Judicial Pensions and Retirement Bill [H.L.]

HL Deb 27 October 1992 vol 539 cc1039-78

4.40 p.m.

Consideration of amendments on Report resumed on Clause 1.

The Lord Chancellor moved Amendment No.5:

Page 2, line 15, leave out ("judicial offices for the time being") and insert ("offices").

The noble and learned Lord said: My Lords, this is a drafting amendment. Its primary purpose is to put beyond doubt that all the offices listed in Schedule 1—including those offices which might not usually be described as judicial—shall be regarded as qualifying judicial offices for the purposes of the Bill. It also removes an ambiguity. I beg to move.

Lord Wigoder

My Lords, before the amendment is formally adopted perhaps I may clarify the position relating to the bundle of extremely helpful documents about which there was some discussion a while ago. The position is that those papers were apparently supplied to the Printed Paper Office but they were not put on display. Apparently they never are. Therefore, they were only available to noble Lords who cared to ask for them. The problem was that many noble Lords did not know of their existence.

Perhaps I may respectfully suggest to the noble and learned Lord that where such a situation arises in the future, as it is bound to do, noble Lords who have taken part in the debates on the subject at various stages up to that time might either be sent the documents direct or at least notified that documents whose existence they had no reason to suspect are available on request.

The Lord Chancellor

My Lords, I accept that point entirely. We sought to disseminate the documents to some extent. I am sorry that it appears that everyone did not receive copies. I took some trouble in preparing the documents and had hoped that they would be disseminated. I am sorry that the noble Lord, Lord Wigoder, did not receive a copy earlier. We shall certainly see whether we can make better arrangements for the future.

On Question, amendment agreed to.

The Lord Chancellor moved Amendment No.6:

Page 2, line 17, at end insert ("if it is held on a salaried basis. (5A) For the purposes of subsection (5) above, a person holds an office "on a salaried basis" if and so long as, and to the extent that—

1. (a) his service in the office is remunerated by payment of a salary; and
2. (b) that salary is not subject to terms which preclude rights to pensions and other benefits accruing by reference to it;

and the reference in that subsection to an office being held on a salaried basis shall be construed accordingly.").

The noble and learned Lord said: My Lords, I have already spoken to the amendment with Amendment No.4. I beg to move.

On Question, amendment agreed to.

The Lord Chancellor moved Amendment No.7:

Page 2, line 18, after ("amend") insert ("either Part or).

The noble and learned Lord said: My Lords, this is a drafting amendment. Schedule 1 has two separate parts and the amendment merely serves to make it clear that offices may be added to either part of it. I beg to move.

On Question, amendment agreed to.

Lord Simon of Glaisdale

My Lords, perhaps I may ask why the amendment is necessary. If the Minister is given powers to amend the schedule why is it necessary to say that he has power to amend both parts of the schedule? Is it not merely a symptom of the prolixity from which we have been suffering, in spite of the protests of the committee presided over by the noble Lord, Lord Renton?

There is another point which arises in connection with the amendment. Is it not a Henry VIII provision as defined by the Donoughmore Committee? Did not my noble and learned friend say during the passage of the Courts and Legal Services Bill that the Government took fully into account the recommendations of the Donoughmore Committee? Did not those include the recommendation that a Henry VIII clause should not be used merely because it was convenient but when it was necessary? Why is it necessary here?

There are other ways of dealing with such a situation. I hope that my noble and learned friend will not merely say either that when a new judicial office is created it is convenient or it is more convenient for him to be allowed to amend the Act of Parliament. As your Lordships know, under the procedure for parliamentary disqualification of officers holding offices of profit under the Crown as the new office of profit is created that very statute amends the schedule to the Parliamentary Disqualification Act. Why cannot that be done in this case?

I repeat the question, which is capable of a simple answer. Is this a Henry VIII clause? Is it consonant with the recommendation of the Donoughmore Committee to which I referred? Even if it is convenient, why is it necessary?

The Lord Chancellor

My Lords, so far as concerns the amendment, which is the matter at issue, it is desirable to make it plain that either part of the schedule can be amended in order to remove the possible suggestion that all one can do is add something to the end of the schedule.

Lord Simon of Glaisdale

My Lords, will my noble and learned friend allow me to intervene? Can there possibly be any doubt that if the schedule can be amended both parts can be amended?

The Lord Chancellor

My Lords, I am in the course of trying to explain why parliamentary counsel advised that the amendment was wise. He took the view that amending the schedule might be regarded as restricted to adding offices to it. The point is that the office could be added to either part of the schedule and he thought it wise to specify that that was the case.

It seems to me that this type of clause is perfectly appropriate for the purposes of adding to or amending a schedule of this kind, which sets out a list of offices to which the pension provisions might apply. The amendment is concerned with only a minor aspect, and that is why I have moved it.

Lord Mishcon

My Lords, I hesitate to hold up the Report stage of the Bill on a point which has been raised by my noble and learned friend Lord Simon of Glaisdale with such eloquence, but I wish to ask whether the amendment clarifies the position or does the reverse. If one can amend a schedule one can obviously amend any part of it. If one introduces an amendment which provides that one can amend either part of the schedule does not one then have to choose whether to amend Part I or to amend Part II of the schedule? With the original wording there can be no doubt about the power to amend the schedule.

The Lord Chancellor

My Lords, the clause which has been amended is not quite so simple. It says that: The appropriate Minister may by order amend Schedule I to this Act by adding offices to those for the time being there specified". It is the view of parliamentary counsel, which has led to the amendment, that that wording contains an ambiguity in that it may suggest that one can only add offices to the schedule and that therefore that would mean at the end of the schedule. It was for that reason that the amendment was proposed.

Lord Mishcon

My Lords, perhaps I may take one more second.

Baroness Trumpington

My Lords, it may be great cheek on my part to intervene but I have been told by our learned clerk that the noble Lord is out of order.

The Lord Chancellor moved Amendment No.8:

Page 2, line 23, at end insert ("other than subsection (6) above").

The noble and learned Lord said: My Lords, the purpose of the amendment is to allow subsection (6) to come into force at an earlier date than the rest of the Bill, should that be desirable. That would enable the Lord Chancellor to bring any further offices which may be necessary within the scope of Schedule 1 before the appointed day. The Bill would then operate in exactly the same way in respect of such offices when it comes into force on the appointed day as it would in respect of all others. I beg to move.

On Question, amendment agreed to.

Schedule 1 [Qualifying judicial offices]:

The Lord Chancellor moved Amendment No.9:

Page 25, line 20, leave out ("salaried").

The noble and learned Lord said: My Lords, I spoke to the amendment with Amendment No.4. I beg to move.

On Question, amendment agreed to.

The Lord Chancellor moved Amendment No. 10:

Page 25, line 35, leave out ("Senior, or other").

The noble and learned Lord said: My Lords, in speaking to Amendment No.10 I should like to speak also to Amendments Nos.11 to 14, 16, 18, 19, 25 and 26.

These are purely technical amendments intended to ensure that the list of offices in Schedule 1 correctly describes those offices which are to come within the new pension scheme and does not include any which are not. Amendments are made to the entries relating to the district judges of the Principal Registry and the Family Division, child support commissioners, the presidents of a number of tribunals and the chairmen of a number of tribunals and various officers of the Immigration Appeals Tribunal. The chairmen of child support appeal tribunals also gain separate entries in the schedule. I beg to move.

On Question, amendment agreed to.

The Lord Chancellor moved Amendments Nos.11 to 14:

Page 26, line 8, at end insert ("excluding appointments in pursuance of paragraph 4 of Schedule 4 to the Child Support Act 1991").

Page 26, line 9, at end insert (", excluding appointments in pursuance of paragraph 4 of Schedule 4 to the Child Support Act 1991 as that paragraph has effect by virtue of paragraph 8 of that Schedule").

Page 26, leave out lines 12 and 13.

Page 26, leave out lines 16 and 17 and insert ("for Northern Ireland").

The noble and learned Lord said: My Lords, I spoke to Amendments Nos.11 to 14 with Amendment No.10. With your Lordships' leave, I should like to move these amendments en bloc.

On Question, amendments agreed to.

The Lord Chancellor moved Amendment No.15:

Page 26, line 18, leave out ("Regional or other full-time")

The noble and learned Lord said: My Lords, I spoke to this amendment with Amendment No.4. I beg to move.

On Question, amendment agreed to.

The Lord Chancellor moved Amendment No.16:

Page 26, line 19, leave out from first ("tribunals") to end of line 20 and insert ("and disability appeal tribunals").

The noble and learned Lord said: My Lords, I spoke to this with Amendment No.10. I beg to move.

On Question, amendment agreed to.

The Lord Chancellor moved Amendment No. 17:

Page 26, line 21, leave out ("Full-time").

The noble and learned Lord said: My Lords, I spoke to this with Amendment No.4. I beg to move. On Question, amendment agreed to.

The Lord Chancellor moved Amendments Nos.18 and 19:

Page 26, line 22, leave out ("disability appeal tribunals and child support appeal tribunals") and insert ("and disability appeal tribunals").

Page 26, line 23, at end insert: ("Chairman of child support appeal tribunals Chairman of child support appeal tribunals in Northern Ireland").

The noble and learned Lord said: My Lords, I spoke to these amendments with Amendment No.10. With your Lordships' leave, I move the amendments en bloc.

On Question, amendments agreed to.

The Lord Chancellor moved Amendments Nos.20 to 24:

Page 26, line 29, leave out ("Full-time").

Page 26, line 32, leave out ("Full-time").

Page 26, line 37, leave out ("full-time").

Page 26, line 46, leave out ("Full-time").

Page 26, line 47, leave out ("Full-time").

The noble and learned Lord said: My Lords, I spoke to Amendments Nos.20 to 24 with Amendment No.4. With your Lordships' leave, I beg to move the amendments en bloc.

On Question, amendments agreed to.

The Lord Chancellor moved Amendments 25 and 26:

Page 26, line 49, leave out ("Vice-President") and insert ("other member").

Page 26, leave out lines 50 to 52.

The noble and learned Lord said: My Lords, I spoke to these amendments with Amendment No.10. With your Lordships' leave, I beg to move the amendments en bloc.

On Question, amendments agreed to.

The Lord Chancellor moved Amendments Nos.27 and 28:

Page 27, line 3, leave out ("full-time").

Page 27, line 4, leave out ("full-time").

The noble and learned Lord said: My Lords, I spoke to these amendments with Amendment No.4. I beg to move the amendments en bloc.

On Question, amendments agreed to.

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

Lord Ackner: moved Amendment No.29:

Page 2, line 27, leave out ("65") and insert ("60").

The noble and learned Lord said: My Lords, in moving this amendment I take together Amendments Nos.29 to 33 and 35 to 36 because all relate to Clause 2 and the ages referred to therein. The first one referred to is the age at which a person who retires from the qualifying office can draw his pension. In Clause 2(1) (a) that is 65. Clause 2(1) (b) obliges him to have done five years' service in the qualifying office. Clause 2(2) deals with someone who wishes to retire before 65. If he retires at 55 he has his pension actuarially reduced.

