Lord Wolfson of Tredegar
That the Grand Committee do consider the Judicial Pensions Regulations 2022.
Relevant document: 35th Report from the Secondary Legislation Scrutiny Committee
The Parliamentary Under-Secretary of State, Ministry of Justice (Lord Wolfson of Tredegar) (Con)
My Lords, this statutory instrument establishes the judicial pension scheme 2022 and forms part of the Government’s commitment to delivering a long-term solution to attract and retain high-calibre judges. In turn, this guarantees the proper functioning of our justice system. The international reputation of our legal system is something that I think we are all proud of and is necessarily sustained by the continued recruitment of the finest candidates to judicial office.
The recent Public Service Pensions and Judicial Offices Act closed all existing judicial pension arrangements to future accrual. The purpose of this SI, therefore, is to establish regulations for the new judicial pension scheme 2022—a scheme that is both fair to the taxpayer and attractive to the judiciary. It will be the only pension scheme open to judges for accrual for service from 1 April this year; I will come back a little later to the slight backdating to the end of last week.
The judiciary has an essential role in upholding the rule of law. Every day, judges up and down the country take decisions on important issues that have a real impact on people’s lives, from delivering justice for victims through to deciding care arrangements for vulnerable children. The exceptional work of judges and others who work in the justice system to ensure that our courts and tribunals kept on functioning despite the ravages of the pandemic served as a reminder of the pivotal role that they play in the administration of justice.
However, over the last number of years, we have experienced unprecedented recruitment and retention issues across the judiciary. A lack of judges has significant and damaging operational impacts. Cases take longer, with serious consequences across all jurisdictions. Delays in the family courts and county courts have a significant impact on children and other vulnerable people, who may have to rely on a judge being available for emergency orders and injunctions.
Of course, the importance and influence of our judges reach beyond our shores. Their reputation for integrity and impartiality plays an important role in attracting international business to the UK, contributing to a legal services industry worth around £29 billion a year to our economy. Quite simply, if we do not have enough judges, that undermines our ability to compete internationally for legal services, which are important to our economy.
A two-year comprehensive review by the Senior Salaries Review Body linked the root cause of the recruitment and retention problems in the judiciary to the 2015 pension reforms. In particular, as the 2015 scheme was tax registered, judges were caught by annual and lifetime tax limits. The Government thereafter made a commitment to introduce a long-term solution through pension scheme changes for the entire judiciary.
It is fair to say that the changes made in 2015 were consistent with those made to other public sector roles, but they did not sufficiently take into account the judiciary’s constitutional role and, importantly, its unique career path. Judges, especially full-time ones, often become judges towards the end of their careers; the value of their pensions is therefore of particular significance. They have many years of training, and often successful private practice, behind them. Many will have taken a pay cut to join the Bench but will also have set up other pension arrangements.
It is against that background that it is important that the pension scheme can attract and retain the highest calibre candidates to judicial office. For this reason, the scheme will be tax unregistered, meaning that the benefits accrued will not be subject to annual or lifetime tax allowances. That returns the judiciary to the position before the 2015 reforms. Several of the features of the scheme, such as the member contribution rate, flow from that tax-unregistered status. There will also be no cap on the number of years for which a judge can accrue benefits, and there is an option for judges to give up part of their pension for a lump-sum payment.
Lord Wolfson of Tredegar (Con)
My Lords, I am grateful to all those who have contributed this afternoon. I will try to respond to the points that have been made because I apprehend that there was general support for the overall aims of the scheme. Therefore, I will not reiterate the points I made in opening.
One point I said I was going to come back to, but then remembered I had not, was on timing. I want to explain why we are using the “made affirmative” procedure. That is simply because it was considered—with hindsight, correctly—that it might be the case that we could not get this before the Committee until after 1 April. That would leave two alternatives. The first would be to have a gap in the scheme. Even I, who is pretty untutored in pensions—I am conscious that we have the noble Lord, Lord Davies of Brixton, here—know that that would not be a good thing. Alternatively, we could try to start the new scheme not on 1 April, but we were told that would not be a good thing either and would lead to complexity. That is why we are using this procedure. I therefore hope that the Committee is aware of that.
I will respond to the substantive points. The central point that the noble Lord, Lord Davies of Brixton, made was that judges might be in a special circumstance but it is not just them—other people can be as well. Indeed, it is fair to say that the noble Baroness, Lady Kramer, and the noble Lord, Lord Ponsonby of Shulbrede, made a similar point. As a Justice Minister, I should underline that judges are in a special position when it comes to their constitutional role, but that is not the basis on which the special treatment, so to speak, applies here. It certainly has nothing to do with denigrating the work of any other public servants, whether they be medical professionals, in the military or the police, nurses or anybody else.
