To point out that it produces nothing over half the period that it is meant to cover, I should have thought called for an answer; but none was available. At this time of night, at this stage in the debate, I have to content myself, which of course I do with the deepest respect, by quoting from Troilus and Cressida: Words, words, mere words, no matter from the heart".

I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Lord Chancellor moved Amendment No. 17:

Page 6, line 24, after ("pension,") insert ("including any increases under the Pensions (Increase) Act 1971,").

The noble and learned Lord said: My Lords, I already explained Amendment No. 17 when I answered Amendment No. 16. I beg to move.

Lord Wilberforce

My Lords, the amendment is entirely to be welcomed and is very necessary. It is surprising that it has arisen only on Third Reading. It draws attention to a problem which is fairly pervasive in the Bill in relation to what are called derivative benefits. That is where one has a derivative benefit which has to be calculated by reference to the pension of a judge and which has to take account of the situation that arises when death takes place after retirement. It is necessary in such a case that the calculation should be made by reference not to the initial pension which the judge draws on his retirement but to the indexed pension which is payable at date of death. Amendments Nos. 17 and 21 deal with that point, as does Amendment No. 24 which I shall be proposing with my noble and learned friend.

One has only to state the problem to see that the amendment is necessary. The derivative benefit must be calculated in relation to the indexed pension as it actually is when the calculation has to he made. For that reason, I very much welcome Amendments Nos. 17 and 21. I hope that, in the same spirit, the noble and learned Lord will be able to accept Amendment No. 24.

It seems unsatisfactory that we should include these piecemeal references to the Pensions (Increase) Act 1971, here, there and elsewhere, instead of having some general provision. In the 1981 Act that situation did not arise because Section 30 contained a general reference to the Pensions (Increase) Act 1971. We have nothing similar in the Bill and therefore we have to insert it in relation to each situation. The noble and learned Lord has done so in relation to Clause 4, and I shall seek to do so in relation to Clause 5. It would be better and more economic drafting if, with his advisers, the noble and learned Lord could find some general formula which could be put in at the end and which would cover every case. Clause 22 contains a general power but it does not happen to fit this provision. I am happy to welcome Amendment No. 17.

On Question, amendment agreed to.

Lord Ackner moved Amendment No. 18:

Page 6, line 24, after ("pension") insert ("increased by any pension paid under section 19").

The noble and learned Lord said: My Lords, this amendment is designed to achieve what my noble and learned friend the Lord Chancellor said he had achieved; namely, a scheme which is the most tax efficient attainable. What it is sought to do is this. At present the death benefit which is paid to the widow is capped. I apologise to the noble Lord, Lord Cocks of Hartcliffe (who has just left the Chamber) for using such extravagant figures; but that means that any sum over £75,000 is capped in the sense that it has to bear tax, presumably at 40 per cent.

That immediately occurred to those expert in pension provisions. It resulted in this advice being given in the following terms to my noble and learned friend the Lord Chancellor a year before the Bill was introduced. When I read it, I shall insert the correct figure which has gone up from 1½ to 2, otherwise I shall be interrupting myself. Paragraph 3.12 of the Top Salaries Review Body's observations on the consultative paper states, with my alteration: A death-in-service benefit of twice the pensionable pay capped is low. There is therefore no need for the cap to restrict benefits. The cap on death-in-service comes into play only when the tax-free lump sum exceeds four times the capped salary at the date of death. The cap applies to the benefit and not to the pensionable pay". Mr. Alexander, the expert and consultant actuary from Watson's, retained by my noble and learned friend the Lord Chancellor said: We further note that if pay exceeds the cap, the gratuity in excess of"— and he puts 1½ times— shortly to become— I interpose "two"— the cap would be paid from the unapproved scheme and would therefore be taxed. We recommend that, instead, all of the death gratuity is paid from the approved scheme, thereby ensuring that no tax would be payable. This is possible because in all cases 1½ times full pay— I interpose "twice times full pay" because I think it applies equally— will be less than the Inland Revenue maximum gratuity payable from the approved scheme of four times capped pay". Our own expert says in his report: The part of the lump sum death benefit that relates to salary in excess of the cap will be taxed, as pointed out by the independent actuary". That is Mr. Alexander. It is possible to enhance the benefit up to four times the lesser of the salary or the cap and so avoid the tax. This is common practice in the private sector. It seems peculiar that judges shall have such a low level of benefits and still be exposed to tax on some of it when, as in the private sector, the whole of the larger benefit is paid free of tax". I interpose merely to say that he refers to the lower level of benefits. Mr. Alexander had suggested that the figure should be three times; we put that up at the Report stage but the amendment of my noble and learned friend the Lord Chancellor that it should be twice was carried.

Thus, on all sides, the TSRB, the Government's own independent consultant actuary and the independent consultant actuary to whom the judges have been obliged to have recourse make the same observation. There is no need for tax to be paid once the death benefit exceeds the capped sum.

What is happening is that the judges or their widows are being required—quite contrary to the position which would occur if they were in the private sector—to pay tax on a death benefit above the capped figure. The answer given by my noble and learned friend to this proposition on Report was quite simply, "Ah, but you have the advantage of the retained benefits". That startling piece of information would not have escaped the TSRB who were commenting on the scheme a year before the Bill was introduced. Nor would it have escaped the attention of Mr. Alexander of Watsons who commented on the same scheme and nor would it have escaped the attention of the independent consultant whom we retained. All three of them knew that the retained benefits were not going to be taken into account. They merely pointed out that the way in which the scheme was being structured involved a quite unnecessary obligation to pay tax. In those circumstances if the refrain, "I have achieved for the judges the most tax efficient scheme obtainable", is not to be a hollow one, the advice given by all three experts should be applied. I beg to move.

The Lord Chancellor

My Lords, I explained in answer to an earlier amendment that the cap is applied to the pensionable pay and if the lump sum is more than £75,000 as a result of the calculation, that does not mean that tax is applied above the £75,000. The Revenue's rules provide for a death in service lump sum benefit before any retirement benefits have been paid, not exceeding either four times the deceased employee's final remuneration less any retained benefits, or a maximum of twice final remuneration where retained benefits need not be taken into account. The scheme as drafted is therefore at the Revenue limits unless retained benefits are taken into account. These amendments do not, of course, seek to increase the multiple of pension used to calculate the tax free lump sum obtainable under Part I of the Bill, but increase the figure for remuneration so that it includes salary earned above the cap. This means of providing an increased tax free lump sum is, so far as I am aware, not permitted in any pension scheme, whether or not retained benefits are taken into consideration. The present draft of the Bill is, therefore on my understanding at the limits the Revenue will allow.

In respect of the death in early retirement benefit, the amendments seek to increase the level of the lump sum so that the additional lump sum will be paid to the personal representatives of a judge who dies following retirement if the aggregate of the payments of his annual pension plus any pension paid under the top-up scheme, and the lump sum paid on retirement plus any lump sum paid under the top-up scheme is less than one-and-a-half times his pensionable pay increased by any part of his salary which exceeds the pensions cap. Here too, this means of circumventing the operation of the pensions cap which applies to all other people is not acceptable. I have already explained that it is one of the purposes of the Bill to bring the judicial pension schemes into line with modern pension and tax law, and the scheme as drafted, following my own amendments to this provision, will, I believe, comply with what the Revenue allows in a modern pension scheme.

Accordingly, I must say that I am not in a position to support this amendment. However, I invite your Lordships in due course to support my Amendments Nos. 19 and 21.

Lord Ackner

My Lords, even I by now have achieved a settled, hopeless expectation that if I have even three experts on my side—and one of those is retained by my noble and learned friend the Lord Chancellor—who point out that the scheme is not tax efficient but can be made so, I will not have my submissions accepted. Therefore I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Lord Chancellor moved Amendment No. 19:

Page 6, line 25, leave out paragraph (b) and insert: ("(b) the lump sum paid or payable to him under subsection (1) above,").

The noble and learned Lord said: My Lords, I spoke to the amendment with Amendment No. 16. I beg to move.

On Question, amendment agreed to.

[Amendment No. 20 not moved.]

The Lord Chancellor moved Amendment No. 21:

Page 6, line 27, leave out ("one and a half times his pensionable pay") and insert ("five times the annual rate in force in respect of that pension immediately before his death, including any increases under the Pensions (Increase) Act 1971,").

The noble and learned Lord said: My Lords, I spoke to the amendment with Amendment No. 16. I beg to move.

On Question, amendment agreed to.

[Amendments Nos. 22 and 23 not moved.]

Clause 5 [Surviving spouse's pension]:

Lord Ackner moved Amendment No. 24:

Page 7, line 6, at end insert:("including any increases under the Pensions (Increase) Act 1971.").

The noble and learned Lord said: My Lords, I am happy to say that this amendment relies on no experts at all, and perhaps therefore I may have some limited success as a result. It is a probing amendment because it is common ground that index linking is applicable to the widow's pension. She does not receive merely one-half of what her husband received at the moment of retirement, she receives one-half of his pension as increased from time to time under the Pensions (Increase) Act 1971 by virtue of indexation.

It therefore occurred to my noble and learned friend Lord Wilberforce, and subsequently to me, that the words set out in the amendment should be included in the Bill. However, in a complex Bill we may have missed the possibility that the point is adequately catered for elsewhere and it may be that tucked away in this complex Bill there is sufficient clarification that the widow receives half her husband's pension, as indexed, and thereafter has the advantage of indexation. However, if that is not the case the amendment is necessary. I beg to move.

Lord Wilberforce

My Lords, perhaps I may add a few words in support of my noble and learned friend's amendment. There is no dispute about what is intended. It is clearly intended that a widow should have half of the indexed pension of her husband in the sum at the date of his death, which is not the same as at the date of his retirement. There is no dispute about that. That is the law under the 1981 Act. That is how pensions are paid at present. At the Report stage the noble and learned Lord made it clear that that is the case. The only question is whether the amendment is necessary.