The purpose of the amendment is to make the scheme consistent with modern practice. Sixty five is in excess of the usual retiring age. The general age for senior employees, certainly in the private sector, is 60, and doubtless that is so within the Civil Service. Your Lordships may remember that the pension proposal devised by the Government was not handed over to the Top Salaries Review Body to provide a scheme as was done in the case of Members of Parliament. It is difficult to know why, because it is accepted that a pension is deferred pay and the remit of the Top Salaries Review Body is to advise the Minister on matters of pay in regard to those within its remit. The result was that a consultative paper was published by the Government. Among those who reacted was the Top Salaries Review Body. On the subject of age it commented: The early retirement provisions are insufficiently flexible and fall short of good practice elsewhere. The Inland Revenue allow any pension earned to be put into payment after the age of 50 without an actuarial reduction. However, most employers impose some actuarial reduction and we would suggest that this should apply to early pensions where members leave between the age of 50 and 60. Pensions of men and women retiring early over the age of 60 should not be subject to actuarial reduction in line with good practice elsewhere and rulings in the European Court of Justice". When the matter was debated in Committee my noble and learned friend said: To take 60 as the normal age at which a pension would be payable would be to make a considerable change to the scheme. That would have the effect of seriously damaging the possibility of the scheme standing as it does". [Official Report, 30/6/92; col.675.] He did not vouchsafe any further reasons for that and it is difficult to understand why a reduction from 65 to 60 (the ordinary retirement age) and a reduction from 60 to 55 (the actuarially reduced pension) should in any way cause that result.

The limits we propose are modest in extent. Those which are in the Bill are out of date and according to the TSRB not consistent with good practice.

The next amendment is to delete: (b) who has, at the time of that retirement, completed, in the aggregate, at least 5 years' service in qualifying judicial office. There does not seem to be any justification for taking five years. After two years a person is entitled by law to a pension under the social security regulations. Therefore, there would seem to be no purpose in imposing a five-year limitation. I beg to move.

The Lord Chancellor

My Lords, the difference in the normal and early pension ages in this scheme from those in the private sector is a function of the unusual career path which the judiciary follows. Although the Bill reduces the compulsory retirement age for judges and makes provision for the first time for early retirement with an immediately payable pension we have not yet reached the point when the judiciary will follow exactly the same career and employment patterns as the rest of the public and private sectors.

To a great extent it is, I believe, common ground among many of your Lordships, in particular my noble and learned friends, that the best persons to fill judicial posts are those who have reached a certain degree of standing in the legal profession appropriate to the offices in question. This usually means that entrants will come to those offices rather later in life than generally applies in other careers and that they will tend to work to a later age. That this has consequence for the shape of the scheme is, I believe, obvious. An occupational pension scheme must be designed to reflect the realities of the career paths of its members. It is for that reason that the judicial pension scheme will have the shortest accrual period the Revenue will permit for earning maximum pension benefits whilst attracting tax-approved status. It is for this reason also that the early retirement and normal pension ages are a little above those used for others. Because of the age at which members of the judiciary are appointed, it would be impractical to allow them, as these amendments seek to do, to retire within a few years of appointment with an immediately payable pension without actuarial reduction. The taxpayer has a right to expect some minimum length of public service from public office holders before taking on the not inconsiderable expense of pensioning them and their dependants, possibly for a good many years ahead.

I believe that the Bill as drafted is fair both to the scheme members and the taxpayers. In my judgment it is a scheme which is properly fitted to the career pattern that judges would normally follow. Accordingly, I must invite your Lordships not to accept this amendment.

5 p.m.

Lord Ackner

My Lords, before my noble and learned friend sits down, perhaps he will tell the House whether he anticipates that, with a retiring age reduced from 75 to 70, he envisages the appointment of judges earlier than on average occurs at present.

The Lord Chancellor

My Lords, it is difficult to be certain about how that may operate. It may well be that judges will be appointed somewhat earlier than at present but not so early as to justify the provisions in these amendments.

The provisions of the Bill reduce the current retiring age. It is worth mentioning that in response to the consultation paper, the Association of County Court and District Registrars (as it was) stated: We strongly support the proposal to reduce the normal retiring age to 65". The Council of Her Majesty's Circuit Judges, writing about that, said: The ability to retire at 65, taking a lower pension if necessary, is to be welcomed and is an undoubted benefit". I quote from the departmental response. My point is that even if judges are appointed in future at a point somewhat lower than at present, the need for them to attain a degree of standing in the profession is such that in any event this particular proposal would be inappropriate.

Lord Ackner

My Lords, from my noble and learned friend's answer, it follows that if a judge—this could easily apply to a circuit judge or a district judge—is appointed under the age of 45, and the present 20-year accrual period stands, he has to serve more than 20 years in order to retire with his pension. If he retires earlier, it will be actuarially reduced, although he has served more than 20 years.

That seems to me to be utterly wrong. Why should that situation arise? He has done his 20 years and ought to be able to go. Instead, he is not only obliged to stay on but to stay on for all practical purposes at half pay. If he had gone after 20 years at the age of 65 he would have received his half pay pension. He is obliged to stay on without drawing that half pay and therefore in effect only receiving half pay merely because the modern retiring age, which applies not only in the private sector but equally throughout the Civil Service, is not to be used in this instance.

I take comfort only to the extent that I infer from my noble and learned friend's answer the clearest possible concession that the judges are sui generis, a matter on which I hope that we shall be able to build later in the debate. On that basis, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Ackner had given notice of his intention to move Amendment No. 30:

Page 2, line 28, leave out paragraph (b).

The noble and learned Lord said: My Lords, I am happy that this amendment is no longer necessary. It was tabled to deal with the situation of a judge, who because of ill health, was required to retire. He did not resign but was required to go. That provision was coupled with the provision later in the Bill which deals with removal for misbehaviour. It was in order to divorce the one from the other that the amendment was tabled. I am happy to concede that the amendments proposed by my noble and learned friend the Lord Chancellor achieve that purpose but, obviously, with greater ability and distinction. Accordingly, I shall not move the amendment.

[Amendment No.30 not moved.]

[Amendments Nos.31 to 37 not moved.]

The Lord Chancellor moved Amendment No. 38:

Page 3, line 8, leave out ("on the ground of incapacity or misbehaviour").

The noble and learned Lord said: My Lords, this amendment is intended to deal with the matter referred to by my noble and learned friend Lord Ackner in his observations a few moments ago. In moving this amendment I shall also speak to Amendment No.39 which is part of the series to which my noble and learned friend referred. I shall endeavour to deal with that amendment and also Amendment No.44 tabled in my name. I speak to Amendments Nos.38 and 44 but the subject matter is also covered by Amendment No.34, to which reference has been made, and Amendment No.39.

As has been said, the amendment is intended to deal with the point raised by the drafting of subsection (4). That subsection deals with the pension entitlement of a qualifying judicial officer who is removed from office. As drafted, it gives just two grounds for removal: incapacity and misbehaviour. In fact, the grounds on which the different classes of officer who will come within the scheme may be removed are many and various and not limited to just those two. Therefore, the simplest way of dealing with the matter is to cut out altogether the description of the grounds. I beg to move.

On Question, amendment agreed to.

Lord Ackner had given notice of his intention to move Amendment No.39:

Page 3, line 8, leave out ("incapacity or").

The noble and learned Lord said: My Lords, I think that there may be some slight confusion here and I should like some assistance in clarifying it.

Amendments Nos.37 and 76 are grouped together and listed below Amendment No.39. I take it that Amendment No.39 will be put to the House before Amendment No.37 is dealt with.

The Lord Chancellor

My Lords, I called Amendment No.37 a little while ago.

Lord Ackner

My Lords, the grouping shows very clearly that Amendment No.37 is to be taken with Amendment No.76. They are related. Amendment No.39, to which the noble and learned Lord has just referred, appears in the grouping above it.

The Lord Chancellor

My Lords, I have to call the amendments in the order in which they appear on the Marshalled List. I called Amendment No.37 and I understood that my noble and learned friend responded to the effect that it was not moved. It may be possible for him to deal with this difficulty. Obviously, if he wants later to raise an amendment which is related to Amendment No.37, I shall not stand in the way of ultimately giving effect to Amendment No.37 if your Lordships are in favour of the later amendment.

Lord Hailshani of Saint Marylebone

My Lords, we are getting into rather a muddle. I understood my noble and learned friend on the Woolsack to have proposed Amendment No.38 and the House passed it. Amendment No.38 leaves out, on the ground of incapacity or misbehaviour". Amendment No.39 leaves out "incapacity or". The phrase has already been left out.

The Lord Chancellor

My Lords, I understood the problem to be that my noble and learned friend Lord Ackner was wishing to raise Amendment No.37 which I called some time ago.

Lord Ackner

My Lords, in view of my noble and learned friend's kind suggestion, when we deal with Amendment No.76, which is linked to Amendment No.37, with your Lordships' indulgence I shall marry the two together. That is why they are grouped together.

[Amendment No.39 not moved.]

The Lord Chancellor moved Amendment No. 40:

Page 3, line 26, after ("determined") insert ("(subject to section 4(6) below)").

The noble and learned Lord said: My Lords, with this Amendment I speak also to Amendments Nos.57 and 66 to 68.

They are technical amendments and are concerned with the rare case of a scheme member who retires and begins to receive a pension but is then reappointed to judicial office. That is something that does not happen too often. A person in that situation will not be required on returning to service to refund any lump sum payment which he may have received on his first retirement. However, when he comes to his final retirement his pension and lump sum will be calculated by reference to his full service and any part of the final lump sum he has already received should not of course be paid to him again.

Clause 4 as drafted already provides for the deduction of an equivalent amount to any lump sum the officer has already received from the lump sum payment he receives on final retirement. It does not provide, however, for equivalent deductions from the lump sum payments made to personal representatives in the event of death in service or in the circumstances set out in Clause 4(3). The amendments are designed to cover those points and to put that matter right. I beg to move.

On Question, amendment agreed to.

The Lord Chancellor moved Amendment No.41:

Page 3, line 27, at end insert: ("( )A A pension under this section shall be payable at such intervals, not exceeding three months, as the Treasury may determine.").

The noble and learned Lord said: My Lords, with this amendment I speak also to Amendments Nos.70,80 and 81.

The purpose of the amendments is to establish the timing of payment of a pension under this section, and of the surviving spouses' and children's pensions. The amendments allow for administrative flexibility by enabling the Treasury to determine the actual timing of payments, but include the safeguard that the intervals between payments shall not exceed three months. I beg to move.

On Question, amendment agreed to.

The Lord Chancellor moved Amendment No. 42:

Page 3, line 42, at end insert ("(except to the extent to which it is given effect under or by virtue of section 12 below").

The noble and learned Lord said: My Lords, the purpose of this amendment is to ensure that, where an officer holds an office which is added to the list of offices in Schedule 1, his accrued rights in that office before the date on which it becomes a qualifying office can be transferred into the new scheme under the provisions of Clause 12. I beg to move.

On Question, amendment agreed to.

The Lord Chancellor moved Amendment No.43:

Page 4, line 4, at end insert ("and for this purpose a payment in respect of a pension shall be treated as becoming due on the first day of the period for which it is payable.").

The noble and learned Lord said: My Lords, the purpose of this technical amendment is solely to protect the interests of a judicial officer's estate in respect of pension payments that were due to a judicial officer but have not actually been paid to him at the time of his death. I beg to move.

On Question, amendment agreed to.

5.15 p.m.