The issue with judges is this: unlike in many other countries, we do not have a career judiciary. We have a system where people generally practise as lawyers—sometimes as aircraft pilots as well—and then become a judge. That means two things: first, that people become judges later in their career; and, secondly, that they are likely to have built up other pension provision because, when they were in their 20s, 30s or perhaps 40s, they did not know and certainly could not guarantee that they were going to become a judge.
The proof of the pudding was in the eating. In 2015, when we moved away from tax unregistered—I will call it that but I hear where the noble Lord, Lord Davies, was coming from—the feedback was that that was a real disincentive to recruitment and retention. Indeed, we had a number of competitions where we were not filling as many judicial posts as we wanted. Therefore, although I certainly do not want this to be seen as in any way denigrating anybody else, whether in the medical sector or the military, judges have a particular background before they become judges that sets them apart from other public sector workers.
The noble Lord, Lord Davies, also made a point about the Chancellor freezing lifetime limits. He then offered me a way out by saying that he noted this issue is not within my particular remit. I gratefully grasp that rope. I hear the point that is being made but this is obviously not the place to debate pensions policy generally. I am sure the noble Lord will pick this up with my Treasury colleagues in due course.
The noble Lord asked a specific question as to the number who have taken up the option I mentioned. The position is that the option is open until 30 June so I do not have a figure but, in any event, it would not be meaningful. I do not know whether that figure will be made public. I respectfully suggest that the noble Lord waits until after 30 June and then finds me, either formally or informally, and I will see what I can do.
The noble Baroness, Lady Kramer, made a few points. Obviously, she referred to the point about other professionals; I hope that I have dealt with that already.
I think the noble Baroness made two other linked points in some detail. The first was the retirement age changing from 70 to 75, and the second was diversity. She is certainly right that diversity remains an issue in the judiciary, particularly the higher judiciary. I would say, however, that diversity remains an issue in the legal profession generally. It is quite good at the lower end, among people going in, but there is a real problem with diversity among senior solicitors and senior barristers. That is not an excuse, but it is relevant to judicial diversity. If that is the pool you are fishing in for the more senior roles, it necessarily remains an un-diverse role.
Baroness Kramer (LD)
Unfortunately, I handed my notes to Hansard, but I think that if the Minister looks at the diversity report he will discover that yes, there are fewer people in the pool but those who are recommended from within the pool have a relatively low appointment rate—in fact, dramatically lower—than white male candidates, so it is not just a pool problem but what happens as people are selected, or put themselves forward, from that pool.
Lord Wolfson of Tredegar (Con)
I am very happy to accept that. I was not putting forward the point I just made as the only reason; there are a number of factors here. I know that the department and the Judicial Appointments Commission have been encouraging people to apply. Too few people apply, and of those who apply, the acceptance rate is also lower.
I do not want to throw statistics around, but there has been some improvement. For example, women now make up 50% of tribunal judges and, since 2014, the proportion of women judges in all courts has improved by nine percentage points to 34%. When it comes to minority ethnic background, however, there is still a long way to go. Black, Asian and minority ethnic judges are 9% of court judges. That is a three percentage point increase since 2014 but, as the noble Baroness pointed out, one problem in this and other areas of lumping together black, Asian and other minority ethnic is that particular problems for particular groups within that cohort can be overlooked. I heard what the noble Baroness said when she drilled down into the statistics. We are very conscious of that; there is more to be done, but it is an issue to which we are very alive.
However, I say respectfully that to link that too closely to the increase in retirement age is unwarranted. There was quite a lot of debate on this when the Bill went through. I do not have all the statistics at my fingertips, but I recall that the difference in diversity impact between, for example, 72 and 75 was, we estimated, pretty marginal. It is not really an either/or: it is not a question of saying that we can either have better diversity or increase the retirement age. The increase in the retirement age from 70 to 75 is expected to retain about 400 judges and tribunal members, in addition to about 2,000 magistrates, annually. That is very significant because, as I have said in other fora, the real issue we face at the moment, certainly when it comes to the criminal justice system, is judicial capacity—a lack of judges. We are very concerned to make sure that we have enough judges, and increasing the retirement age from 70 to 75 will, we hope, have a very significant impact in that regard.
The noble Lord, Lord Ponsonby of Shulbrede, also made the point that judges are a special case and reiterated the points on diversity I have just addressed. I am conscious that he put down that halfway house amendment suggesting 72. One issue that has an effect on this House—the noble Baroness, Lady Kramer, mentioned that we are fortunate to have a number of judges here—is that if we are to continue the position of not appointing sitting judges here, increasing the age to 75 will have an effect on the judicial input of the House. That is perhaps something we need to think about as well. As a Minister, I find their input extremely useful—I did not say helpful—informative and interesting.
I hope I have responded to the main points raised. I am conscious that each of them could be a debate in themselves, so I hope it is not taken amiss if I do not deal with them in any more detail. For the reasons I have set out, I commend this instrument to the Committee.