I felt that there was a difficulty in the terminology of the Bill which might produce a contrary result. I shall have to go through the hoops very rapidly, being conscious of the necessity of not boring the gentlemen in the bar at this stage.

The widow's pension is dealt with in Clause 5. On line 5 on page 7 it is indicated that it is: one-half of the annual rate of the deceased's judicial pension". That appears very clear. Lines 18 and 22 state that, '"the annual rate of the deceased's judicial pension' means…the appropriate annual rate of that pension". Then one jumps back to Clause 3(1) which indicates that, 'the appropriate annual rate' for the purposes of this Act is an annual rate equal to one-half of his pensionable pay". As if that were not enough, one then has to turn to Clause 3(3), which states that, a person's 'pensionable pay' is the greater of the following…the pension-capped salary", which means the salary of the last 12 months.

That rather strong collection of phrases seems to limit the court to giving the widow anything more than one-half of the deceased's pensionable pay in the last 12 months, three years, or 10 years, or whatever it may be, of his life.

There is no provision anywhere else in the Bill that I can find which says that she has to have the benefit of indexation. One leaves aside that her own pension is indexed by virtue of the Act of 1971. In order to get to the right starting point she has to establish that she is entitled to one-half of her husband's pension as increased by indexation.

It may be that this amendment is unnecessary. If the noble and learned Lord can tell us so, I shall be happy indeed. I hope he will not reject it out of hand. Both I and my noble and learned friend have given considerable thought to it. We believe that the point is a valid one. If he cannot agree to it this evening, I earnestly ask him to take it away, consult with his advisers and see whether in another place some provision is necessary. We all agree on what we want to do. It is just a question of the means.

9.45 p.m.

The Lord Chancellor

My Lords, I am grateful for those explanations. It is absolutely clear that we all have the same desire for the end result. The advice I have received so far—I shall look at it again in the light of what my noble and learned friends have said—is that the surviving spouse receives a pension increase to which he or she is entitled. That will happen under the Bill as currently drafted. I refer in particular to Clause 22 which specifically applies the pensions increase legislation to pensions under the Bill.

The advice that I have received is that the amendment in its present form would put a pension increase on to the pension which would be derived from the judge's pension. In other words, it would provide for index linking twice. None of us has that in mind. My noble and learned friends can be assured that I shall certainly look closely at what has been said tonight to ensure that the effect is that which all of us desire.

Lord Wilberforce

My Lords, I do not know who is entitled to reply but perhaps I may add a few words. Clause 22 does not help. It only applies indexation to the widow's own pension. That is all right. When she gets her pension, it is indexed by virtue of the 1971 Act. I cannot see at the moment that Clause 22 helps to establish the initial calculation of the figure of which the widow is to receive half.

I do not think that there is any case of double indexation, except that the husband's pension is indexed and when he dies his wife's pension goes on being indexed. That is not double indexation. It is consecutive indexation.

I have said enough. I am happy to know that the noble and learned Lord will look at the provision again. If he finds it necessary, I am sure that something like this amendment, if not identical, will be brought forward at another stage in another place.

Lord Ackner

My Lords, on that basis, we both seek leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 25 not moved.]

Clause 6 [Grant and payment of a children's pension]:

The Lord Chancellor moved Amendment No. 26:

Page 7, line 37, leave out from ("shall,") to ("be") in line 38.

The noble and learned Lord said: My Lords, in moving this amendment I shall speak also to Amendments Nos. 27 to 33.

The purpose of these amendments is to extend the scope of children eligible to receive a children's pension under the Bill. I undertook, following our discussions at the Committee stage of the Bill, to look at this area further, and at Report to bring forward these amendments. Their effect is to make all children who fall within the period of full-time education and childhood in Clause 7 eligible for a children's pension if they are a natural child of the deceased or a step-child of the deceased. In respect of natural children there is no longer any requirement that the scheme member must have been married.

Natural and step-children may be included regardless of retirement. With regard to adopted children, however, the redrafted Clause 6 will still require that they be adopted before retirement unless the Treasury directs that a pension may be paid in other circumstances. This is because it would not be right for the public purse to be expected to give an open-ended commitment to provide a pension for any number of children an officer might choose to adopt following retirement.

The amendment to Clause 8 removes entirely the present requirement that the children's pension should cease if the spouse remarries unless the Treasury direct otherwise. It also replicates a provision in the 1981 Act which enables the Treasury to direct that, on a spouse's remarriage, the pension may be paid at the higher rate which would apply if there was no surviving spouse at all.

I hope that your Lordships will agree that I have taken full account of the points made in our discussion of this area of the new scheme and that the amendments I now bring forward are a significant improvement to the arrangements for children under the Bill as drafted. With your Lordships' leave I shall wish to move Amendments Nos. 27 to 33 en bloc. I beg to move Amendment No. 26.

Lord Simon of Glaisdale

My Lords, although it is late at night and we have been almost seven hours without remission, I should like to ask two questions on Amendment No. 27. They relate to the term "natural children". My first is a purely technical question. Why was it necessary to specify "natural children"? My understanding was that until 1969 children in a statute meant legitimate children. But I believe that that rule has been abrogated since 1969.

Our statute book continues to swell, becoming increasingly prolix and extensive as a result. In my submission, we ought not to put in even one unnecessary word. I suggest that since 1969 the word "natural" may be an unnecessary word.

The second question raises a rather wider social aspect: that is, whether we are not in danger of drifting almost blindly and without apprehension into recognising a status of concubinage. Many legal systems have such a status, well defined, with the children's interests properly defined. We seem to be drifting, especially in the social service code, into recognition of concubinage as if it were the equivalent of marriage to the detriment of the status of marriage. I should be grateful if my noble and learned friend could advert to that matter.

I hear from every side nowadays the phrase "common law marriage", a phrase my noble and learned friend would certainly never use since Scottish law recognised common law marriages up to 1939. However, there seems to be from the linguistic aspect a recognition of semi-concubinage as a status.

The Lord Chancellor

My Lords, we have used the expression "natural children" especially, and defined it for the purposes of this section in Amendment No. 32. We use the expression to distinguish between the other types of children referred to—for example, step-children and adopted children—because we did not wish to deal with them all in exactly the same way.

On my noble and learned friend's second point, of course the measure provides that any children of whom that person is the genetic father or mother will be regarded as the natural children, and therefore subject to being supported by a pension under the Bill. That seems to me to be reasonable in the circumstances.

On Question, amendment agreed to.

The Lord Chancellor moved Amendment Nos. 27 to 32:

Page 7, leave out lines 43 to 47 and insert:

1. ("(a) any natural children of the deceased,
2. (b) any step-children of the deceased,
3. (c) any children adopted by the deceased before his retirement from qualifying judicial office, and
4. (d) any children adopted by the deceased after his retirement from qualifying judicial office and in respect of whom a direction is given under subsection (6) below,").

Page 8, line 19, leave out subsection (5).

Page 8, line 23, leave out ("(c)") and insert ("(d)").

Page 8, leave out lines 25 to 36 and insert:

1. ("(a) that the deceased had, before his retirement from qualifying judicial office, formed the intention of adopting the child; and
2. (b) that, immediately before that retirement, the child was wholly or mainly dependent on the deceased.").

Page 8, line 38, leave out ("(2) (b)") and insert ("(2) (c)").

Page 8, line 39, at end insert: ("() In this section, "step-children of the deceased" means—

1. (a) any natural children of any person to whom the deceased was at any time married who, at the time of the marriage, either had been born or were in gestation;
2. (b) any children adopted by such a person before the marriage to the deceased; and
3. (c) any children adopted by such a person after the marriage to the deceased in a case where the adoption proceedings were pending at the time of the marriage.

() For the purposes of this section the "natural children" of any person are any children of whom that person is the genetic father or mother.").

On Question, amendments agreed to.

Clause 8 [Rate of children's pension]:

The Lord Chancellor moved Amendment No. 33:

Page 10, line 13, leave out subsection (3) and insert: ("(3) Where the deceased leaves a surviving spouse who remarries, the Treasury may, if they think fit, direct that subsection (1) above shall apply instead of subsection (2) above as respects any period when the surviving spouse has a spouse.").

On Question, amendment agreed to.

Clause 9 [Contribution towards cost of surviving spouse's and children's pension]:

Lord Simon of Glaisdale moved Amendment No. 34:

Page 10, line 41, at end insert: ("() Regulations made under this section shall be subject to the affirmative resolution of both Houses of Parliament.").

The noble and learned Lord said: My Lords, I can deal with the matter briefly because much of the ground was covered in respect of an earlier amendment; namely, the status of parliamentary control over our delegated legislation. Earlier I drew attention to the first criterion which was established by the joint Select Committee on delegated legislation; that is, whether the regulation made a substantial contribution to the body of legislature. This is a different point and arises under the second head to which my noble and learned friend averted; namely, powers to impose financial charge or to make other forms of financial provision. The clause deals with contributions to be made towards improved benefits for dependents by the judge himself. That is reasonable enough and has always been accepted.

Clause 9(3) provides that the contributions shall be prescribed. The only question is whether when contributions are prescribed they fall under the heading of powers to enforce financial charge. In my respectful submission it is obvious that they do so. In recent years we have come across such a provision. The most notorious was in the Statutory Sick Pay Act 1991, as it was introduced. That Act amended an earlier Statutory Sick Pay Act under which employers were enjoined to pay statutory sick pay to their employees and the Government were enjoined to reimburse them 100 per cent. However, under the recent Act the figure was reduced to 80 per cent. It may seem extraordinary that under another provision the Minister was empowered to alter that figure of 80 per cent., obviously imposing a charge on the individual employer and affecting a charge on public funds. Even more strange is the fact that it was subject only to negative resolution, which is relevant here.