The Lord Chancellor moved Amendment No.44:

Page 4, line 8, at end insert: ("(e) where a person ceases to hold qualifying judicial office in consequence of infirmity of mind or body, the cessation (however brought about) shall be taken for the purposes of this Part to constitute retirement, not removal, from such office.").

The noble and learned Lord said: My Lords, I have already spoken to the amendment with Amendment No.34. I beg to move.

On Question, amendment agreed to.

Clause 3 [The appropriate annual rate]:

The Lord Chancellor

My Lords, if Amendment No.45 is agreed to, I cannot call Amendments Nos.46 to 48 inclusive.

Lord Coleraine moved Amendment No.45:

Page 4, line 10, leave out subsections (1) and (2) and insert:

1. ("(1) In the case of a person who at the time of his retirement from qualifying judicial office has completed not more than twenty years' service in such office the "appropriate annual rate" for the purposes of this Act is an annual rate equal to one-fortieth of his pensionable pay multiplied by the aggregate length of his service in qualifying judicial office (expressed in years and fractions of a year).
2. (2) In the case of a person not falling within subsection (1) above the appropriate annual rate for the purposes of this Act is an amount equal to one-half of his pensionable pay plus an amount equal to one-seventieth of his pensionable pay multiplied by the aggregate length of his service in qualifying judicial office which exceeds 20 years of such service, but not extending beyond the date upon which he attains the age of 65 or completes 25 years of such service whichever first occurs (expressed in years and fractions of a year).").

The noble Lord said: My Lords, I first moved the amendment in Committee. I make no apologies for bringing it back again today because when my noble and learned friend sought to answer, he did not so much answer as probe the thinking behind the amendment. With the four months which have passed since Committee stage, I hope that he may have found it possible to look favourably at the thinking behind the amendment, if not the wording which I concede is incomplete at this stage.

The amendment provides a modest increment to pensions of judicial officers who are appointed before the age of 45 years, but would do so only in respect of periods of service exceeding 20 years and completed before the age of 65. Under the Bill as drafted such judicial officers will have been unable to make tax-effective contributions to their pensions during their periods of service before the age of 45. That fact alone, according to my understanding of the thinking behind the Bill, ought to speak loudly in favour of the amendment being accepted.

I remind the House that in the consultation paper, the point is answered by the statement that the extra pension payable to persons for periods in excess of 20 years would exceed the limits allowed for tax-approved schemes. On the basis of the actuary's report prepared for the Association of District Judges, I argued in Committee that that was incorrect. I challenged the assumption. I stated that the modest increment that the amendment allowed was within the limits laid down for those schemes. My point has not been challenged. I believe that the point which I made in Committee still holds good. I beg to move.

Lord Campbell of Alloway

My Lords, my noble friend makes an important and constructive contribution to this aspect of the debate. If the Government were prepared to accept Amendment No.45, I would support it. However, as I understand the attitude of the Government, they will not accept Amendments Nos.45,46 or 47. Since I prefer Amendments Nos.46 and 47, with deference to my noble and learned friend, I shall support those amendments in due course.

The Lord Chancellor

My Lords, as I stated in calling the amendment, it pre-empts later amendments. That I understand to be the purport of the observations of my noble friend Lord Campbell of Alloway.

The pension scheme has to be designed with an eye to a maximum level of benefit obtainable under it. In this case we have set the accrual span for earning maximum benefit at the minimum that the revenue allow for a tax-approved scheme; namely,20 years. I can see that there is possible scope for a person who has not any retained benefits to wish to improve what he might receive. In this connection, having in mind what my noble friend said at Committee stage, I have considered what else can be done.

My noble friend Lord Coleraine will have noticed the provisions of the additional voluntary contribution scheme referred to in Clause 10 of the Bill. I believe that it may be possible to open that up still further by making technical amendments which I shall propose later in order to enable people in the situation to which my noble friend referred to make such additional contributions. Contributions made under such a scheme will attract tax relief and would therefore be a way of adding to the value of the judge's pension up to the Inland Revenue's maximum in his particular case. If a person has no retained benefits, that would be quite an attractive option. I cannot accept the amendment as it is put. However, I have endeavoured to deal with the situation by opening up further the possibility of a scheme under Clause 10.

I hope that in the light of that explanation my noble friend will feel able to withdraw the amendment and make it possible for us to have a debate on Amendment No.46 and later amendments.

Lord Coleraine

My Lords, I listened to what my noble and learned friend said and I wish to consider the points that he drew to my attention. I cannot help believing that if the period could be stretched to 25 years where that is justified that would be right. However, tonight is not the time to take the matter further; I sense that the will of the House is that the amendment is withdrawn and consideration is deferred. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Donaldson of Lymington moved Amendment No.46:

Page 4, line 11, leave out ("20") and insert ("15").

The noble and learned Lord said: My Lords, perhaps I may first express my appreciation to the noble Lord, Lord Coleraine, for withdrawing his amendment and thus enabling the House to debate Amendment No.46. It is grouped with Amendment No.47, which is purely consequential and need have nothing said about it in its own right. Amendment No.46 raises the great issue of whether we should have a minimum accrual period of 15 or 20 years. Its purpose is to retain that accrual period where it exists and to extend it throughout the new scheme which is proposed by the Bill.

I moved the two amendments in Committee. They received unanimous support from all who spoke other than, necessarily, the noble and learned Lord the Lord Chancellor. However, that is not a matter of criticism. I withdrew the amendments in order to enable the noble and learned Lord to put the views of the Committee before the Treasury. I assume that he did so, but there has been no sign of any change of mind.

In Committee the noble and learned Lord resisted the amendments and in doing so advanced two explanations. First he said that in 1988 Parliament altered the general tax laws relating to pensions. That is entirely correct, but the change was in the general tax laws—and I stress the word "general". There was no suggestion that the judicial pensions scheme for the higher judiciary would in consequence require revision or that if for other reasons it were thereafter revised, any such revision must be within the 1988 general tax framework.

Few laws, and in particular tax laws, can have universal application. As we all know, no government have ever had the slightest hesitation in making exceptions in tax laws for exceptional situations in which the public interest genuinely so requires. The noble and learned Lord the Lord Chancellor has spoken in the debate about the exceptional career path or pattern of the judiciary. It is my submission to your Lordships that that very exceptional career path or pattern raises the question of whether exceptional treatment should be accorded to the judiciary. I wish to make clear that I am not suggesting that in the interests of the judiciary; I suggest it in the public interest. It must be judged by the public interest and it is only if the public interest would be served by exceptional treatment that there should be such treatment.

Secondly, the noble and learned Lord the Lord Chancellor said that it was desirable that there should be one uniform scheme for judicial pensions which would eliminate the anomalies and injustices which undoubtedly arise when, as at present, we have more than one scheme and a judicial officer has to change schemes on promotion. I am sure that no one will disagree with that objective. However, there are more ways than one of achieving it, and the way in which the Bill is drafted is not one of them.

What the noble and learned Lord did not say, but what I ventured to suggest underlies the Government's whole attitude towards amendments to the Bill, is that whatever changes are being made in the pension arrangements, the result must be financially neutral; those changes must cost nothing. If a 30-year accrual period is to be changed to 20 years, some other period must be increased. In the Government's view that is the only public interest which matters.

With the greatest respect, I suggest that that is complete nonsense. We are not legislating for a time of temporary recession; we are legislating for the long term. Indeed, the full effects of the Bill will not be felt for at least 15 years, and some people suggest it will be longer.

In that situation there exists another public interest of far greater importance; that is, the quality of justice and the calibre of the judges who administer it. No one denies that the office of judge of whatever level is rewarding in its nature. At present it rightly carries with it a certain status in the community. However, if one makes that sufficiently financially unattractive, the day will assuredly come when suitable candidates will say to themselves, "Well, if the public rate the importance of the job that low, I am just not interested in seeking appointment".

Not only will the candidates for judicial appointments be affected, so will the administration of justice which, as your Lordships well know, is deeply rooted in public confidence. Why should the public have confidence in judges if they are relatively lowly regarded in the league tables of esteem as measured in terms of remuneration?

The principal vice of the Bill is that it seeks to make two changes; one is clearly desirable and the other could be justified only if the judicial career structure or path were radially different. Put together, their effects are cumulative and will almost certainly prove disastrous in the longer term.

For reasons previously given, I supported and continue to support lowering the retirement age to 70. That necessitates lowering the average age of appointment to judicial office by approximately five years. If at the same time one increases the pension accrual period by five years, one will, in effect, reduce the average age of appointment by 10 years. One is then talking about appointing judges aged between 40 and 45 which, as a norm, is too young. Such judges will not have acquired the depth of experience which is required by them. Furthermore, it will deprive the public of the services of the brightest and best members of the practising branch of the legal profession just at a time when they are beginning to develop their full potential. Therefore, there will be a double loss; a loss to the practitioners who directly serve the public as clients and a loss to the Bench.

There are real objections to a 20-year accrual period, apart from being combined with a reduced retirement age. The majority of judges will never be promoted. They will continue throughout their careers to serve in the office into which they were first appointed. That is inevitable even if it is inherently undesirable. It is inevitable given the pyramidical nature of the judiciary, the numbers involved and the real differences between the talents called for at the different levels. Twenty years of an endless diet of the same professional fare will inevitably blunt the enthusiasm for sympathy and the critical approach which judges would bring to bear upon all the cases which they are called on to try. I suggest that we cannot afford to have judges soldiering on simply in order to earn their full pension. Apart from anything else—and there are many other objections—it would tend to raise the normal retiring age rather than lower it.

It is a great mistake to think, as the noble and learned Lord the Lord Chancellor appeared to think when this matter was last before us, that practitioners at or about the age of 40 will already have acquired significant pension rights. Only the exceptional few will have had incomes to make that possible. Of those few, many will naturally and humanly, if not perhaps very sensibly, have concentrated their expenditure on the immediate needs of their families, including such matters as expenditure incurred to educate their children and to service the mortgages on their homes.

When offered judicial employment, those people will have to ask themselves whether they are prepared to forgo the opportunity of acquiring the really worthwhile pension which would be open to them if they continued in private practice for 10 or 15 years when the alternative facing them is to hold judicial office for 20 years and end up with a very much smaller pension.

At present it is extremely rare for a judge to be appointed at an age at which he cannot earn a full pension based on a 15 year accrual period. Perhaps the noble and learned Lord the Lord Chancellor contemplates that in future it will be the rule rather than the exception that a judge should be appointed at a time when he cannot serve for long enough to qualify for a full pension. If so, judicial pensions will not normally exceed a figure of perhaps one third rather than one half of final salary. That may well save money but it will be singularly unattractive to those who are considering judicial appointments. As always, the result will be that we simply get what we pay for. I hope that the House will support these amendments not in the interests of future judges but in the public interest.

5.30 p.m.

Lord Taylor of Gosforth

My Lords, I regard this as the crucial clause in Part I. I wish to support this amendment with such force as I can muster. I believe that I do so with the greater authority in that I know I speak on behalf of the judiciary as a whole, not just the High Court Bench but especially the circuit Bench up and down the length and breadth of this country.

