Pension Schemes Bill [HL]

Lord Berkeley Excerpts

Report stage & Report stage (Hansard) & Report stage (Hansard): House of Lords
Tuesday 30th June 2020 Lords Chamber

[Lord Vaux of Harrowden [V]]

My Lords, I had intended to add my name to this amendment, and I apologise that I failed to do so. The noble Baroness, Lady Bowles, has raised an extremely important issue in the amendment and has eloquently set out the reasons.

We are often guilty of looking at defined benefit schemes as a concept that is on the way out—that we are only really talking about the run-out of closed schemes —but that ignores the fact that many DB schemes remain active and open to new joiners. I am very grateful to the Railways Pension Scheme for explaining the potential implications for such schemes of the regulator’s consultation on the defined benefit funding code of practice.

For schemes that are mature or closed and in the run-down phase, it makes complete sense to minimise the risk of the investment strategy so that there is a high degree of certainty that the fund will be able to meet its obligations. The flipside of that, of course, is that a low-risk investment strategy means a low return. That is fine for mature schemes, but schemes that are not mature and still live would suffer from being restricted to a low-risk, low-return investment strategy. As the noble Baroness, Lady Bowles, said, the largest part of benefits paid from a fund typically come from the investment returns earned over its life. If forced to take such a low-risk, low-return approach in order to meet a certain level of benefit, they would have to massively increase contributions from either the employer or the employee or a combination of both. Indeed, I confess that I had not understood that there are DB schemes that specifically share such risk between employers and employees.

A higher-risk investment strategy with the ability to earn better returns is entirely appropriate for schemes that are not mature. I think that it was the noble Lord, Lord McKenzie of Luton, who, in Committee, raised a concern about hastening the demise of defined benefit schemes. If the regulator, in taking an overly risk-averse approach, insists on too low a risk and a low-return approach for open or immature schemes, they will inevitably become less attractive to employers and possibly to employees. All we will achieve is the hastening of the end of defined benefit schemes, which are the gold standard for pension saving, especially for those on lower earnings.

The amendment is therefore critical to ensure that the regulator takes into account the state of maturity of a fund when looking at scheme funding and to ensure that trustees have sufficient discretion to be able to act in the best interests of their beneficiaries.

[Lord Berkeley (Lab) [V]]

My Lords, I too congratulate the noble Baroness, Lady Bowles, on bringing forward this amendment. It is vitally important that the many contributors to these open schemes have comfort that these schemes will continue and will provide them with a reasonable level of benefit when they retire. I am grateful to the Railways Pension Scheme for a very useful briefing, which other noble Lords have seen. I myself am not a member of that pension scheme, but I have a large number of friends who are among its 350,000 members. I think it is relevant that 100,000 of them are still active, and that number will probably continue. That will happen, as the noble Baroness said, in the schemes for local authorities, nuclear decommissioning and many other sectors.

The real point is that many of the people contributing to these funds are comparatively low paid. Perhaps the Minister when she comes to respond can explain why the Government think it is a good idea to allow the schemes to require a greater contribution from the members and from the employers for no particular benefit. It seems absolutely clear that open and closed schemes must be treated separately. In ending, I ask the Minister to explain to me and other noble Lords why Ministers are not going along with this amendment. It seems so simple and well thought through, and I will certainly support it if the noble Baroness decides to divide the House.

[Lord Snape (Lab) [V]]

My Lords, I will confine my remarks to the impact of this amendment on the Railways Pension Scheme, and I join other noble Lords who expressed support for the amendment. As a former railwayman I was a member of the RPS in my younger days, although I was sensible enough—if that is the right term—to transfer to the parliamentary pension scheme when I was elected to the other place many years ago. However, I remain in contact with many of my former colleagues within the railway industry, and certainly they and the trustees of the Railways Pension Scheme have expressed their concern about the impact of this legislation on their future policy.

I remind the Minister that the RPS is a final salary defined benefit scheme that replaced the British Rail Pension Scheme after privatisation in 1993. Successive Ministers since then—among them those as distinguished as the noble Lord, Lord Young of Cookham—have assured the Railways Pension Scheme that matters will continue pretty much as before, and phrases such as “mirror image” and “the continuation of the present scheme” have been used. To find ourselves in the position that we will be in if this amendment is rejected is, to say the least, something of a surprise.

I have to tell noble Lords that the future of the Railways Pension Scheme is of massive concern among the railway unions, one of which, the National Union of Rail, Maritime and Transport Workers—I used to be a member of its predecessor, the National Union of Railwaymen—has already balloted or threatened to ballot its members about the future of the scheme. The acceptance of this amendment would go some way to ease the fears that many members of the scheme feel about the future.

However, the trustees of the RPS themselves have expressed concern about the future. Without this amendment being written into the Bill, they feel that the regulations which will follow will force trustees to take short-term investment decisions rather than the long-term and ethical decisions that the RPS takes at the present time. Indeed, one of them passed a comment to me that “We will be forced in the end to buy nothing else but government gilts”—which is probably not an investment path that most advisers would recommend in the current circumstances.

To ensure that the RPS is traditionally able to make long-term and ethical investments, I make this plea to the Minister to write this amendment into the Bill. It may well be that the noble Earl, Lord Howe, says to us, “We hear what you say. We are conscious that there is concern; we will look at this. Of course, many of your fears are groundless, and Ministers will bear all these fears in mind”. However, over the years that I have been a Member of the other place and your Lordships’ House, Ministers have come and gone. The other day I counted that 27 Ministers for Transport have been around in my time in one House or the other. Ministerial pledges are all very well, but times change—not quite as often as Ministers.