A protest was immediately made in respect of another place. The Government hastened to accept that the provision ought to be subject to affirmative resolution. In fact, when the Bill came to this House your Lordships would not have the Henry VIII provision. By a vote carried against the Government your Lordships expunged that from the Bill and the Government finally bowed to the view of this House. In this case the only question is whether the provision should be subject to affirmative resolution. That is answered by the reply to the question: does the clause confer powers to impose a financial charge? Since it does, in my respectful submission it should be affirmative. I beg to move.

10 p.m.

The Lord Chancellor

My Lords, the second head of the Joint Committee's recommendation was only as regards matters which would normally be appropriate to taxation. It states: powers to impose or increase taxation or other financial burdens on the subject or to raise statutory limits", and so on. I do not believe that this is within that category. It regulates the terms of contributions by those who will be members of the scheme.

I am comforted by the fact that the corresponding provision for contributions in Section 23 of the 1981 Act, which was a consolidating Act, was subject to the negative resolution procedure. This is an area in which that type of negative resolution procedure is adequate. I have heard no suggestion that such a procedure has not worked perfectly satisfactorily in the context of the 1981 Act.

It may be very necessary to maintain a degree of flexibility about this matter. For example, at an earlier stage my noble and learned friend Lord Wilberforce referred to increasing benefits if one wished to pay for them. That possibility exists. I should have thought it to be very much a matter for negotiation.

In this case I submit to your Lordships that the correct view to take is that in all the circumstances the negative resolution procedure is appropriate, par-ticularly having regard to the history of the antecedent Section 23.

Lord Simon of Glaisdale

My Lords, there are three points. The first is whether the power to levy and impose a contribution is one which imposes a financial charge. My noble and learned friend did not answer that question. It could have been answered by either yes or no. It certainly must be answered.

The second matter is the point made by my noble and learned friend that it is a negative procedure only in the 1981 consolidation Act. The lesson from that is that Parliament cannot always uniformly exercise vigilance in these matters. Formerly it was exercised to a large extent within the government by the legislation committee of the Cabinet. However, for some years that committee has abnegated that responsibility.

It cannot be expected that Members of Parliament should read every line of every statute to see whether there is a bureaucratic encroachment. It may be that the committee which your Lordships set up earlier this week, following the Australian institution—the Delegated Powers Scrutiny Committee—may perform that duty. However, it is no answer to say that that has been done before. On the contrary, it shows that we must be extremely careful in passing any power of this kind which admits bureaucratic encroachment.

That leads me to the last point. Are we not in danger of seeing the progressive erosion of the criteria established by the Joint Select Committee because we can only look at single incidents? It is like examining the wavelengths on the beach, irrespective of whether the tide is coming in. A great bureaucratic tide has been invading the legislature in recent years. However, at this hour, I must bow to the superior force of the Whips and, if my noble and learned friend will allow me to say so, not to the superior force of his argument.

I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 10 [Additional benefits from voluntary contributions]:

The Lord Chancellor moved Amendment No. 35:

Page 11, line 4, after ("benefits") insert (", whether").

The noble and learned Lord said: My Lords, with this amendment I wish to speak also to Amendments Nos. 36 to 44 and 46 to Clause 10; Amendments Nos. 53 and 54 to Schedule 3 and Amendments Nos. 86 to 89 to Clause 9. These amendments give effect to the undertaking I gave at Report stage of the Bill to amend the provisions of the Bill relating to additional voluntary contributions to permit these to be made up to Revenue limits provided retained benefits are taken into account.

The analogous provisions to those in Clause 10 contained in the Judicial Pensions Act 1981 have never been implemented. The reason for this is that, until recently, the view was that the 1981 schemes were so generous, particularly in their treatment of retained benefits, in comparison to other occupational pension schemes, that there was no scope for affording further tax advantages to scheme members. As I explained at Committee, it took a good deal of consideration to overcome this. I am now in a position, with the Revenue's agreement, to allow judicial officers to make additional voluntary contributions to increase their own benefits provided that they do so within the limits which apply to all other tax approved occupational pension schemes. That means that any retained benefits from other personal or occupational pension schemes of which a scheme member has been a member, will have to be declared and taken into account for the purposes of assessing the scope for each individual to make additional voluntary contributions. Such contributions will attract tax relief at the highest rate.

The amendments ensure that the regulations under this clause will be able to require a member to declare his or her retained benefits. They also enable those benefits to be valued and aggregated with the judge's potential entitlement under the main judicial pension scheme, to determine whether or not there is any headroom between that aggregated figure and the effective ceiling established by the Revenue's overall limits. The regulations will also have to cover a number of administrative and procedural matters and I have taken the opportunity of making sure that the regulation-making power is adequate.

The amendments cover not only the new scheme, but also the 1981 schemes, and the analogous Scottish and Northern Ireland legislation. There will therefore be no need for judicial officers to join the new scheme when it is established in order to take advantage of this particular development. The requirement to take into account retained benefits will apply of course only to those judges who wish to make AVCs. There will be no requirement for anyone else to declare their retained benefits.

Your Lordships may remember that my noble friend Lord Colville of Culross, said during our discussions at Report stage that this could be one of the most important points discussed during that debate. I very much agree with that view. An effective additional voluntary contribution facility will allow those scheme members who, for whatever reason, have been unable to make adequate provision for themselves and their families before appointment, to increase that provision to the maximum level allowed by the Revenue for a member of a tax approved scheme.

My noble friend Lord Colville of Culross, explained earlier to me that he was unable to be with us this evening, but he told me that he welcomed these particular amendments. He understood that they had also been welcomed by his contacts among the circuit judges. I beg to move.

Lord Coleraine

My Lords, I wish to thank my noble and learned friend for these amendments which, I am advised, largely answer the anxieties which I expressed at earlier stages of the Bill on behalf of those judges who first took up posts as judges before the age of 45.

Lord Chancellor

My Lords, I am very much obliged to my noble friend. I am glad that we have been able to accommodate his anxieties.

On Question, amendment agreed to.

The Lord Chancellor moved Amendments Nos. 36 to 44:

Page 11, line 5, at end insert ("or otherwise. (1A) Regulations may make provision for the purpose of imposing, in a case where a person to whom this Part applies makes voluntary contributions, upper limits with respect to—

1. (a) the aggregate value of the aggregable benefits which may be paid to or in respect of any such person; and
2. (b) the amount which any such person may pay by way of such contributions;

and, without prejudice to the generality of paragraph (b) above, any such regulations may, in particular, impose such an upper limit on the amount which a person may pay by way of voluntary contributions as will, so far as reasonably practicable, secure that the aggregate value referred to in paragraph (a) above will not exceed the limit prescribed under that paragraph. (1B) Regulations may—

1. (a) prescribe the manner in which aggregable benefits are to be valued for the purpose of any such aggregation as is mentioned in subsection (1A) above;
2. (b) confer on the administrators of the scheme constituted by this Part power to require a person to whom this Part applies who is making, or who wishes to make, voluntary contributions to provide such information as they may require concerning any retained benefits of his;
3. (c) permit the disclosure by those administrators of any information which they may obtain concerning any such retained benefits—
1. (i) to, or to any officers of, the Commissioners of Inland Revenue; or
2. (ii) to, or to any servants or agents of, the trustees, managers or administrators of the scheme under which the additional benefits in question are to be provided.").

Page 11, line 6, leave out ("Any such").

Page 11, line 9, after ("than") insert ("either or both of the following, that is to say—

1. (i) such upper limit as may be imposed by virtue of subsection (1A) (b) above; or
2. (ii)").

Page 11, line 26, leave out ("under this section").

Page 11, line 30, leave out ("and").

Page 11, line 33, leave out ("limit imposed by virtue of") and insert ("such limit as is mentioned in").

Page 11, line 33, at end insert:

1. ("(c) provide for any administrative expenses incurred by any person by virtue of this section to be defrayed out of sums received by way of voluntary contributions;
2. (d) provide for the manner in which voluntary contributions are to be paid;
3. (e) make provision for, and in connection with, the valuation of a person's accrued rights under any occupational or personal pension scheme which are to be transferred into a voluntary contributions scheme;
4. (f) prescribe the additional benefits which are to be available under a voluntary contributions scheme and the rates and times at which those benefits are to be payable;
5. (g) make provision for and in connection with the making of elections between different benefits available under voluntary contributions schemes;
6. (h) provide for the terms on which a person may terminate his membership of a voluntary contributions scheme;
7. (i) provide for the terms on which surplus funds may be refunded to a person who has made payments by way of voluntary contributions to a voluntary contribu-tions scheme.").

Page 11, line 34, leave out subsection (4).

Page 11, line 37, at end insert: ("() Regulations may provide—

1. (a) for such additional benefits arising under or by virtue of this section as may be prescribed—
1. (i) to be charged on, and paid out of, the Consolidated Fund, or
2. (ii) to be paid out of money provided by Parliament, and
2. (b) for payments to be made into or out of the Consolidated Fund, or out of money provided by Parliament, in connection with the operation or administration of any prescribed voluntary contributions scheme.").

On Question, amendments agreed to.

[Amendment No. 45 not moved.]