What is proposed in this amendment is not an advantage for the judiciary which it has not hitherto had. All that is sought is that the status quo should remain. That status quo has existed for a long time and for very good reason, the good reason being, as has already been said and acknowledged by my noble and learned friend, that the judiciary is in a unique position because of what my noble and learned friend referred to as the unusual career path and the fact that before anyone is ripe to be appointed to the Bench he needs—again I use my noble and learned friend's words—to have acquired status and experience. That means that the judiciary starts its job in that role at a stage when many people are already beginning to contemplate retirement. Therefore, it means that the length of the accrual period for pensions in relation to the judiciary must be separately considered from any consideration in regard to public servants in general. That has been recognised and that is why the accrual period of 15 years for the judiciary has been in existence for so long.

The arguments on this clause have already been deployed skilfully by my noble and learned friend Lord Donaldson of Lymington, and at previous stages of the Bill. However, I make no apology for repeating them because my noble and learned friend the Lord Chancellor has not addressed them either in this House or in such discussions as I have had with him.

Perhaps I may make two preliminary remarks. First, the present judiciary has no self-interest to protect in regard to this clause because it simply does not bite upon those in office at present. Therefore, however cynical anyone may feel about self-interest, it simply does not apply here.

The second point has already been made by my noble and learned friend Lord Donaldson of Lymington. At a time when every increase in payment or every financial provision must be scrutinised in the light of the stringent circumstances in which we find ourselves temporarily, this Bill does not fall to be considered in those terms. As has already been said, here we are laying down the guidelines for judicial pensions not for this year or next year and, indeed, not even beginning to have any bite for another 15 years or so. When they do have a bite, they will continue to bite for many years during which I hope that this country will again see periods of prosperity. Therefore, this clause need not be considered solely in the light of present stringent circumstances.

I am fundamentally opposed to the 20 year period, not because it is financially unfavourable to the judiciary—of course it is—but my reason is concerned with the public interest. Together with my noble and learned friend on the Woolsack, I am primarily responsible for the efficiency and standards of service of the judiciary. I am quite satisfied that to require judges to serve for 20 years in order to earn a full pension is contrary to the public interest. Twenty years sitting on the Bench, after a career in a profession preceding it, is an extremely long time. There can be no doubt but that there is a tendency for staleness, for case hardening, for inflexibility of approach and for resistance to change, both as regards new laws and society, to set in when a judge sits for too long—and particularly when he sits for too long—doing the same work in the same place.

I do not mean in any way to denigrate—quite the contrary—the circuit judges who form the backbone of the judiciary in this country, disposing of the great majority of civil cases and jury trials. However, they tend to sit in the same place doing the same class of work day in and day out, year in and year out. Presently the evidence shows that many judges who are appointed when they are about 50 have lost their zest for the work by the time they have been there for 15 years. They have had enough. Judges, particularly on the circuit Bench but not solely there, who have been appointed at about the age of 50 are in many instances ready to go and do go at the age of 65 or thereabouts.

If this clause is not amended, it will force them to work on for another five years in order for them to gain a full pension. In those five years they will not be happy and I dare say that the public interest will not be served by judges who are soldiering on simply for that purpose, whereas they really feel that they have done their work on the Bench.

The answer to this which has been presented so far by my noble and learned friend is not to address the argument head-on and say, "I do not accept that 20 years is too long or that case hardening sets in". His argument is to say, "Well, they do not need to stay that long. They can go after 15 years, as they always have. Of course, they will only receive fifteen-twentieths of their pension but there is the retained benefit, and how generous we are in not taking retained benefit into account, which is a unique privilege attaching to the judiciary and to nobody else".

That is misconceived. It is particularly misconceived in relation to the circuit Bench because in that case we are not necessarily dealing with high earners who have been able, in the very few years of their maturity at the Bar, to put aside money by way of retained benefits so that they have some private pension to supplement their fifteen-twentieths if they go at the age of 65. Those who are appointed to the Circuit Bench are often not high flyers. One does not need to be a high flyer in order to be an extremely good judge. In the past it has been thought that those who are the most flashy and able advocates are not always the best on the Bench because they continue to practise that skill from the Bench where it is not as appropriate as it was from counsels' benches.

There are many judges who are extremely good but who have not earned high fees at the Bar. Moreover, at the time they are appointed to the Bench (and, a. fortiori, if they are appointed a little earlier as my noble and learned friend contemplates they will be) the moment of appointment will hit them just when they are trying to educate their families, pay their mortgages and generally enable themselves to be established in middle life rather than at a time when they have been prosperous for a period and been able to make a nestegg for themselves as the view of the noble and learned Lord the Lord Chancellor seems to contemplate. The retained benefit argument may be all right for a few high flyers. However, it does not apply to the foot soldiers of the judiciary. It is those judges for whom I am most concerned in this provision.

Should the clause remain unamended, the Bill will contain two major clauses which clash in their purposes. I support and have always supported a reduction in the retirement age of the judiciary. That is provided for in Part II of the Bill, a reduction from 75 to 70. In fact that was not initially proposed by the Government. It was initiated and supported by the judiciary themselves. At the time it was so supported and proposed there was not the countervailing provision looming on the horizon of making the judges work an extra period in order to earn a full pension.

At the moment, should the clause remain amended, judges will have to retire earlier and work longer in order to earn their full pensions. It seems to me that those two provisions incontestably work in opposition to one another. The motive for reducing the retirement age of judges from 75 to 70—namely, to achieve a younger judiciary more acceptable to the public in the 1990s—will be defeated by the fact that most judges on the Circuit Bench who would have retired at 65 or thereabouts will now hang on until they are 70. The average age of the judiciary will therefore be higher as a result of the Bill rather than lower.

It is for the noble and learned Lord on the Woolsack and myself to ensure that the judiciary are so appointed and deployed as to give the public the best service. I have yet to hear the response of the noble and learned Lord the Lord Chancellor to the argument that to have judges soldiering on for 20 years is contrary to public interest. But the justification is said to be twofold. First, that it is in accordance with general taxation policy; secondly, that it is bringing the judges into line with other public servants.

As my noble and learned friend said, judges are in a separate category. The general taxation policy can be varied. There is no reason why there should not be exceptions; indeed, if there were not there would be no need for this part of the Bill at all. My noble and learned friend contemplates that there will be exceptions in relation to the judiciary, to wit, the retained benefits. Therefore if it is desired and thought to be in the public interest that there should be an exception in relation to the accrual period, then that can be made too. There is nothing which requires the judiciary to be placed in the general Procrustean bed of a 20-year accrual period simply to bring them in line. Bringing them in line is not necessarily a good thing in all cases; uniformity is not necessarily the ultimate virtue.

The arguments put forward in favour of the clause simply do not meet the main argument in regard to the public interest which I have endeavoured to present. I hope that the House will see the force of my argument and carry the amendment. I ask particularly that when my noble and learned friend on the Woolsack replies, he has regard to the efficiency of the judiciary—of which he is the head—has regard to the public whose interests should be paramount and does not simply speak for the Treasury.

5.45 p.m.

Lord Hailsham of Saint Marylebone

My Lords, I hope not to take up too much time. I ask the House to believe that my one object in speaking is that I am concerned that we should obtain the best judges we possibly can to serve the public. Two of my noble and learned friends on the Cross-Benches pointed out that the financial cost of the accrual period will not, in the nature of things, bite during my lifetime—certainly not for 15 years. The effect of accepting the Bill, if it is not amended in the sense proposed by my noble and learned friends, will bite the moment the Bill comes into effect and from then onwards. It will have immediate effect.

If it be the case that it will be more difficult for future Lord Chancellors to recommend to Her Majesty appointments of judges of adequate calibre, the Bill will have done almost infinite harm. As the noble and learned Lord the Lord Chief Justice said, we have the concurrence of the two main propositions in the Bill. The first is the reduction in the retiring age from 75 to 70 in the higher grades of the judiciary which appears to be fairly uncontroversial in itself. However, it is the effect of the accrual period upon that reduced retiring age which will produce the result that we fear.

Last week an Unstarred Question debated the need for judges. There was unanimous opinion from the Cross-Benches on that occasion and from other quarters in the House regarding the need for more judges in the judicial establishment. I share that view. We probably need another seven judges in the judicial establishment at the High Court level, and I do not know how many more at circuit judge level. I do know that when I was Lord Chancellor I had to appoint around 400 circuit judges, and I do not know how many recorders and assistant recorders in addition. When my father was Lord Chancellor, he had to appoint around one-quarter of that number.

The Bar was smaller then, as was the solicitors' profession. But in fact the extent by which work has increased for the courts is totally out of proportion to the rise in the numbers of the profession. Crime at the trial on indictment level has risen by around 10 per cent. a year compound interest almost since the war. Divorce work (or family work as it now is) has risen similarly since the Act of 1969. Motor accident cases, which form a great deal of the bread and butter of the Queen's Bench Division, are a result of the number of motor vehicles on the road. When we come out of recession, as I hope we all will, the employers' liability cases will rise in direct proportion also. The construction cases and the official referee work are even now running at far beyond what I was accustomed to when I was practising at the Bar. One can say the same of the Commercial Court which was referred to in the previous debate on the Unstarred Question.

I can only say that I found it extremely difficult to find enough judges of adequate calibre when I was Lord Chancellor—which, after all, was almost seven years ago. The situation must have grown a good deal worse since then. We managed to keep our heads above water. The Bar as a whole and the solicitors' profession are public servants who are eager to serve the public and often regard a judicial career as the legitimate aim of a career in the law, and I also take that view.

However, there comes a limit. I certainly was not finding it easy to compete, let us say, with the City. I look around this Chamber, but I do not see all of them here. The number of high-class high-fliers at the Bar who take remunerative positions in the City firmament at quite astronomical salaries, is not inconsiderable. I know from various sources that are open to me that the earnings at the Bar are very much higher. They make my mouth drool with envy compared with when I was practising. One has to compete with them. There is no reason why a man should not go on practising and earning large sums instead of joining the judicial Bench, but that is not what I believe a really public-spirited man will do.

Thank goodness there is a good deal of job satisfaction about being a judge, and one should take that into account. There is also the public esteem in which especially High Court judges and above are held. But that is not really enough. If one needs to appoint judges mainly aged 45 and above—it is no use referring to very much earlier ages than that—they have to be called for 15 or 20 years before they are appointed. It is true that the late Lord Devlin was aged about 41 when he was made a High Court judge, but in the main judges are appointed at the age of 45-plus. If one is then to say that a judge will have to retire at 70 with an accrual period of 20 years, that does not make sense.

It is no good referring—as my noble and learned friend on the Woolsack did at an earlier stage of the Bill—to the general pension law. That point has already been dealt with in this debate by both my noble and learned friends the Master of the Rolls and the Lord Chief Justice. The fact is that judges in the common law world—perhaps the Scots will forgive me for including them for this purpose—are appointed from successful practitioners whereas in the Code Napoleon world they are appointed as a separate profession when they leave law school and become part of the civil service. But that is not so in the common law world. The appointments have to be made from successful practitioners. They have to be of a quality which commands the respect of the profession. If one goes on saying that this provision has to be part of the system which applies to civil servants and other career patterns of the ordinary kind, one is going to get into terrible trouble. I beg my noble and learned friend the Lord Chancellor to consider his successors even if he gets by with it.

Lord Simon of Glaisdale

My Lords, your Lordships have just heard three remarkable speeches. I doubt if any of your Lordships who heard them would consider other than that their case has been made out conclusively. This is very much a Treasury Bill. I do not at all use that as a term of opprobrium. I thought it might be useful for your Lordships to know how the situation appeared to the Treasury in 1958– 59 when the present system was established.

The first point is negative. Nobody suggested for a moment that there were any grounds for bringing judicial pensions into line with the Civil Service pension. That argument was never advanced. The other point is positive. The situation which faced both the Lord Chancellor's Department and the Treasury, which were entirely at one, was that for many years a judge had to subsist on the Bench for 15 years before he acquired a right to a pension at all.

I am sure that my noble and learned friend Lord Hailsham will bear me out when I say that when we came to the Bar there were a number of judges who were soldiering on, to use the expression of the noble Lord, Lord Alexander of Weedon, at Second Reading, and repeated and further spelt out by my noble and learned friend the Lord Chief Justice today. A number of judges were obviously in pain and ill-health which seriously affected their performance, but they felt in duty bound to their families and themselves to soldier on until they were quite convinced that they could no longer properly perform their duties. So the obvious answer, and the one that was adopted, was to have a graduated accrual system. The problem of soldiering on to earn a pension after 15 years is greatly exacerbated by the provisions of this Bill. To earn a full pension a judge is now required to go on for an extra five years.

There is one factor which we do not know as far as I have been able to ascertain. What is the benefit to the public purse of harming the judges in this way? At Second Reading my noble and learned friend said that obviously the increase from 15 years to 20 years is not helpful. I take that to be Ministerspeak meaning harmful. It certainly will be harmful to the judges as a whole. It has been estimated that the provisions of this Bill amount in effect to a cut of 7.5 per cent in the value of the pension. That is the calculation which has been made. If I am wrong I am sure that my noble friend Lord Benson, who has such expertise in these matters, will correct me.

We do not know and we have not been told, what the financial benefit is of this extra burden that is being put on the judges. I hope that my noble and learned friend will not say that it cannot be calculated because there are so many imponderables. There are certainly uncertainties, but some such calculation must have been made to justify the statement in the Financial Memorandum that the financial effects of this Bill are broadly neutral. Therefore, I press my noble and learned friend to give his best estimate of the figure involved if this additional burden is carried into effect so that judges must serve 20 years and not 15 years to earn a full pension. What is the advantage, on the best estimate in pounds, shillings and pence, to the public purse? I support this amendment as strongly as I can.

6 p.m.

Lord Ackner

My Lords, the first Judicial Pensions Act was passed in 1799, which is nearly 200 years ago. It provided for the pension to be earned after 15 years' service. That period has therefore inured for close on 200 years. Now, for some purely Treasury reason as far as one can gather, one is contemplating altering it. In case it is thought that there is something idiosyncratic about the British period of 15 years, perhaps I may inform the House that in the United States the period is 10 years, which is one-half of the 20 years proposed; in Australia the period is 10 years, which again is one-half of the proposed period. In Canada it is 10 years, which again is one-half of the proposed period. In New Zealand there is an interesting compromise which some would favour. There the period is 16 years, which is one year added to our 15 years. However, the pension is not one-half; it is two-thirds, and it is tax-free. I imagine that the Government will not support that proposition.

To avoid repetition the only other point that I wish to make relates to the reference which has been made so frequently and which will no doubt be made again to the enormous advantage that members of the judiciary have in not being obliged to have their retained benefits taken into account. I am referring to the pensions that they may have acquired by money purchase or similar schemes. With the deepest respect, that is a red herring for the following four quite separate reasons.

First, it is, generally speaking, a justifiable assumption that pension provisions are part of an employment package—a pension representing deferred pay. After entering into employment, an employee gradually builds up his pension entitlement. In the course of his career he may be promoted or he may achieve an improved salary by taking on different employment. It is therefore considered right that credit must be given for the benefits he thus achieves under the various pension schemes into which he enters in the course of his employment. Therefore, as I understand it, although not in primary legislation, Inland Revenue practice contains a provision requiring that retained benefits are then to be taken into account.

However—this is my second point—before appointment to the Bench, the self-employed lawyer is in a different position. True enough, he can make some provision for his future retirement by money purchase, but the extent to which he does so varies considerably in practice. Some lawyers who have no children or other family commitments may be able to set aside satisfactory provision for the future. Others, burdened with house purchase and mortgage interest and with the heavy cost of children's education, find that they cannot finance any—or any adequate—pension provision in addition to their existing outgoings until later in their lives—indeed, at just the period when they might he offered a judicial appointment. Others may invest not in pension contracts but in real property or other assets. Moreover, the judicial appointment offered does not involve as is the case with promotions—an increase in income, but the very reverse. Taking retained benefits into account would, in all those circumstances, be quite inequitable. Why should wealth in one form—accumulated pensions—be taken into account whereas wealth in another form—real property—is not? Why should the saver be penalised but the speculator not?

The third point is that the Government know full well that if retained benefits were taken into account the only practical effect would be seriously to inhibit recruitment to the High Court Bench of those whose incomes are so high as to enable substantial pension provision to he made by the age of 50 to 55. In relation to circuit judges, in practice the retained benefits are likely to be very modest if not totally irrelevant.

My fourth and final point is that the decision to disregard retained benefits is not some new advantage that has been conjured up to facilitate the passage of the 20-year accrual. It is something which judges have enjoyed ever since pensions began and has certainly been of value for the past 40 or so years during which pensions have been able to be earned with tax advantages.

Lord Campbell of Alloway

My Lords, I wish to speak briefly from the Back Benches as a practising member of the Bar who has absolutely no interest to declare. By reason of age, any question of judicial preferment is quite impossible. However, on the grounds of the reasonable, convincing and moderate arguments advanced by noble and learned Lords on the Cross Benches and in the speech of my noble and learned friend Lord Hailsham, surely there is an overwhelming case to be made in support of the amendment? I wish to have the privilege of having said just a few words publicly and on record in support.

Beyond the general argument that has been raised, only one matter concerns me. I refer to the point raised by the noble and learned Lord, Lord Simon of Glaisdale, when he asked, "What is it all about in terms of cash?" What does the Treasury want? What is it going to get? And is it really worth it in terms of the public interest—the only interest with which we are concerned?

Lord Cocks of Hartcliffe

My Lords, it will probably be said that the only remarkable thing about my speech is that so far as I can tell, apart from the noble Baroness, Lady Seear, I am the only person to have taken part in our entire proceedings up to now who is not legally qualified, and the noble Baroness has an honoris causa Doctor of Law degree to her credit.

I am moved to speak for very much the same reasons that I was driven to my feet on 9th June 1989 during the Second Reading of the Dock Work Bill. I had not intended to speak then, but I got so fed up hearing not only the Minister who introduced the Second Reading but also speaker after speaker from the Government Benches deplore the fact that dockers had jobs for life that I had to say that this was hardly the place for people to talk about having jobs for life. I mentioned that there had been a recent Friday debate in which the noble and learned Lord the Lord Chancellor had introduced his proposals for the reform of the Bar. I drew attention to the fact that of some three dozen speakers, two dozen were barristers. I made the point that possibly our proceedings on the Dock Work Bill might have been rather different if two dozen dockers had been Members of your Lordships' House.

When I was a schoolboy, if somebody was being bullied we used to have an expression, "Two (or three) against one isn't fair." During these proceedings, we have been in the position of having N against one, where N is any given number of your Lordships who happen to be legally qualified, speaking against the noble and learned Lord the Lord Chancellor. Although I know that the judges have only the interests and the standing of their profession at heart, they are in the extremely fortunate position of being able to table amendments on, and to discuss, their conditions of service. Frankly, if members of the mining community had had the same privilege, things might possibly have taken a different course recently.

On the question of staleness in jobs, I feel it necessary to point out to your Lordships that there are numerous professions in which people become stale after a time. Indeed, for many people plodding on towards retirement, possibly with a recurrent illness, is a real hardship. It becomes more and more difficult for them to give the zest and the attention to the job that they were able to give in their younger days. Perhaps we should try to move towards some sort of system in which membership of various professions, such as teaching, social work, probation work and prison work, could be almost interchangeable so that people can move smoothly from one service to another to avoid the staleness that we are talking about.

I am afraid that if we accept this argument from noble and learned Lords today it will be the thin end of the wedge and the whole question of comparability will be raised. Other people will then be trying to do this and will be exerting pressure. I want to put it on record that the judges, while they serve our community nobly, are really in an exceptional and very privileged position.

Lord Mishcon

My Lords, for many reasons I wish that I had been able to speak before my noble friend. Nevertheless I suppose it falls to me to some extent to answer the point. I answer in this way. No one who belongs to the profession that I have the privilege to belong to has argued in any way the purpose of this amendment on the basis of more remuneration—more money—for judges. It is true that the pound may have fallen in value and that our balance of payments may be looked upon with some derision by wealthy countries in the world. But there is one thing that no one in this world could ever say with truth. That is, that our system of justice with the standard of our judiciary is not the highest in the universe. That is due, as has been said, to the quality of our judges.

I say to my noble friend with a smile that no one should think that our circuit judges and puisne judges are treated with great luxury on appointment. I can say this with the knowledge of someone who is a practitioner but who has never been appointed a judge. Those who claim so are completely and absolutely wrong. Does anyone think that they have suites at their disposal, as befits, one might think, the dignity of the High Court judge, or research assistants galore to help them in researches for their judgments, as anyone might think was appropriate to a High Court judge who is required to be of the standard I have mentioned'? Does anyone think that there is secretarial assistance galore of the highest ability? Those who think that do not know the truth. Indeed I know so well that the modern luxury chambers of counsel and solicitors compare so much more favourably with the rooms that are given even to our judges in the Court of Appeal and the Lords of Appeal in Ordinary who assist your Lordships' House in the administration of justice. We are not talking about luxury appointments.

I do not intend to repeat the arguments so far advanced because that would not aid the cause that I have in mind. I do not want to make the position of the noble and learned Lord the Lord Chancellor any more difficult than it is. I say that with complete sincerity. In Committee I made the respectful suggestion that between that stage and today the noble and learned Lord should use his considerable powers of advocacy, employed in Committee with great ability even if not received with the utmost popularity by your Lordships, to persuade the Treasury and the Revenue that it is a bad suggestion that the age should, on the one side, be reduced for retirement and, on the other side, that there should be the figure of 20 years instead of 15. The suggestion is an absolute absurdity apart from anything else, but I shall not repeat the obvious arguments on that basis.

I do not know what has happened in the noble and learned Lord's discussions. I make this suggestion to the noble and learned Lord and I wonder whether your Lordships will not feel that it is appropriate and possibly that no further participation in this debate may be necessary if only my suggestion is adopted. The noble and learned Lord is the proud head of the judiciary, a judiciary which he has served with, from his point of view, complete integrity. But as head of the judiciary he has heard the view expressed, for example, by the noble and learned Lord the Lord Chief Justice, who has consulted the judiciary at circuit level and at High Court level. He will know the opinion therefore of the judiciary of which he is the proud and distinguished head.

All of us appreciate that he has a dual position. He is a member of the Government and a member of the Cabinet. All I suggest is this. Will he not agree that the appropriate thing to do in these circumstances is to accept this amendment because it will have expressed the view of the judiciary and of those who sit in your Lordships' House without any legal qualifications but who may agree with the amendment? Let us see what the attitude of the Revenue and Treasury would be on the amendment being accepted as the view of your Lordships' House. There will always be the opportunity at Third Reading for the noble and learned Lord to have another view to express to the House in the light of the reaction of the Revenue and the Treasury. I ask the noble and learned Lord, having heard all the speeches in Committee and on Report, to accept the amendment at this stage so that the Revenue and Treasury may know the view of your Lordships' House.