The Lord Chancellor moved Amendment No. 46:

Page 11, line 40, at end insert: ()In this section—

• "aggregable benefits" means— 422
  1. (a) any pensions or other benefits under this Part, other than such additional benefits as are mentioned in subsection (1) above;
  2. (b) such additional benefits so mentioned as may be prescribed; and
  3. (c) such retained benefits as may be prescribed;
• "employment" has the same meaning as it has in the Social Security Pensions Act 1975 (and accordingly includes employment as a self-employed earner, within the meaning of that Act);
• "occupational pension scheme" has the meaning given by section 66(1) of the Social Security Pensions Act 1975;
• "personal pension scheme" has the meaning given by section 84(1) of the Social Security Act 1986;
• "prescribed" means specified in, or determined in accordance with, regulations;
• "regulations" means regulations under this section;
• "relevant benefits" has the meaning given by section 612(1) of the Income and Corporation Taxes Act 1988;
• "retained benefits", in the case of any person, means any rights retained by him to relevant benefits under any occupational or personal pension scheme which has, or which may be expected to qualify for, tax-exemption or tax-approval, being rights which accrued during some previous employment;
• "surplus funds", in relation to a person and any voluntary contributions scheme, means any funds which are, or have been, held for the purposes of that voluntary contributions scheme and which fall to be returned to him in consequence of any such limit as is mentioned in subsection (2) (b) above;
• "tax-exemption" and "tax-approval" have the meaning given by section 84(1) of the Social Security Act 1986;
• "voluntary contributions scheme" means any occupa-tional or personal pension scheme if and to the extent that it is a scheme under which such additional benefits as are mentioned in subsection (1) above are, or are to be, provided.

() Without prejudice to section 29(6) below, regulations under this section may make different provision for different classes or descriptions of voluntary contributions scheme.").

The noble and learned Lord said: My Lords, I have already spoken to this amendment in speaking to Amendment No. 35. I beg to move.

On Question, amendment agreed to.

Clause 19 [Benefits in respect of earnings in excess of pension-capped salary]:

[Amendment No. 47 not moved.]

Clause 26 [Retirement date for holders of certain judicial offices etc.]:

The Lord Chancellor moved Amendment No. 48:

Page 20, line 18, leave out ("other than Circuit judge").

The noble and learned Lord said: My Lords, this is a drafting amendment and it has no effect on the substance of the clause. I beg to move.

On Question, amendment agreed to.

The Lord Chancellor moved Amendment No. 49:

Page 20, line 45, leave out paragraph (b) and insert: ("(b) participate in the hearing and determination of any appeal, or any petition for leave to appeal, to the House of Lords, unless he is the Lord Chancellor;").

The noble and learned Lord said: My Lords, in moving this amendment, I wish also to speak to Amendment No. 80. I am bringing forward both amendments as a result of the observations on the existing drafting made by my noble and learned friend Lord Wilberforce. My noble and learned friend pointed out in Committee and again on Report that the present drafting does not achieve its purpose, which is to ensure that no one over the age of 75, other than a serving Lord Chancellor, should hear and determine appeals and petitions for leave to appeal to your Lordships' House. I believe that the present amendment achieves this purpose, and Amendment No. 80 in Schedule 6 is a consequential textual amendment to the Appellate Jurisdiction Act 1876. I am particularly grateful to my noble and learned friend Lord Wilberforce for raising this point and I hope that this is a satisfactory solution to it. I beg to move.

Lord Wilberforce

My Lords, I am very much obliged to the noble and learned Lord for bringing forward this clause, which gives full effect to what I had wanted to do at previous stages. Having said that, I hope it is not ungracious to say that I would much prefer that the clause were not there at all. This whole matter of asking people to sit on after a certain age ought to be dealt with gracefully by administration, by courtesy or good sense, rather than by the heavy hand of primary legislation. However, we are set on that course and given that the present clause is much better than the previous wording, I am very happy to agree to it.

On Question, amendment agreed to.

Clause 27 [Completion of proceedings after retirement]:

The Lord Chancellor moved Amendment No. 50:

Page 23, line 15, at end insert: ("(4) If and to the extent that any prohibition imposed by subsection (7) of section 26 above would not, apart from this subsection, be regarded as a prohibition on the holding of an office, it shall be treated for the purposes of this section as if it were such a prohibition, and references in this section to office, or to vacating or otherwise ceasing to hold office, shall be construed accordingly.").

The noble and learned Lord said: My Lords, this is a technical drafting amendment. Its purpose is to remove any doubt as to the provisions of Clause 27 which allow a judge to finish off a case even though he has vacated his office and to work in a case even where a judge does not actually vacate an office but merely becomes ineligible to take part in the proceedings. An example of this we have just considered, and that is that a person of 75 is no longer able to participate in the hearing of appeals to the House of Lords. It might be argued that he does not vacate any office; he merely becomes ineligible to take part. The amendment removes any doubt that there may be on this. I beg to move.

On Question, amendment agreed to.

Clause 29 [Regulations and orders]:

[Amendment No. 51 not moved.]

Clause 30 [Interpretation]:

[Amendment No. 52 not moved.]

Schedule 3 [Corresponding minor amendments to other pensions enactments]:

The Lord Chancellor moved Amendments Nos. 53 and 54:

Page 35, line 35, at end insert:

("Additional voluntary contributions

.—(1) Section 33A of the 1981 Act (which confers power to make regulations entitling any member of a judicial pension scheme constituted by that Act or by the Sheriffs' Pensions (Scotland) Act 1961 to make voluntary contributions towards the provision of additional benefits under the scheme) shall be amended in accordance with the following provisions of this paragraph.

(2) In subsection (1), for the words "under the scheme" there shall be substituted the words "whether under the scheme or otherwise".

(3) After that subsection there shall be inserted— (1A) The regulations may make provision for the purpose of imposing, in a case where a member makes voluntary contributions, upper limits with respect to—

1. (a) the aggregate value of the aggregable benefits which may be paid to or in respect of any such member; and
2. (b) the amount which any such member may pay by way of such contributions;

• and, without prejudice to the generality of paragraph (b) above, the regulations may, in particular, impose such an upper limit on the amount which a member may pay by way of voluntary contributions as will, so far as reasonably practicable, secure that the aggregate value referred to in paragraph (a) above will not exceed the limit prescribed under that paragraph.

(1B) The regulations may—

1. (a) prescribe the manner in which aggregable benefits are to be valued for the purpose of any such aggregation as is mentioned in subsection (1A) above;
2. (b) confer on the administrators of a judicial pension scheme power to require a member who is making, or who wishes to make, voluntary contributions to provide such information as they may require concerning any retained benefits of his;
3. (c) permit the disclosure by those administrators of any information which they may obtain concerning any such retained benefits—
   1. (i) to, or to any officers of, the Commissioners of Inland Revenue; or
   2. (ii) to, or to any servants or agents of, the trustees, managers or administrators of the scheme under which the additional benefits in question are to be provided."

(4) In subsection (2), in paragraph (b) (no limit on voluntary contributions, other than an upper limit corresponding to that imposed by section 594 of the Income and Corporation Taxes Act 1988) after the words "other than" there shall be inserted the words "either or both of the following, that is to say—

1. (i) such upper limit as may be imposed by virtue of subsection (1A) (b) above; or
2. (ii)".

(5) In subsection (3) (regulations about valuation of benefits etc)—

1. (a) the word "and" immediately preceding paragraph (b) shall be omitted; and
2. (b) in that paragraph, for the words "limit imposed by virtue of" there shall be substituted the words "such limit as is mentioned in".

(6) At the end of that subsection there shall be added—

1. "(c) provide for any administrative expenses incurred by any person by virtue of this section to be defrayed out of sums received by way of voluntary contributions;
2. (d) provide for the manner in which voluntary contributions are to be paid;
3. (e) make provision for, and in connection with, the valuation of a person's accrued rights under any occupational or personal pension scheme which are to be transferred into a voluntary contributions scheme;
4. (f) prescribe the additional benefits which are to be available under a voluntary contributions scheme and the rates and times at which those benefits are to be payable;
425
5. (g) make provision for and in connection with the making of elections between different benefits available under voluntary contributions schemes;
6. (h) provide for the terms on which a person may terminate his membership of a voluntary contributions scheme;
7. (i) provide for the terms on which surplus funds may be refunded to a person who has made payments by way of voluntary contributions to a voluntary contributions scheme."

(7) Subsection (4) (limitation of voluntary contribu-tions by reference to maximum entitlement of members) shall be omitted and before subsection (5) there shall be inserted— (4A) The regulations may provide—

1. (a) for such additional benefits arising under or by virtue of this section as may be prescribed—
1. (i) to be charged on, and paid out of, the Consolidated Fund; or
2. (ii) to be paid out of money provided by Parliament; and
2. (b) for payments to be made into or out of the Consolidated Fund, or out of money provided by Parliament, in connection with the operation or administration of any prescribed voluntary contributions scheme."

(8) After subsection (5), there shall be inserted— (5A) The regulations may make different provision for different classes or descriptions of voluntary contributions scheme.

(9) After subsection (8) of that section there shall be added—

"(9) In this section—

• "administrators", in relation to any scheme, means the persons entrusted with the administration of that scheme;
• "aggregable benefits" means—
1. (a) any pensions or other benefits under a judicial pension scheme, other than such additional benefits as are mentioned in subsection (1) above;
2. (b) such additional benefits so mentioned as may be prescribed; and
3. (c) such retained benefits as may be prescribed;
• "employment" has the same meaning as it has in the Social Security Pensions Act 1975 (and accordingly includes employment as a self-employed earner, within the meaning of that Act);
• "judicial pension scheme" has the meaning given by section 14A(2) above;
• "member" means member of a judicial pension scheme;
• "occupational pension scheme" has the meaning given by section 66(1) of the Social Security Pensions Act 1975;
• "personal pension scheme" has the meaning given by section 84(1) of the Social Security Act 1986;
• "prescribed" means specified in, or determined in accordance with, the regulations;
• "relevant benefits" has the meaning given by section 612(1) of the Income and Corporation Taxes Act 1988;
• "retained benefits", in the case of any person, means any rights retained by him to relevant benefits under any occupational or personal pension scheme which has, or which may be expected to qualify for, tax-exemption or tax-approval, being rights which accrued during some previous employment;
• "surplus funds", in relation to a person and any voluntary contributions scheme, means any funds which are, or have been, held for the purposes of that voluntary contributions 426 scheme and which fall to be returned to him in consequence of any such limit as is mentioned in subsection (2) (b) above;
• "tax-exemption" and "tax-approval" have the meaning given by section 84(1) of the Social Security Act 1986;
• "voluntary contributions", in relation to any member of a judicial pension scheme, means voluntary contributions towards the provision of additional benefits, whether under that scheme or otherwise;
• "voluntary contributions scheme" means any occupational or personal pension scheme if and to the extent that it is a scheme under which such additional benefits as are mentioned in subsection (1) above are, or are to be, provided."").