6.15 p.m.

Lord Wigoder

My Lords, I wish to make two very brief points in support of the amendment. First, it is self-evident that if a judge has to retire at the age of 70 and has to put in 20 years before he can expect his full pension, it means that he has to be appointed before the age of 50. That is too young in the great majority of cases. Members of the Bar are called in their early twenties. They can normally expect to do 15 to 20 years as juniors in order to provide a good, solid, hard base for their practice before they take silk. I know there is a tendency these days sometimes for them to take silk almost as soon as they finish their pupillage. That ought to be resisted. It is necessary, if there is to he a strong junior Bar, that they should serve as juniors for 15 to 20 years. After taking silk, they then have to acquire a wide range of experience of all facets of the law in this country, in Europe and internationally before they are really fit to serve on the Bench. That is bound to take another 10 to 15 years or so. If this amendment is not carried it means that the noble and learned Lord the Lord Chancellor will in future have to look for the overwhelming majority of his recruits to the Bench from members of the Bar who are under the age of 50. I believe that that simply will not be practicable.

My second argument is this. I have had the pleasure of appearing many times in the past before judges who have served for longer than 15 years. I mean no offence to anyone in your Lordships' House whom this may affect. I am bound to say that, by that stage, I found that none of those judges was improving. They were without exception deteriorating. It would be a disaster to seek to make them all continue in that way.

Lord Benson

My Lords, after the eloquence to which we have listened this afternoon on the point it would be an impertinence for me to speak at all. However, I wish only to put a point of view from the layman, the man in the street. What we are worried about, and nothing else, is the quality of the persons who sit on the Bench. What we have heard tonight from people who speak with unexampled authority is that, if the Bill goes through in its present form, there is a danger either that the best people will not be appointed or, if they are, that they will become stale by the end of 15 years. What has not been stressed in the House is the fact that in every other comparable walk of life the retiring age is 60. Judges already have to do 10 years' more work than any of their compatriots in other classes of work. No wonder they are likely to become stale. Other people retire at the age of 60 and enjoy their retirement from then on.

I should like to stress one further point. In another field we have seen the result of appointing second raters. Between the 1960s and the 1970s we appointed many teachers in schools who were not qualified for the job. As a result, discipline in the schools went by the board and the teaching was deplorable. We are only now climbing out of that misery. I beg the Government not to make another similar mistake with the infinitely more important administration of justice.

The Lord Chancellor

My Lords, as 1 said earlier, and I repeat it now, the career pattern of judges is different from that of most other people; indeed, reference has been made to that fact more than once. Judges follow an unusual career path. I agree with some matters that have been raised. First, I agree that those who have spoken who are either already retired members of the judiciary or presently serving members of it are not speaking from any personal interest in these matters but from the point of view of the public interest as they perceive it.

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. However, I shall put forward what I believe is a proper basis for considering this amendment and those that are related to it.

I agree with the view that the calibre of those who sit on the Bench is vitally important. Along with those who have already expressed the opinion, I believe that the calibre of judges we have is extremely high. It is derived from their particular judicial qualities which have matured over a period of service in the profession. That is the way in which we have hitherto—and, I believe, will in the future—properly looked for our judges and not in a career path referred to by my noble and learned friend Lord Hailsham—which some continental countries adopt whereby one becomes a judge at an early age and then moves up through a judicial hierarchy.

I believe that our system, against the background of our tradition, is a better one. Judges are appointed after they have participated in the profession and reached a standing and standard in that profession which marks them out as suitable for judicial office. 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 system.

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.

When the time comes for such people to go on the Bench, they will typically have served for quite a long time in the profession. I have not yet reached the stage of handing out silk patents to people who have just recently completed their pupillage. I believe that our system also properly recognises distinction in practice at that level. Those whom one would be looking to appoint either to the circuit Bench, to the Bench of district judges or to the High Court Bench would all have served an appropriate time in the profession.

In my submission, we have to approach the correct arrangements for judicial pensions on the basis of what is the general tax law. That is the first aspect of the tax law which has to be taken into account. The second is that the general rule provided under the Income and Corporation Taxes Act 1988 is that a 20-year minimum accrual period is required for the provision of a full pension under a tax-approved scheme. That is the general rule. I believe that it is proper and appropriate to design the pension arrangements for the judiciary taking full account of their special circumstances against that background.

Therefore, the best possible pension which can be given to the judiciary is one that gives its members those tax advantages. It is right that they should have a pension with a 20-year minimum accrual period. The result of that is to produce a scheme such as that provided by the Bill. In one scheme it incorporates all the different levels of the judiciary that are set out in the schedule. It has important advantages; for example, in relation to the promotion of a circuit judge to the High Court.

I, for one, take the view that it is important that there should be an avenue of promotion from the circuit Bench to the High Court. Apart from anything else, I believe that it helps to maintain a zest for judging in circuit judges which, were there no such avenue, might wither rather earlier than would otherwise be the case. That is an important aspect of the judicial career. Secondly, in the development and deployment of judicial talent it is important to seek to provide for them a variety of work. The arrangements in place these days help in that direction.

The appropriate system therefore appears to me to be one which gives the best possible tax treatment of the pension accruing to the judge coupled with recognition that the judges have had an opportunity under the tax regime for the profession to make provision for their pension while serving in the profession. I accept at once that precisely what provision a person makes may vary according to circumstances; but so far as the tax law is concerned, that provision is there to enable a person to make a substantial contribution to his pension, with the proper tax relief on it, while working in the profession.

The next matter I want to mention is that so far as I can judge the effect of the retirement provision—subject to amendments that we shall consider in relation to the retirement part of the Bill—is to make 70 the maximum age to which a senior judge, a member of the higher judiciary, can hold office. That is a reduction of five years from the present limit. That has the effect of reducing the maximum age at which judges will hold office, and nothing in the pension part of the Bill does anything to erode or damage that. That is the maximum age. It is that point that is important.

The noble Lord, Lord Wigoder, has told your Lordships about his experience of attending on judges who have had 15 years' experience. I should think it highly likely that the reactions of particular judges would vary considerably from one judge to another. It is most unlikely that it is wise to stereotype judges as if all of them, after 15 years' service and at whatever age they were appointed, suddenly become stale and unable to follow what is going on, or to adapt to change. I do not believe there is any real basis on which 15 years can be selected as self-evidently the right time at which to ask judges to retire. If it were so, it should apply to all judges. Generally speaking, it is the age at which judges sit that may have importance in this connection and not the length of time for which they have already sat. I do not accept that it is established that judges who sit for more than 15 years on the Bench are thereby less fit to perform their judicial functions than those who sit for 15 years or less.

In my submission, the scheme proposed in this Bill is a proper recognition of the special career path of the judiciary against the background of the general tax law that I have described. I have indicated a number of matters in correspondence with my noble and learned friend the Lord Chief Justice and others that I shall be proposing by way of improvement on certain aspects of the scheme; but so far as this aspect is concerned, I believe that what we have proposed in the Bill is appropriate against the background that I have described.

It has been suggested in some speeches that what I am seeking to do is to align judges with other public servants. The accrual rate in the new judicial scheme is about double the level applicable to most public service employees, so I am not seeking to align the judges' accrual rate with public service employees generally. It is about 50 per cent. more favourable than the provision applicable to Members of Parliament. So far as the private sector is concerned, nearly 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 accrual rates as high as one thirty-fourth. In broad terms, I believe that the judicial pension arrangements are worth about twice the typical provision made for either public service or private sector schemes.

In my submission, it is appropriate that the retained benefits should be allowed as an addition, having regard to the special position of the judiciary; but I believe that it is right that the judicial pension arrangements should take account of the general tax law to which I have referred. It is for these reasons that in my view the provision of the Bill should stand and this particular amendment should not be given effect to.

Lord Mishcon

My Lords, before the noble and learned Lord sits down, would he please indicate whether the consultations that were requested between Committee stage and Report stage have taken place between the noble and learned Lord and the Revenue and the Treasury?

The Lord Chancellor

My Lords, I speak here for Her Majesty's Government; and the view that I have put forward is the government point of view. I do not think it is appropriate for me to enter into details of my discussions. I am putting forward here what is the government point of view, and I have sought to explain the basis on which it rests.

Lord Simon of Glaisdale

My Lords, before my noble and learned friend finally sits down, is he going to say what is the financial benefit to the Exchequer of extending the accrual period from 15 to 20 years?

The Lord Chancellor

My Lords, it is quite difficult to make that sort of calculation. As I said before, and I say again, the best judgment that I can make is that the judicial scheme proposed in this Bill, compared with the schemes being replaced by this scheme, is broadly neutral. I do not think it is possible to be detailed about these calculations. Much depends on one's assumptions; but so far as the Treasury is concerned, if a judge goes on for 20 years he is getting exactly the same, so far as the pension provision is concerned, out of the scheme as he would under the present arrangements. The fact that the pension accrued when he had served 15 years does not make it any more costly to the Treasury.

Lord Ackner

My Lords, before my noble and learned friend sits down, could he tell us whether he is aware of Table 7 in the most recent report of the Top Salaries Review Body, which is headed Cost to Employer of Pension Benefits? It then sets out percentage of pensionable salary, and in relation to High Court judge and circuit judge it is 30 per cent.—hence Lord Simon's 7½ per cent. He has taken 30 per cent., and because the accrual rate is to go up by five years he has divided it by four; ergo,7½ per cent.

The Lord Chancellor

My Lords, the arithmetic that my noble and learned friend has put forward is apparent to anyone who has listened. My noble and learned friend mentioned the Top Salaries Review Body. That body commented on our proposals and made no suggestion that it was inappropriate at this time to adopt a 20-year accrual rate. My noble and learned friend has pointed to other criticisms that the TSRB made of our proposals, but as regards the point that we are discussing no criticism was offered.

Lord Donaldson of Lymington

My Lords, the reply of the noble and learned Lord on the Woolsack is deeply disappointing although not entirely surprising. In view of the fact that today—this was also the case in Committee—the voices were near unanimous in favour of this amendment, on this occasion I wish to give the non-voices an opportunity to express their views too. I therefore shall not withdraw the amendment as I wish to test the opinion of the House.

6.41 p.m.

On Question, Whether the said amendment (No.46) shall be agreed to?

Their Lordships divided: Contents, 89; Not-Contents, 94.