Page 38, line 22, at end insert:

("Additional voluntary contributions

.—(1) The following enactments (which correspond to section 33A of the 1981 Act), that is to say—

1. (a) section 11A of the 1951 Act,
2. (b) section 127A of the 1959 Act, and
3. (c) section 9A of the 1960 Act,

shall be amended in accordance with the following provisions of this paragraph.

(2) In subsection (1), for the words "under the scheme" there shall be substituted the words "whether under the scheme or otherwise".

(3) After that subsection there shall be inserted— (1A) The regulations may make provision for the purpose of imposing, in a case where a member makes voluntary contributions, upper limits with respect to—

1. (a) the aggregate value of the aggregable benefits which may be paid to or in respect of any such member; and
2. (b) the amount which any such member may pay by way of such contributions;

• and, without prejudice to the generality of paragraph (b), the regulations may, in particular, impose such an upper limit on the amount which a member may pay by way of voluntary contributions as will, so far as reasonably practicable, secure that the aggregate value referred to in paragraph (a) will not exceed the limit prescribed under that paragraph.

(1B) The regulations may—

1. (a) prescribe the manner in which aggregable benefits are to be valued for the purpose of any such aggregation as is mentioned in subsection (1A);
2. (b) confer on the administrators of a judicial pension scheme power to require a member who is making, or who wishes to make, voluntary contributions to provide such information as they may require concerning any retained benefits of his;
3. (c) permit the disclosure by those administrators of any information which they may obtain concerning any such retained benefits—
1. (i) to, or to any officers of, the Commissioners of Inland Revenue; or
2. (ii) to, or to any servants or agents of, the trustees, managers or administrators of the scheme under which the additional benefits in question are to be provided."

(4) In subsection (2), in paragraph (b) (no limit on voluntary contributions, other than an upper limit corresponding to that imposed by section 594 of the Income and Corporation Taxes Act 1988) after the words "other than" there shall be inserted the words "either or both of the following, that is to say—

1. (i) such upper limit as may be imposed by virtue of subsection (1A) (b); or
2. (ii)".

(5) In subsection (3) (regulations about valuation of benefits etc)—

1. (a) the word "and" immediately preceding paragraph (b) shall be omitted; and
2. (b) in that paragraph, for the words "limit imposed by virtue of" there shall be substituted the words "such limit as is mentioned in".

(6) At the end of that subsection there shall be added—

1. "(c) provide for any administrative expenses incurred by any person by virtue of this section to be defrayed out of sums received by way of voluntary contributions;
2. (d) provide for the manner in which voluntary contributions are to be paid;
3. (e) make provision for, and in connection with, the valuation of a person's accrued rights under any occupational or personal pension scheme which are to be transferred into a voluntary contributions scheme;
4. (f) prescribe the additional benefits which are to be available under a voluntary contributions scheme and the rates and times at which those benefits are to be payable;
5. (g) make provision for and in connection with the making of elections between different benefits available under voluntary contributions schemes;
6. (h) provide for the terms on which a person may terminate his membership of a voluntary contributions scheme;
7. (i) provide for the terms on which surplus funds may be refunded to a person who has made payments by way of voluntary contributions to a voluntary contributions scheme."

(7) Subsection (4) (limitation of voluntary contribu-tions by reference to maximum entitlement of members) shall be omitted and before subsection (5) there shall be inserted— (4A) The regulations may provide—

1. (a) for such additional benefits arising under or by virtue of this section as may be prescribed—
1. (i) to be charged on, and paid out of, the Consolidated Fund of the United Kingdom; or
2. (ii) to be paid out of money provided by the Parliament of the United Kingdom; and
2. (b) for payments to be made into or out of the Consolidated Fund of the United Kingdom, or out of money provided by the Parliament of the United Kingdom, in connection with the operation or administration of any prescribed voluntary contributions scheme."

(8) After subsection (6) of that section there shall be added— (7) In this section—

• "administrators", in relation to any scheme, means the persons entrusted with the administration of that scheme;
• "aggregable benefits" means—
1. (a) any pensions or other benefits under a judicial pension scheme, other than such additional benefits as are mentioned in subsection (1);
2. (b) such additional benefits so mentioned as may be prescribed; and
3. (c) such retained benefits as may be prescribed;
• "employment" has the same meaning as it has in the Social Security Pensions (Northern Ireland) Order 1975 (and accordingly includes employ-ment as a self-employed earner, within the meaning of that Order);
• "judicial pension scheme" means a scheme constituted by this Act;
• "member" means member of a judicial pension scheme;
428
• "occupational pension scheme" has the meaning given by Article 2(2) of the Social Security Pensions (Northern Ireland) Order 1975;
• "personal pension scheme" has the meaning given by Article 2(2) of the Social Security (Northern Ireland) Order 1986;
• "prescribed" means specified in, or determined in accordance with, the regulations;
• "relevant benefits" has the meaning given by section 612(1) of the Income and Corporation Taxes Act 1988;
• "retained benefits", in the case of any person, means any rights retained by him to relevant benefits under any occupational or personal pension scheme which has, or which may be expected to qualify for, tax-exemption or tax-approval, being rights which accrued during some previous employment;
• "surplus funds", in relation to a person and any voluntary contributions scheme, means any funds which are, or have been, held for the purposes of that voluntary contributions scheme and which fall to be returned to him in consequence of any such limit as is mentioned in subsection (2) (b);
• "tax-exemption" and "tax-approval" have the meaning given by Article 2(2) of the Social Security (Northern Ireland) Order 1986;
• "voluntary contributions", in relation to any member of a judicial pension scheme, means voluntary contributions towards the provision of additional benefits, whether under that scheme or otherwise;
• "voluntary contributions scheme" means any occupational or personal pension scheme if and to the extent that it is a scheme under which such additional benefits as are mentioned in subsection (1) are, or are to be, provided."").

The noble and learned Lord said: My Lords, I have already spoken to Amendments Nos. 53 and 54 with Amendment No. 35. I beg to move these amendments en bloc with your Lordships' leave.

On Question, amendments agreed to.

Schedule 4 [Pensions for senior public investigative officers]:

The Lord Chancellor moved Amendment No. 55:

Page 39, line 29, leave out ("(3)") and insert ("(4)").

The noble and learned Lord said: My Lords, in moving Amendment No. 55, I should like to speak to Amendments Nos. 56 to 78. These are largely technical amendments to give effect to the undertak-ings that I gave at Report stage to make a number of consequential amendments in respect of senior investigative officers. They are designed to extend the provisions of Part II of the Bill to such officers, because the Bill as drafted omits to do so. They also ensure that the appropriate Minister in respect of such officers is to be a Treasury Minister. As drafted, only some of the references to "appropriate Ministers" are to Ministers in the Treasury, which has ministerial responsibility for their pension arrangements. With your Lordships' leave, I will move Amendment No. 55 and then take Amendments Nos. 56 to 78 en bloc.

On Question, Amendment agreed to.

10.15 p.m.

The Lord Chancellor moved Amendments Nos. 56 to 78:

Page 39, line 29 leave out ("section 19 of that Act (which provides") and insert ("sections 19, 20 and 23 of, and Schedule 2 to, that Act (which provide for").

Page 39, line 31, after ("salary") insert (", appeals and transfer of accrued rights)").

Page 40, line 1, leave out ("and").

Page 40, line 1, leave out ("or) and insert (" 19 (benefits in respect of earnings in excess of pension-capped salary) and 20 (appeals) of, and Schedule 2 (transfer of accrued rights) to,").

Page 40, line 2, at end insert ("and the power conferred by paragraph 2 of that Schedule to make regulations shall be exercisable by the Treasury.").

Page 42, line 33, leave out ("(3)") and insert ("(4)").

Page 42, line 34 leave out ("section 19 of that Act (which provides") and insert ("sections 19, 20 and 23 of, and Schedule 2 to, that Act (which provide for").

Page 42, line 35, after ("salary") insert (", appeals and transfer of accrued rights)").

Page 43, line 3, leave out ("and").

Page 43, line 3, leave out ("of") and insert (" 19 (benefits in respect of earnings in excess of pension-capped salary) and 20 (appeals) of, and Schedule 2 (transfer of accrued rights) to,").

Page 43, line 4, at end insert ("and the power conferred by paragraph 2 of that Schedule to make regulations shall be exercisable by the Treasury.").

Page 46, line 38, leave out ("(3)") and insert ("(4)").

Page 46, line 39 leave out ("section 19 of that Act (which provides") and insert ("sections 19, 20 and 23 of, and Schedule 2 to, that Act (which provide for").

Page 46, line 40, after ("salary") insert (", appeals and transfer of accrued rights)").

Page 47, line 7, leave out ("and").

Page 47, line 7, leave out ("of") and insert (" 19 (benefits in respect of earnings in excess of pension-capped salary) and 20 (appeals) of, and Schedule 2 (transfer of accrued rights) to,").

Page 47, line 8, at end insert ("and the power conferred by paragraph 2 of that Schedule to make regulations shall be exercisable by the Treasury.").

Page 49, line 32, leave out ("(3)") and insert ("(4)").

Page 49, line 33, leave out ("section 19 of that Act (which provides") and insert ("sections 19, 20 and 23 of, and Schedule 2 to, that Act (which provide for").

Page 49, line 34, after ("salary") insert (", appeals and transfer of accrued rights)").

Page 50, line 2, leave out ("and").