Division No.1
CONTENTS
Ackner, L.	Goff of Chieveley, L.
Ailesbury, M.	Graham of Edmonton, L.
Alexander of Tunis, E.	Grantchcster, L.
Archer of Sandwell, L.	Gridley, L.
Beloff, L.	Grimston of Westbury, L.
Benson, L.	Hailsham of Saint Marylebone,
Blease, L.	L.
Bridge of Harwich, L.	Harris of Greenwich, L.
Brightman, L.	Harrowby, E.
Butterworth, L.	Howell, L.
Campbell of Alloway, L.	Hylton-Foster, B.
Carmichael of Kelvingrove, L.	Irvine of Lairg, L.
Carnock, L.	Lane, L.
Carter, L.	Lawrence, L.
Cledwyn of Penrhos, L.	Lockwood, B.
Clinton-Davis, L.	Lowry, L.
Coleraine, L.	Lyell, L.
Colville of Culross, V.	Lytton, E.
Darcy (de Knayth), B.	Macaulay of Bragar, L.
David, B.	Mackie of Benshie, L.
Donaldson of Lymington, L.	Mallalieu, B.
[Teller.]	Malmesbury, E.
Elis-Thomas, L.	Mason of Barnsley, L.
Ewing of Kirkford, L.	Meston, L.
Foot, L.	Mishcon, L.
Gallacher, L.	Morris, L.
Galpern, L.	Morris of Castle Morris, L.
Geddes, L.	Morton of Shuna, L. [Teller.]

Murray of Epping Forest, L.	Robson of Kiddington, B.
Mustill, L.	Roskill, L.
Newall, L.	Saltoun of Abernethy, Ly.
Nicol, B.	Seear, B.
Norrie, L.	Shannon, E.
Ogmore, L.	Simon of Glaisdale, L.
Oliver of Aylmerton, L.	Taylor of Gosforth, L.
Orkney, E.	Templeman, L.
Orr-Ewing, L.	Teynham, L.
Parry, L.	Thomas of Gwydir, L.
Pender, L.	Tordoff, L.
Peston, L.	Underhill, L.
Pitt of Hampstead, L.	Westbury, L.
Redesdale, L.	Wigoder, L.
Rees, L.	Wilberforce, L.
Renton, L.	Williams of Mostyn, L.
Richard, L.	Winstanley, L.
Rippon of Hexham, L.
NOT-CONTENTS
Aberdare, L.	Long, V.
Allenby of Megiddo, V.	McAlpine of West Green, L.
Alport, L.	McColl of Dulwich, L.
Ashbourne, L.	Mclntosh of Haringey, L.
Astor, V.	Mackay of Ardbrecknish, L.
Auckland, L.	Mackay of Clashfern, L.
Blatch, B.	Margadale, L.
Borthwick, L.	Marlesford, L.
Boyd-Carpenter, L.	Mersey, V.
Brougham and Vaux, L.	Milverton, L.
Bruce of Donington, L.	Monk Bretton, L.
Caithness, E.	Montgomery of Alamein, V.
Carnegy of Lour, B.	Mountevans, L.
Chilver, L.	Moyne, L.
Cocks of Hartcliffe, L.	Munster, E.
Colnbrook, L.	Nelson, E.
Craigavon, V.	O'Cathain, B.
Craigmyle, L.	Onslow, E.
Cranborne, V.	Oxfuird, V.
Cumberlege, B.	Palmer, L.
Davidson, V.	Park of Monmouth, B.
Denham, L.	Pearson of Rannoch, L.
Denton of Wakefield, B.	Perry of Southwark, B.
Downshire, M.	Prentice, L.
Ellenborough, L.	Rea, L.
Elles, B.	Renwick, L.
Elliot of Harwood, B.	Rodger of Earlsferry, L.
Elliott of Morpeth, L.	St. Davids, V.
Elton, L.	Sanderson of Bowden, L.
Flather, B.	Savile, L.
Gardner of Parkes, B.	Seccombe, B.
Gibson-Watt, L.	Selborne, E.
Gisborough, L.	Somerset, D.
Goschen, V.	Stewartby, L.
Hardinge of Penshurst, L.	Strange, B.
Harmar-Nicholls, L.	Strathmore and Kinghorne, E
Harmsworth, L.	[Teller.]
Henley, L.	Swinfen, L.
Hesketh, L. [Teller.]	Taylor of Blackburn, L.
Hothfield, L.	Teviot, L.
Howe, E.	Trumpington, B.
Jeffreys, L.	Ullswater, V.
Jenkin of Roding, L.	Vivian, L.
Joseph, L.	Wade of Chorlton, L.
Kimball, L.	Wyatt of Weeford, L.
Kinnoull, E.	Wynford, L.
Kitchener, E.	Young, B.
Lauderdale, E.

Resolved in the negative, and amendment disagreed to accordingly.

6.50 p.m.

[Amendment No.47 not moved.]

Lord Ackner moved Amendment No. 48:

Page 4, line 19, at end insert ("provided that if the period in the qualifying judicial office does not amount to 6 years the judicial pension will be one quarter of his last annual salary; if the period amounts to 6 years or more, the pension shall be one quarter of that salary plus l/40th of that salary for each completed year of service exceeding 5.").

The noble and learned Lord said: My Lords, in moving Amendment No.48 I wish to speak also to Amendment No.76. If there is just a slight hint that the latter amendment might refer back to Amendment No.37 it is purely coincidental. This is an important part of the Bill because it focuses on what happens if a judge becomes ill or dies in office as a result of illness.

During the last debate I referred to the first Judicial Pensions Act, which was passed in 1799. As my noble and learned friend Lord Simon pointed out, that Act provided that a judge received a full pension if he had to retire as a result of infirmity, no matter when that occurred. That position continued for 160 years until, as my noble and learned friend pointed out, in 1959 the situation was amended. That amendment brought in a graduated pension provision and at the same time made it possible to obtain a pension without having to serve the full 15 years provided one had reached the age of 70.

The clause which I wish to insert in the Bill is the very clause which exists at present in respect of High Court judges. Perhaps I may give your Lordships an indication of the figures involved to show how important the matter is. It is, sadly, not unknown for a judge to fall sick after appointment. There has been the sad case recently of Mr. Justice Desmond Fennell, like myself a former chairman of the Bar. No doubt the stress and strains of that office, particularly during the passage of the Courts and Legal Services Bill, were an added strain in a stressful office.

Perhaps I may explain the position today and what it would be if the Bill were passed. I ask your Lordships to accept for the sake of convenience that a High Court judge's remuneration is £80,000. That is more convenient because it makes the mathematics easier; it is in fact £87,000. If the judge suffers a stroke in his first year in office, under the present situation he receives one half of the full pension which he would have earned if he had served his full 15 years. On a salary of £80,000 he would receive a pension of £40,000 if he had served his full 15 years in office. If he suffers a stroke in his first year and has to retire from the Bench he will receive £20,000—one half of £40,000, the maximum pension he could have earned. That is the situation today. If he dies during that year—and this is why Clause 76 enters into the equation—his widow receives one half of the pension which he would have obtained—one half of £20,000: £10,000.

The position today is that if a judge suffers a stroke and has to retire after one year he receives a pension of £20,000. If he dies during that year his widow receives half, £10,000.

After the Bill comes into force the wretched judge who becomes disabled in his first year receives £2,000, one tenth of what he receives now. The widow, logically, as the Bill provides, instead of receiving her £10,000, receives one tenth—£1,000. That position is arrived at by the simple process of abolishing the provision which I have set out in the amendment. It results from the simple fact that the Bill provides no fast accrual period after appointment but instead a slow, year by year, addition over 20 years of one fortieth. The judge ends up after 20 years with 20 fortieths. In his first year he receives one fortieth, hence my arithmetic of £ 2,000 — 40 x 2 equals £ 80,000—and, in the case of the widow, who receives one half of what he would have received, £ 1,000.

One asks why that is the case. There is no question of having to conform—the favoured word of the Government in this measure—with existing legisla-tion. This is simply and starkly a money-saving operation designed to achieve what I indicated to your Lordships at the outset. The judges who have to suffer—not a suffering which I emphasise—a reduction in their retirement age from 75 to 70 have to pay for it.

No one could have put the matter better than the noble Lord, Lord Benson, who said at Second Reading: In any pension scheme if one reduces the retiring age it increases the cost at an extravagant degree, depending on the number of people involved. The statement can therefore be true the statement in the Bill that the costs would level out only if the benefits paid to the new entrants under the new scheme have been correspondingly pared off to make up the difference".—(Official Report,16/6/92; cols.151 and 152.]

That is what has happened here. In order to pay for the reduction in their pension age judges are required to give up that which most judges look upon as vital—security for themselves and, in particular, for their widows in the event of their falling sick.

I remind your Lordships that in the past five years 76 per cent. of High Court judges were aged 50 years or over. That is known to be a vulnerable period. If the year by year accrual provided for in the Bill operated in relation to the ordinary employee starting at the age of 21,22 or 23, then the anxiety relating to early sickness would not arise.

The situation was commented upon firmly and critically by the Top Salaries Review Body in its comments to the Lord Chancellor on his paper in the following terms: 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 he to base ill-health pensions on potential service to age 65". Mr. Alexander of the well-known firm of consultant actuaries Watson & Sons (who advised the TSRB on pensions for Members of Parliament) was very sensibly retained by the Government to give his comments to them on the Bill. He reported: On ill-health retirement an immediate pension is payable based on complete service. Where service is short the pension payable will he relatively small, whereas it can he argued that it is precisely such individuals who need the greatest support. This is one reason why it is more common to provide a more generous basis of calculation. In 59 per cent. of private sector schemes (see the NAPF 1990 survey), whereby some or all of potential service to normal pension age is included for example, a somewhat complex enhancement formula is common in public service schemes. We suggest that consideration is given to something simpler, such as inclusion of half the potential service". I have more material to establish the undoubted hardship, unfairness and lack of justification of the present system in relation to the judge and his widow. Following the conclusion of the Committee stage on 30th June, on behalf of the judges we obtained a very detailed report from a consultant actuary, a Mr. Wynne-Griffith. senior partner in a well-known firm.

My noble and learned friend the Lord Chief Justice sent that to my noble and learned friend the Lord Chancellor by the end of July. At the end of September the comments from the Lord Chancellor were received and within the matter of days the comments of our experts on those comments were provided.

A meeting was sought by my noble and learned friend the Lord Chief Justice. That meeting was attended by my noble and learned friend the Lord Chief Justice, the noble Lord, Lord Benson, and myself. The Lord Chancellor had indicated that in regard to the question of sickness he was minded to consider whether some concession could be made. We have recently been informed that he is contemplating making an amendment. As I understand it, that will provide not for deemed service to the age of 65—which is in my Amendment No.76 and was in my Amendment No.37—but half that sum. Apparently the draftsmen found that the intervening four months between the end of the Committee stage and today was not long enough to enable them to put that into proper drafting form, and there is nothing before your Lordships now. Therefore, it would he pointless for me to weary your Lordships further with argument because I understand that that amendment by the Government will be provided at Third Reading.

Moderation (which is the hallmark of debates in this House) limits me to say that I find this an astonishing situation but one that has to be tolerated. Without further speakers addressing the House your Lordships may find it convenient at this stage for my noble and learned friend the Lord Chancellor to indicate whether I have accurately represented the Government's current position and perhaps to tell your Lordships the precise nature of the amendment that he has in mind for Third Reading which is to take place on an as yet unspecified date. I beg to move.

7 p.m.

The Lord Chancellor

My Lords, I undertake to produce at Third Reading an amendment which will provide for the relevant service of a person who retires on the ground of ill health to be enhanced by half the service outstanding to 65; in other words, if somebody retires at 50 on the ground of ill health he will have seven-and-a-half years—half of 15 years—credited to him as if he has served those in calculating the benefits for pension purposes. I am able to do that in the light of the discussions to which my noble and learned friend Lord Ackner has referred. I think it is fair to the parliamentary draftsman to say that this has nothing to do with him. I needed to consider the position with some care and the decision to make the change followed the meeting to which my noble and learned friend referred. I undertake to produce at Third Reading an amendment to give effect to that decision. I hope that in the light of that undertaking my noble and learned friend Lord Ackner will feel able to withdraw the amendment.