Page 50, line 2, leave out ("of") and insert (" 19 (benefits in respect of earnings in excess of pension-capped salary) and 20 (appeals) of, and Schedule 2 (transfer of accrued rights) to,").

Page 50, line 3, at end insert ("and the power conferred by paragraph 2 of that Schedule to make regulations shall be exercisable by the Treasury.").

On Question, amendments agreed to.

10.15 p.m.

Schedule 5 [Retirement provisions: the relevant offices]:

The Lord Chancellor moved Amendment No. 79:

Page 54, line 5, at end insert: ("President of the Industrial Court appointed in pursuance of Article 91 of the Industrial Relations (Northern Ireland) Order 1992").

The noble and learned Lord said: My Lords, with this amendment, I wish to speak also to Amendments Nos. 81, 84 and 85. The purpose of this amendment is to add the office of president of the Industrial Court in Northern Ireland to the list of offices in Schedule 5 to this Bill. In other words, the office will become a "relevant office" so as to be governed by the retirement provisions of the Bill.

Amendment No. 81 provides for consequential textual amendments to the legislation affecting the office; and Amendments Nos. 84 and 85 provide for transitional retirement arrangements for the existing holder of the office. I beg to move.

On Question, amendment agreed to.

Schedule 6 [Retirement dates for certain judicial offices]:

The Lord Chancellor moved Amendment No. 80:

Page 55, leave out lines 27 and 28 and insert: (""but this section is subject to sections 26(7) (b) and 27 of the Judicial Pensions and Retirement Act 1992 (prohibition on participating in the hearing and determination of appeals after attaining the age of seventy-five years, except for the purpose of completing proceedings already begun)."").

The noble and learned Lord said: My Lords, I spoke to this amendment with Amendment No. 49. I beg to move.

On Question, amendment agreed to.

The Lord Chancellor moved Amendment No. 81:

Page 64, line 3, at end insert:

("President of the Industrial Court in Northern Ireland

In Article 91 of the Industrial Relations (Northern Ireland) Order 1992, at the beginning of paragraph (3) (terms of appointment of president and other members of the Industrial Court) there shall be inserted the words "Subject, in the case of the president, to paragraph (3A)," and after that paragraph there shall be inserted— "(3A) The president shall vacate his office on the day on which he attains the age of 70; but this paragraph is subject to section 26(4) to (6) of the Judicial Pensions and Retirement Act 1992."").

The noble and learned Lord said: My Lords, I spoke to this amendment with Amendment No. 79. I beg to move.

On Question, amendment agreed to.

Schedule 7 [Retirement dates: transitional provisions]:

The Lord Chancellor moved Amendment No. 82:

Page 75, line 51, at end insert (", or whose arrangements with respect to retirement,").

The noble and learned Lord said: My Lords, with this amendment I should like to speak also to Amendment No. 83. Amendment No. 82 is a drafting amendment to ensure that the provisions of Schedule 7 which supply a transitional retirement date by reference to a person's standard terms of appointment work equally well when there are no standard terms of appointment but only "arrangements with respect to retirement". Amendment No. 83, which gave rise to the need for Amendment No. 82, ensures that a Social Security Commissioner who was appointed before 23rd May 1980 has, as his transitional retirement date, the last day of the completed year of service in which he attains the age of 72. I beg to move.

On Question, amendment agreed to.

The Lord Chancellor moved Amendment No. 83:

Page 76, line 4, at end insert: ("() Social Security Commissioner appointed before 23rd May 1980;").

The noble and learned Lord said: My Lords, I spoke to this amendment with Amendment No. 82. I beg to move.

On Question, amendment agreed to.

The Lord Chancellor moved Amendments Nos. 84 and 85:

Page 76, line 18, at end insert: ("() president of the Industrial Court appointed in pursuance of Article 91 of the Industrial Relations (Northern Ireland) Order 1992").

Page 77, line 12, at end insert: ("() president of the Industrial Court appointed in pursuance of Article 91 of the Industrial Relations (Northern Ireland) Order 1992").

The noble and learned Lord said: My Lords, I spoke to these amendments with Amendment No. 79. With your Lordships' leave I shall take them en bloc. I beg to move.

On Question, amendments agreed to.

Schedule 9 [Repeals and revocations]:

The Lord Chancellor moved Amendments Nos. 86 to 89

Page 84, line 18, at end insert:

("1951 c.20 (N.I.).

The Judicial Pensions Act (Northern Ireland) 1951.

In section 11A, in subsection (3), the word "and" im-mediately preceding paragraph (b), and subsection (4).").

Page 84, line 19, column 3, at end insert ("In section 127A, in subsection (3), the word "and" immediately preceding paragraph (b), and subsection (4).").

Page 84, line 22, column 3, at beginning insert ("In section 9A, in subsection (3), the word "and" immediately preceding paragraph (b), and subsection (4).").

Page 85, line 10, column 3, at end insert ("In section 33A, in subsection (3), the word "and" immediately preceding paragraph (b), and subsection (4).").

The noble and learned Lord said: My Lords, you will be aware that I have already spoken to these amendments when I spoke to Amendment No. 35. With your Lordships' leave, I should like to take them en bloc. I beg to move.

On Question, amendments agreed to.

Amendment (privilege) made.

10.18 p.m.

The Lord Chancellor

My Lords, I beg to move, That the Bill do now pass.

Moved, That the Bill do now pass.—(The Lord Chancellor.)

Lord Williams of Mostyn

My Lords, I had wished to speak earlier on Report but as I had not made my maiden speech I could not. I have nothing useful to add this evening therefore I shall not.

Lord Ackner

My Lords, pensions are deferred pay. That is common ground. The Top Salaries Review Body—the TSRB—which was appointed over 20 years ago is required by its terms of reference to advise the Prime Minister on the remuneration of, among others, the higher judiciary and certain other judicial appointments. That too must be common ground.

When it came to reconsidering the extent to which the Judicial Pensions Act 1981—a consolidating Act—should be fundamentally altered, it was to be expected that the whole issue of judicial pensions would be referred to the TSRB. After all, that had recently been done in relation to pensions of Members of Parliament. The TSRB produced recommendations which were subsequently, so I understand, accepted. Why was it that this most important aspect of judicial pay—a vital constituent of judicial independence—was confined within the Lord Chancellor's Department, which merely sought comments from, inter alia, the TSRB, but never published those comments? It took a little time for the penny to drop, but at the conclusion of the debate on the Bill the explanation is a simple but depressing one.

For some years there has been mounting pressure to reduce the retiring age of the judiciary, fixed for the first time some 33 years ago at 75 for the senior judiciary and at 72 for the Circuit Bench. This pressure has had the support of judges themselves and had ultimately to be accepted by the Government. The financial implications were immediately recognised by that venerable senior wrangler, Lord Denning, who in an interview in recent times said in his inimitable way that this was going to cost the Treasury a pretty penny. As your Lordships would expect, in his speech on Second Reading, on 16th June (col. 152 of Hansard), the noble Lord, Lord Benson, explained the matter trenchantly in accountancy terms. He said: if one reduces the retiring age it increases the cost"— of a pension scheme— to an extravagant degree, depending on the number of people involved". However, the Treasury had no intention of accepting that the reduction in the judicial retiring age, which from a financial point of view it no doubt viewed with scanty enthusiasm, would cost it a pretty penny or any penny. On the contrary, it was determined that it would cost nothing by the simple process of requiring the senior judiciary and the circuit judges themselves to pay for the obligation to be imposed upon them to cease to work at an earlier age. That was to be achieved quite simply in one and the same Bill by reducing the retiring age and downgrading the value of the judicial pension for such judges.

That was made abundantly clear by the statement on page 3 of the Bill where, under "Financial Effects of the Bill," it is stated: The difference in cost between the existing arrangements and the new arrangements will take some years to emerge, but the effect on public expenditure is expected to be broadly neutral. That is particularly significant since, in restructuring judicial pensions, certain injustices, anomalies and inadequacies relating to, among others, stipendiary magistrates and registrars, now known as district judges, required remedying. That too would prove costly.

Let me now justify my assertions. As your Lordships now know, for nearly 200 years—that is, since the first judicial pension legislation in 1799—the period which the senior judiciary and subsequently the county court and circuit judges have had to serve to earn their pension—not a generous one, being half their salary—has been 15 years. That is not an idiosyncratic feature of the English legal system. The period in the United States, Canada and Australia is 50 per cent. less; that is, 10 years. In New Zealand, as I pointed out to your Lordships, there is a slightly strange compromise. It is one year longer than in England—that is, 16 years—but the judges obtain a tax-free pension of two-thirds of their salary.

There seemed during debates to be a certain reticence in my noble and learned friend the Lord Chancellor in his responses to the inquiry as to what it cost the Treasury to provide the judicial pension. I found that a little surprising as it is all neatly set out in Table 7 on page 60 of the latest report of the TSRB, Report No. 33. The table is headed "Comparative Value of Public and Private Sector Pensions" and is subheaded "Cost to employer of Pension Benefits as at April 1991". In relation to the High Court judge and the circuit judge, it shows that that cost is 30 per cent. of pensionable salary; that is to say, in those days, in relation to the High Court judge, £25,000. By imposing upon the judge the obligation to work an extra five years to earn his full pension, the Treasury is in effect imposing a salary cut of one-quarter of 30 per cent.—that is to say, 7.5 per cent.—upon those judges. Expressed in another way in relation to every High Court judge who previously would have retired having served 15 years to obtain his full pension but who in future will now have to work an extra five years, the Treasury will save each year over £6,000 per judge or, over the whole five-year period on current figures, something in the region of £30,000. That is only one of the many savings.

Until now the judicial pension has been based on the current annual rate of pay. Thus a judge who retired shortly after a pay rise would receive a pension of one-half of his annual salary thus increased. Henceforth, to achieve yet another saving, the pension is to be based upon his salary as averaged over the year before his retirement. Applying a recent 4 per cent. salary increase, the judge who retires not immediately after a pay increase but half way through the year will, if he be a circuit judge, suffer a reduction in his annual pension of £650 or, in the case of a Law Lord, the sum would be £1,000. His widow's pension which is half of his pension will be proportionately reduced, as will be the lump sum he obtains on his retirement. That has nothing whatever to do with conforming to the general tax law. A yet further saving is produced by the capping of the lump sum at the current figure of £75,000. Sums above that amount will doubtless be taxed at 40 per cent.

In moving Amendments Nos. 2 and 3, I have today drawn your Lordships' attention to the quite shabby treatment which the Bill sought to inflict upon disabled judges, their widows or widowers and orphans; to the strong criticism provoked from independent experts; and to the inadequate provision ultimately extracted, with difficulty, from the Government. I shall not repeat myself. In addition, there was total unanimity among the experts with regard to the Government's meanness in relation to the tax free lump sum, to the death-in-service benefits, to the out-of-date obligation upon the judiciary to pay contributions towards widows' and widowers' benefits and to their position upon remarriage.

The experts made it quite clear that what the Government were seeking to do was to enshrine in primary legislation out-of-date concepts, ignoring how pension provisions have evolved over the years. A consultant actually advising the judges concluded that the saving to the Treasury amounted to between 10 per cent. and 15 per cent. of the judicial salary, and that was without taking into account the new important basis for the calculation of the pension to which I referred earlier.

About five years ago in an important lecture which was prominently reported by the press, my noble and learned friend Lord Browne-Wilkinson—then the Vice-Chancellor, the head of the Chancery Division of the High Court—said that, the old machinery regulating the administration of justice no longer ensures the independence of that system from executive control. Judges are sitting in an environment wholly determined by executive decision in the Lord Chancellor's department, which in turn is operating under the financial constraints and pressures imposed by the Treasury. The yardstick for decision taking is financial value for money not the interests of justice. What constitutes value for money is being determined by the executive, not judicial decision. The Lord Chancellor's own position, representing as he does simultaneously both the independent judiciary and the interests of the Government, is becoming more and more difficult, since the price to be paid for obtaining funds for the administration of justice is dependent on satisfying the Treasury that any particular cause represents, in their terms, value for money". The accuracy of those observations was illustrated vividly quite recently on 22nd October in the debate on an Unstarred Question asked by the noble Lord, Lord Irvine of Lairg, about the continuing gross shortage of High Court judges, which, in the words of my noble and learned friend the Lord Chief Justice, will truly become a national disgrace".—[Official Report, 22/10/92; col. 879.] Your Lordships will recall the debate on Report on Amendment No. 46 which sought to reinstate, in the public interest, the accrual period of 15 years. The alteration proposed by the Government would prejudicially affect, in future, the calibre of judges who accept the appointments and thereby the quality of the administration of justice. That amendment, defeated by 84 votes to 79, was supported by the former Lord Chancellor, the former Lord Chief Justice, the current Lord Chief Justice, the former Master of the Rolls, 10 Law Lords and two former Law Officers. I need not remind your Lordships that one of the great constitutional tasks of the court today is to control the misuse of power by government Ministers and departments; thus the quality of the judiciary has never been so important.

It cannot be disputed that since the war the Lord Chancellor no longer presides frequently over the judicial sittings of the House, but his fundamental responsibility under the constitution is, and remains, to maintain at all costs the independence of the judiciary and the legal profession. My noble and learned friend Lord Hailsham, in a lecture which he gave in 1989 on "The Office of the Lord Chancellor" which will be found printed in the Civil Justice Quarterly of October 1989, considered that to be the one paramount duty of the Lord Chancellor. He added: If he does it well, he is a good Lord Chancellor whatever his other defects. If he does it ill, whatever his other qualities, he is not". for the past 18 months I have, at the instance of the British Council or the Council of Europe, addressed judges in Hungary, Czechoslovakia, Poland, Moscow, Estonia and Lithuania. On some of those occasions other senior judges from Western Europe spoke. I, on behalf of the United Kingdom, was always asked to speak on the subject of the independence of the judiciary. No doubt it was thought that the common law system particularly protected that fundamental feature of justice. I must therefore confess my astonishment when I found in the Bill, in Clause 25, that power was to be taken by the Lord Chancellor, at his sole discretion, to continue the senior judiciary in office beyond the now compulsory retirement age of 70, from year to year, up to a period of five years—a system of judges on contract.

Over 50 years ago that concept was rejected by the Royal Commission, the Peel Commission, of which Sir Claud Shuster, an outstanding Permanent Secretary in my noble and learned friend's department, was a member. In the debate on Report on 29th October my noble and learned friend Lord Simon of Glaisdale expressed his astonishment that, This unconstitutional provision ever appeared in the Bill"—(Official Report; 29/10/92; col. 1262.], in terms with which I respectfully concur. Thankfully, my noble and learned friend the Lord Chancellor had second thoughts and removed the offending clause, but not until the Report stage.

I do not belong to, nor do I sympathise with, the aprèsmoi school of thought. I have a passionate belief that a strong and independent judiciary is one of the essential foundations of our liberty, without which the rule of law could not exist. Because the calibre of the future judiciary cannot but be weakened by this mean, penny-pinching Bill, I have felt obliged to intervene in the debates much more than I would otherwise have wished. It was not how I expected spending my first few weeks of retirement. For this I therefore crave your Lordships' indulgence. The greatest thing in the world"— Montaigne said— is to know how to be self sufficient". In the past, the judiciary has looked for the protection of its independence to the Lord Chancellor and his department. It is quite clear that in future it must look to itself.

Lord Benson

My Lords, I say farewell to the Bill with a deep sense of frustration. Some of the terms proposed for the High Court and circuit judges are mean and penny-pinching. The inevitable conse-quence is that we shall not appoint the best men to the Bench. That is the sole purpose of my interest in the Bill.

The reason why I say that they must be mean and penny-pinching is that the existing scheme which I thought was settled 11 years ago—and the noble and learned Lord, Lord Ackner, has explained that it was a great many years before that—settled what was then thought to be fair. The present proposals in the Bill for the High Court and the circuit judges are below that scheme settled 11 or however many years ago it was.

How can this Bill possibly be fair if its terms are below the existing terms settled long ago? We must remember that retirement benefits have changed enormously in the intervening years and what was fair 11 or 20 years ago is now totally unfair, so the comparison should be on quite different terms.

I have been at pains to try to find out what are the Government's objections to the numerous amend-ments that have been made to remove the penny-pinching, mean provisions in certain clauses of the Bill. There seem to be only two. Whenever an amendment was proposed, the answer came back, "Oh, it's the retained benefits". At this end of the Chamber we got very tired of that refrain and formally asked that it should not be repeated, we were weary of it. However, we took note of the point.

Then amendments were put forward saying, "We will bring the retained benefits into charge", which removed the objections. But those have been rejected, and the rejection of what was prayed for so often has made one wonder whether the sincerity on the retained benefits was satisfactory.

The second factor on which the mean and penny-pinching clauses have been resisted is that the Bill must comply with the general law. I cannot discuss or contest questions of law with so many eminent lawyers. But I can put forward the plain, commonsense view. This general law is not some great doctrine which was settled at Magna Carta; it is two or three sections in a taxation Act passed five years ago.

The judiciary are sui generis. They have always needed an Act to deal with their remuneration and pensions, apart from any other Act which might otherwise apply. I cannot see why, if the judiciary are sui generis and need an Act of Parliament of their own, that Act must, for one special purpose only and in one particular only, comply with a section in a taxation Act passed five years ago.

As a layman, I can think without any difficulty at all of half-a-dozen situations where the general law applies to the citizen, but the general law is deliberately amended to meet particular circumstan-ces. I shall not bother to give examples which spring to mind, the many lawyers here will know dozens from their experience. But what makes me convinced that this general law doctrine, which has been thrown at us so often, is totally untenable is that this general law, this taxation section, was passed four or five years ago. But we have lived with the present scheme which is supposed to be contrary to it for five years without the smallest difficulty. No one has complained. No one has raised constitutional or legal difficulties. No difficulties have arisen in practice. There have been no problems at all. The two have worked in harness and the present Bill could go on indefinitely, contrary to so-called general law. So that does not seem to me much of an answer to the points which have been raised again and again to remove these mean and penny-pinching provisions.

But I think what has happened is the following. This was made plain to me in a letter which the noble and learned Lord the Lord Chancellor was kind enough to send to me. We had correspondence about certain parts of the Bill which I need not bother the House with and which in no way affects what I am saying. In the course of a letter of 27th October the noble and learned Lord said: In the current public expenditure climate, the Government did not feel able to entertain a revised scheme for the judges with overall costs which were greater than the present arrangements". There we have it. That is really the whole problem. What happened was that the Government thought the economy was in good shape, at any rate up until about June or July. In August they discovered that the economy was in a grave mess. Then the decision clearly was made that in the current expenditure climate this Bill should be kept within the same cost as the existing arrangement. That is not administration; that is not a proper way to legislate at all. It is pure panic policy and pure panic decisions.

This Bill is not intended—as we know so well—to come into force for 15 or 20 years. To fix its provisions on the basis of the worst slump for 60 years and to say that we cannot exceed the cost of the existing scheme is really ludicrous because the existing scheme has been varied anyhow. To say that the new scheme must have exactly the same costs as the existing one when you have changed the circumstances means that you could not possibly have a fair Bill. That is exactly what has happened.

I have one other gasp of frustration before I sit down. I have been offended in another way. We have gone through four stages on this Bill extending over a period of six months. Decisions after decisions have been made and amendments after amendments have been made. Never at any time in the whole history of the Bill, until last Tuesday at midday, have we known the effect of those decisions. If one runs a whelk stall or a paper shop and one wishes to change the terms of one's customers, or indeed of one's own administra-tion, one works out the cost of doing so stage by stage, quantifies it and assesses the effects.