Lord Ackner

My Lords, my noble and learned friend has been kind enough to say that he undertakes to produce an amendment at Third Reading. Will he be kind enough to give the House an assurance that it will be available for all to see at least a week before Third Reading so we have time to consider it and be better able to analyse its repercussions?

Lord Chancellor

My Lords, I will certainly produce it as soon as I possibly can. I hope to be in a position to produce it before Third Reading, certainly in sufficient time for your Lordships properly to grasp its full implications.

Lord Ackner

My Lords, I do not wish to pursue my noble and learned friend. My request was a modest one, that it be produced one week before Third Reading. Four months have gone by. Our experience to date has not been a very happy one. That is why I ask for the assurance. With great humility, I suggest that it should not be very difficult to give it.

The Lord Chancellor

My Lords, I have given the best assurance that I can. I hope I may be able to produce the amendment more than a week before Third Reading. I shall certainly do my best to produce it in ample time for Third Reading. At the moment I am not in a position to say when Third Reading will be.

Lord Ackner

My Lords, in the light of the discussion that has taken place I beg leave to withdraw the amendment, although I am bound to say that at this stage the offer of one-half of what we have sought is hardly likely to prove acceptable.

Amendment, by leave, withdrawn.

The Lord Chancellor

My Lords, I have to say that if Amendment No.49 is agreed to I cannot call Amendment No.50.

Lord Ackner moved Amendment No.49:

Page 4, line 21, leave out paragraph (a) 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, this is an awkward amendment to deal with before the adjournment when the intake of a little protein might have put one in a better position to explain it. It concerns what I understand is known as dynamisation; that knowledge having been recently massaged into me. It reminds me of the occasion when I was briefed to take part in litigation on performing rights. I revelled in two technical phrases. One was "needle time" and the other was "over-exposure", which had nothing to do with criminal litigation. Quite simply, dynamisation means that, provided one does not base one's pensionable salary upon the last year, the Revenue permits one to take other years and to add to them the inflation factor if in those other years one has not achieved or exceeded that inflation factor.

The Top Salaries Review Body, whose report received little sympathy in the Government, at least provided material which was not open to contradiction. One piece of material was that the real income of the group (that is, all the top salary earners taken as a whole) has risen around 7 per cent. over the period since 1985, whereas real average earnings in the economy have risen by 22 per cent. Even more significant is that the 200 or so most senior posts covered have had the worst experience, with a real decrease in their income of 3 per cent. Data from studies and surveys which are described more fully later in that report provide a further perspective. That is found at page 3, paragraph 14, of the report, which goes on to provide a figure which shows that senior private sector earnings have had a real increase of 41 per cent.

So down go the very top earners by minus three whereas the private sector goes up to 41. In my submission, it is only fair and proper that the judges should be entitled to have regard to what the Inland Revenue permit. The Inland Revenue permit "dynamisation". On many occasions my noble and learned friend has said that he has achieved the most tax efficient scheme obtainable. Therefore in tabling this amendment I ask whether he has sought to obtain the Revenue's consent to dynamisation being provided and if so with what result. Alternatively, if he has not sought its observations, would he be kind enough to do so? I beg to move.

The Lord Chancellor

My Lords, this amendment for so-called dynamisation is interesting. Notwithstanding my noble and learned friend's eloquent description of it, the precise wording leaves one with a certain degree of perplexity as to what exactly is in mind.

First, this sort of formula is not found in any other public sector scheme which I know. Secondly, it is quite obvious that it is quite a complicated formula to administer. So far as I have been able to follow it, I do not see how it would give any particular advantage in the case of the judiciary. The passage from the TSRB report to which my noble and learned friend referred would not suggest that the method of dynamisation proposed in the amendment would produce much of an increment. Under the present definition of pensionable pay it is the highest pensionable pay over the previous three years which counts. I cannot think it at all likely in present circumstances that any advantage is to be gained by increasing that period to five years. Moreover, if one takes into account the remuneration in line with the RPI, one will find that the remuneration which is payable is not at all likely to be increased by that particular approach.

Accordingly, apart from the fact that this would be an expensive scheme to administer, I cannot see that the advantages are likely to make it worthwhile. In the light of that explanation, I hope that my noble and learned friend will feel that it is not right to press the amendment.

Lord Ackner

My Lords, my noble and learned friend the Lord Chancellor pays me no compliment in thinking that I have not done my homework. Having obtained, after a delay, from his department figures for the earnings of High Court judges for the past 10 years—that is the relevant period—those figures were handed over immediately to our consultant actuary. The advice that he has provided is that it will make a difference of a few thousand pounds a year to the High Court judge.

If my noble and learned friend does not want to take the matter up because he feels that it will do the High Court judges no harm, I can dispose of that point. Perhaps he would be kind enough, on the basis that we can establish that it does the High Court judge and above positive good, to consider with the Inland Revenue if there is any reason why the Inland Revenue practice, which I have, recorded in IR9/91, should not be made applicable.

The point is one of principle. Other people are entitled to it under the Inland Revenue practices and we have heard the assurance that my noble and learned friend has achieved the most tax efficient scheme available. In this respect he does not seem to have achieved that. I should be grateful, on the basis that we satisfy him that it will make a significant financial difference to the calculation of the judicial pension, if he will tell us whether he will give it consideration.

The Lord Chancellor

My Lords, I am certainly prepared to consider any material that my noble and learned friend likes to put before me. My understanding is as I have said. Those are the reasons why I urge your Lordships not to accept the amendment. I am very willing to look at any information that my noble and learned friend has which he believes would serve to instruct me even better than I am instructed at the present moment.

7.15 p.m.

Lord Ackner

My Lords, I am most grateful to my noble and learned friend. On that basis, I shall withdraw my amendment with a view to bringing it back. I should inform the House that technical though it is, we have not bounced it on the Lord Chancellor. It was in our consultant actuary's report which was provided on a "cards on the table" basis to the Lord Chancellor. All we have done in the recent past, having obtained figures from his department, is to establish that it would be effective. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Lord Chancellor moved Amendment No.50:

Page 4, line 25, leave out ("he retires from such office; ") and insert (", within the meaning of section 590C(l) of the Income and Corporation Taxes Act 1988 (earnings cap), his participation in the scheme constituted by this Part ceases; ").

The noble and learned Lord said: My Lords, this is a technical amendment relating to the mechanics of pensions indexation. It covers the situation of a judicial officer who opts out of the new scheme to enter a personal pension scheme under the provisions of Clause 13 and elects for his pension rights under the Bill scheme to remain in the scheme until his retirement from judicial office. When such a judge comes to retirement and collects his pension, the clause as drafted requires that the pension be calculated by reference to the judge's pensionable pay at retirement, not at the time he opted out. However, his accrued rights under the scheme will already have attracted pensions increase—an annual up-rating designed to raise the value of preserved benefits to keep pace with inflation. To leave the clause unaltered in this respect would be to give a judge double inflation-proofing. It might also entitle the officer to get more than he should under the top-up provisions of Clause 19.

The amendment ensures that the pension of the judicial officer in this position is correctly calculated by reference to his pensionable pay at the time he opted out of the new scheme, not at the time of his retirement from judicial office. I beg to move.

On Question, amendment agreed to.

The Lord Chancellor moved Amendment No.51:

Page 4, line 41, leave out ("and").

The noble and learned Lord said: My Lords, I have already spoken to the amendment with Amendment No.4. I beg to move.

On Question, amendment agreed to.

The Lord Chancellor moved Amendment No.52:

Page 4, line 42, leave out ("there is a reduction in").

The noble and learned Lord said: My Lords, in moving this amendment I wish to speak also to Amendments Nos.53 and 54. They are purely drafting amendments which I have thought it wise to make following my discussion with my noble friend Lord Colville of Culross during Committee.

It might help if I explain the effect of subsection (3) (d) in a little detail. Subsection (3) (a) provides that, for the purposes of determining pensionable pay, the largest amount of pension-capped salary payable to a scheme member in any period of 12 months in his or her last three years of service will be taken to be the operative figure. Subsection (3) (d) deals with the situation where an officer's salary during those three years is reduced by reason of absence on sick leave. It provides that any such reduction in salary will be ignored for the purposes of determining pensionable pay.

There is, therefore, nothing in subsection (3) (d) which could affect a scheme member's decision when to retire, as any reduction in salary due to periods of ill health would not affect the level of pension the officer received. There is nothing in the clause which restricts, or alters in any respect, the present arrangements relating to sick leave, sick pay or retirement on the grounds of ill-health.

Turning now to the amendment, I must emphasise that this has no substantive effect. It merely redrafts subsection (3) (d) to make its meaning more transparent to the reader. I have considered my noble friend's suggestion that the three-year period should be extended to five, but given a clear understanding of the effect of this clause, I hope it is evident that there is little, if anything, to be gained by doing so. I beg to move.

On Question, amendment agreed to.

The Lord Chancellor moved Amendments Nos.53 and 54:

Page 4, line 45, after ("above") insert ("is less than it would have been apart from the periods of ill-health,").

Page 4, line 47, leave out ("without any such reduction") and insert ("at the rate at which it would have been payable, apart from the periods of ill-health; ").

The noble and learned Lord said: My Lords I have already spoken to Amendments Nos.53 and 54 with Amendment No.52. With your Lordships' leave I beg to move put them en bloc.

Lord Renton

My Lords, I realise that the amendment has been referred to but I find the drafting of it difficult to follow. Perhaps my noble and learned friend would be so good as to give some idea of a salary, which is paid on terms which preclude rights to pensions and other benefits accruing by reference to it". I did not know that there were such salaries within the judiciary.

The Lord Chancellor

My Lords, I am not sure that I understand the particular point to which my noble friend refers. At present I am referring to Amendments Nos.53 and 54.

Lord Renton

My Lords, I am sorry. I thought that my noble and learned friend had dealt with those amendments and was now moving to Amendment No.55. I must have misheard.

On Question, amendments agreed to.

The Lord Chancellor moved Amendment No.55:

Page 4, line 47, at end insert: ("(e) in determining a person's salary in respect of his service in qualifying judicial office, there shall he left out of account any part of the salary which is paid on terms which preclude rights to pensions and other benefits accruing by reference to it: ").

The noble and learned Lord said: My Lords, I have already spoken to Amendment No.55 with Amendment No.4. However, perhaps I may explain the reference to my noble friend Lord Renton.

There are some positions to which a judge may be appointed for a temporary period in which he may receive an additional salary. However, that salary is not part of his judicial salary and does not count for pension purposes. That is part of the terms on which he takes the appointment. The amendment makes clear that in that situation the additional salary which he receives does not count for pension purposes. One needs to make that clear. That is the purpose of the amendment.

Lord Renton

My Lords, I am grateful to my noble and learned friend for that explanation. Amendment No.55 was one of a dozen amendments referred to earlier and not every one could have been explained.

On Question, amendment agreed to.

The Lord Chancellor

My Lords, Amendment No.56 may take a little time. It is almost 7.30 p.m. This might be a suitable moment to break if that is convenient.