When we come to settle a Bill for the pensions of the highest judicial officers in the country, we do not do that. We put these amendments through without anybody knowing the cost of doing so, what the effect is and how the new provision compares with the existing scheme. The provision was eventually produced, as I say, last Tuesday. The House has never seen it. As far as I know the only people who have seen it are two or three people down at this end of the House and, I suppose, the Ministers on the Front Bench. But the idea that we should ask the House to make decisions without telling it what the effects of those decisions are, how the different amendments change the scheme, and how the new provision compares with the existing scheme, seems to me totally intolerable. I hope that this is not a way in which legislation will be conducted in future.

10.45 p.m.

Lord Simon of Glaisdale

My Lords, the debate on the Motion that the Bill do now pass generally engenders a somewhat autumnal air. Even the opponents of a measure tend to look on it a little less unkindly and we try to speak well of each other. Such a balmy atmosphere is not altogether possible on this occasion.

The first reason is the way your Lordships have been treated today by the Government's business managers. There were 89 amendments covering 18 pages. Seven-eighths of those were government amendments. To get through that business on a Thursday, when business begins at 3 o'clock, would at the best of times have been exacting; but to interpolate two long statements so that the second amendment was only called at 6 o'clock, and then to refuse the promised respite so that your Lordships who were interested in the Bill were kept on these Benches from 3 o'clock until a quarter to 11 —and we have not yet finished—is quite intolerable. It is no way to treat your Lordships' House.

The second reason is that it would be idle and hypocritical to pretend that this Bill is other than mischievous. Anyone who heard the speeches of the Lord Chief Justice, the noble and learned Lord, Lord Donaldson of Lymington—who has just retired from his very distinguished tenure of the office of Master of the Rolls; as distinguished administratively as it was juristically—and my noble and learned friend Lord Hailsham of Saint Marylebone, the pre-eminent Lord Chancellor of post-war years, could not doubt that the Bill is, at the highest possible estimation, going to do great damage to the judiciary of the future and thus to the standard of judgment and therefore to the rule of law and the liberty of the citizen who depends on the rule of law.

Although I do not like to hear harsh words used of the Treasury I cannot gainsay the epithets which have been expressed by my noble and learned friend Lord Ackner and my noble friend Lord Benson tonight and on earlier occasions.

It is pleasant to pass from the Bill to those who have participated in your Lordships' debates. First, there must be mention of my noble and learned friend on the Woolsack. He has had to defend the Bill on his own against the most forceful and expert attack. If he has seemed at times to be a little less than on his best form, which is very high indeed, one must remember that the arguments that he had to gainsay were those which he must himself have been urging on his colleagues while the Bill was being prepared.

It is not for a moment to be credited that my noble and learned friend did not see the matters that were urged and did not try to persuade his colleagues to adopt a rather less harsh procedure and do less constitutional damage. Any great advocate on the whole tends to convince himself of the validity of his case as he develops it. Nevertheless, it is bound to impair to some extent dialectic and forensic performance when one realises at every stage that one is urging arguments against which one has protested at a very recent time.

Up against my noble and learned friend has been a formidable artillery and a great debt is owed by your Lordships (I am sure noble Lords will agree) to my noble and learned friend, Lord Ackner. His activity, intellectual and physical, has been quite phenomenal. He marshalled his arguments with astonishing lucidity, based often on complicated figures and intricate arguments, all put lucidly forward. Noble Lords must consider themselves very much in his debt.

There is also my noble friend Lord Benson, who brings unexampled expertise on these matters of pensions, at the end of such a distinguished career as his. But there is another reason why your Lordships would wish to be grateful to him. He was chairman of the Royal Commission on the legal profession in England, as the noble Lord, Lord Hughes, was chairman of a similar Royal Commission for the Scottish system. My noble friend Lord Benson, with great labour for three years presided over that commission, taking evidence and weighing it, marshalling the arguments and finally producing an authoritative report. That report was accepted by the Government. But in a sudden ideological spasm the Government changed their mind and brought in a diametrically opposite scheme, a scheme opposite to that of the English commission and opposite to that of the Scottish commission.

It would not have been surprising in those circumstances if my noble friend Lord Benson had then decided to wash his hands entirely of the law, having been treated in that way. We are very greatly in his debt. Not only has he brought his great knowledge and experience to the discussion of this Bill, but he continues to take a vital and a wide-eyed interest in the future of our judicial system.

I have only one other point to make and that is, I hope, a constructive suggestion. At every stage in the passage of this Bill comparisons have been made with whatever system is most unfavourable to the judicial scheme: the public sector pension scheme, private sector pension schemes and the Inland Revenue regime. Although it will not be possible to repair the substantial damage done by the Bill, I have no doubt that my noble and learned friend will be looking for ways to mitigate the injuries that it inflicts on the public interest. I suggest that when comparisons are being made, as they have been made so frequently with the public sector pension schemes, he should keep his eye open for attempts to improve on it. Comparisons have been made with those schemes because most of the public sector schemes are badly out of date. It does not require great gifts of prophecy to forecast that as soon as financial conditions are less stringent the public service trade unions will be agitating strongly for an improvement in the public sector pension schemes to bring them more into line with what the private sector is now doing, as my noble friend Lord Benson has so trenchantly shown during the debate.

I hope that my noble and learned friend on the Woolsack will be able to assure your Lordships that he will watch carefully the improvements that will be made in the public sector pension schemes. Wherever they are improved from a position where they have been used to the disadvantage of the judicial scheme, I hope that he will ensure that the judicial scheme is similarly improved. I hope that my noble and learned friend will be able to give that assurance.

We pass the Bill without great enthusiasm. However, if my noble and learned friend gives that assurance there is at least the knowledge that there will be some mitigation of the harm that it will do.

The Lord Chancellor

My Lords, it would not be appropriate for me to speak at great length at this time of the evening. Your Lordships still have other business on the Order Paper. However, I wish to say one or two things.

Of course I shall be keeping in mind what happens both in public and private sector pension schemes as the future rolls on.

Secondly, the occasion for the Bill was the change in the tax position of pension schemes brought about under the legislation to which the noble Lord, Lord Benson, has referred. It was very desirable that the conformity of the judicial pension scheme to the general tax law to which I referred should be brought about in a Bill which concerned itself with the judicial schemes as a whole. Your Lordships know—I noticed that there was not much reference to it in what we heard in the latter part of the evening—that a number of different schemes affect different parts of the judiciary. One of the objectives of the Bill is to produce a comprehensive scheme that applies to the judiciary as a whole and produces a fair result for all of them.

Some reference has been made, for example, to the arithmetical costing exercise by my noble and learned friend Lord Ackner. However, such an approach does not take into account the pattern of the time for which judges sit. The simple calculation which he made ignores the fact that in present circumstances most judges on average hold office for longer than the time for which they need to serve in order to qualify for a full pension. A number of my noble and learned friends have done that. Therefore, the effect of the present scheme and the new scheme must take account of the pattern that is likely to emerge. It is appropriate to the new scheme to apply to the judiciary as a whole in a consistent way. That makes it much easier for people to move up the scheme without detriment. A number of anomalies in the present scheme have often been referred to and those have been removed by the new structure.

I was delighted to hear the comments of the noble Lord, Lord Williams of Mostyn, about the quality of the judiciary. I believe that he was correct and that the standard of the judiciary is as high as it ever was. I believe also that that high standard will continue and I have no reason to believe that it will be anything else.

During the course of our discussions on the Bill we have made a number of improvements. Our debates have contributed to improving the Bill. I am grateful to all noble Lords who took part, whether or not they were particularly complimentary to me in their submissions. I should not wish to distinguish on such an irrelevant ground. I thank all noble Lords most sincerely for your help in improving the Bill. Assuming that my Motion is agreed to, the Bill will go to another place where what has been proposed will no doubt be discussed fully.

As I made clear at the outset, I understand that the judiciary has a different career pattern from other professions. I explained that within the structure of the general tax and pension law to which I have referred the position of the judiciary was recognised as special by the particular arrangements for the retained benefits. In the old days to which my noble and learned friends and the noble Lord, Lord Benson, referred, there were not the same provisions for people making contributions for their retirement at the expense of the Exchequer.

Pension provisions for the self-employed with tax relief are a comparatively recent development. I do not believe that it is proper that where people have come into the judiciary after attaining a standard in that profession to ignore that fact. That is why I said earlier that I believed that it was an important fact. The overall importance of the tax law in this connection is primarily that to have a scheme that is tax approved it is necessary that it does not accrue faster than over 20 years for the full pension. Within these constraints, the Bill has produced a tax efficient system and it has produced a reasonable result for the judiciary. I have said already that as compared with schemes in the private sector and the public sector taken as a whole the judicial scheme is most favourable.

I wish to thank all noble Lords who have taken part in the debate; those who are still here and those who have left. I am particularly appreciative of the extent to which my noble and learned friend Lord Ackner has taken part in the debates. I am grateful to my noble and learned friends Lord Simon of Glaisdale, the Lord Chief Justice, Lord Hailsham of Saint Marylebone, Lord Donaldson of Lymington and the noble Lords, Lord Benson, Lord Mishcon and Lord Wigoder and my noble friend Lord Renton. I am grateful to my noble and learned friends from Scotland, Lord Morton of Shuna and Lord McCluskey and many others to whom perhaps I may refer in a more composite way. Perhaps I should mention in particular my noble friend Lord Coleraine. I acknowledge the contribution of the noble Lord, Lord Williams of Mostyn, so recently arrived here. I am sure that we all look forward to many distinguished contributions from him in the future.

The debates on this Bill will continue as it passes to another place. I believe that it produces a complete system for the judiciary as a whole which is fair to the judiciary in comparison with other schemes to which attention has been directed. I beg to move.

On Question, Bill passed, and sent to the Commons.