Health and Safety at Work

Lord Berkeley Excerpts

Monday 4th April 2011 Grand Committee

[Lord Berkeley]

If I may contribute briefly before the Minister sums up, I would just like to make two points. I have been on a sort of inspection trip of the railways this morning with Theresa Villiers, the Minister for Transport, looking at some work that Network Rail has been doing. There were a lot of signallers around on the tracks—something had gone wrong—and it made me wonder yet again, if transport as an industry is going to be downgraded in risk, where the railways come in this. Railways are transport and so is road. The difference in the risk to a worker beside a track on the railways is not much different to the risks and exposure of people working on motorways, where the traffic is going extremely fast—probably at much the same speed—and with even less protection. The great thing about trains is that they tend to stay on tracks, whereas cars occasionally wander off the road. So it would be very interesting to hear what views the Minister has on that particular element of transport, because railways are transport and roads are transport and, as my noble friend said in his introduction, so are ports.

That takes me on to my second point. I declare an interest as a harbour commissioner at the port of Fowey in Cornwall. We recently had a visit from the Maritime and Coastguard Agency, which is spending a lot of time at the moment restructuring the coastguard service, as noble Lords have debated on previous occasions. The MCA came to inspect a passenger ferry, which is a little ferry that takes 12 people across the river. The ferry is already approved by the harbour authority and checked every year for safety, as are the skippers. The MCA informed people that the mooring hook that is used to connect to the steps at each end was unsafe. The same hook—a nice piece of mild steel—has been used for the past 60 years, during which there has been no record of any accidents. It is a hook that enables them to leave quickly if the swell gets too strong, but it is very safe and enables the ferry to operate very well. They have now been told to use a snap shackle instead. Some of us who help skippers on occasions know that the snap shackle can pinch your fingers—I know that other noble Lords have helped and also pinched their fingers on that particular shackle—so, if the Government are intent on saving money on some of these safety issues, surely they should concentrate on the important things rather than on coming to tell a ferry skipper which type of shackle he is supposed to use. Quite honestly, it is the skipper’s job to make sure that the ferry is safe, as approved by the harbour authority. I mentioned that to that chief executive of the Maritime and Coastguard Agency when he came to a meeting a couple of weeks ago; I have not had a reply yet.

I hope that the Minister will take that as a real example—and it is a real example, unlike some of these conker fights, which we hear about being unsafe, although I do not really accept that. Let us concentrate on the important things and try to avoid undue and unnecessary inspections of things that have worked perfectly well and will continue to work perfectly well for quite a long time.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)]

My Lords, I am grateful, as always, to the noble Lord, Lord McKenzie, for the opportunity to update the House on how the Government’s proposed changes to the health and safety system will encourage safer and healthier workplaces.

I should begin by reiterating why change is needed. Good health and safety is, of course, vital, and the Government are committed to maintaining health and safety protections. That is the whole point—for health and safety to be effective, it must be a protection, not a burden. Health and safety legislation, overzealously applied, achieves nothing. That is exactly the point that the noble Lord, Lord Berkeley, made about snap shackles. Equally, compensation claims, pursued at random, simply breed cynicism. Our challenge is to lift these burdens and—to paraphrase my noble friend Lord Young of Graffham—to let common sense prevail.

Noble Lords will be aware that the Government are committed to implementing the recommendations in my noble friend’s report, Common Sense, Common Safety, and have recently reinforced this commitment. On 21 March, my right honourable friend the Minister for Employment, Chris Grayling, announced the next steps in the Government’s plans for health and safety reform in Britain. These include setting up an immediate review of health and safety regulation, with a wide-ranging remit including exploring the scope for consolidating, simplifying or abolishing regulations. The review, led by Professor Ragnar Löfstedt, director of the risk management centre at King’s College London, is set to make recommendations this autumn. I can assure my noble friend Lord German that the terms of reference will be published on the DWP’s website before the end of May. The overall remit for the review was set out in Good Health and Safety, Good for Everyone. In the mean time, I assure noble Lords that the Government are already making good progress in implementing the recommendations set out in the report of my noble friend Lord Young. Those who wish to can view a progress report on my department’s website, detailing progress against all the recommendations.

My noble friend Lord German expressed concern about whether the code of practice would be enforceable in respect of adventure activities. That code of practice will be consulted on shortly. In practice, current licensing does not cover many of the newer adventure activities—I do not think that it covers coasteering, for instance. Health and safety law will continue to apply and will be enforced appropriately.

I shall focus on two aspects of our strategy today: first, the action that we are taking to change the health and safety culture for the benefit of Britain’s workplaces; and, secondly, our focus on reforming so-called no-win no-fee agreements and other aspects of civil litigation funding and costs.

Culture change, whether in health or safety or anything else, does not happen overnight, but its results can be impressive. Perhaps noble Lords will allow me a personal reflection. I well remember meeting officials from Eurotunnel—for which I was working in a more financial capacity—some 20 years ago and comparing the numbers of fatalities that occurred during the construction phase of that amazing project. There were seven on the British side and two on the French side. The factors involved were many and various, but I was struck and a little shocked by how much the French construction industry had achieved for itself compared with its British counterpart and how much its strong safety culture owed to partnership working.

Happily, in the intervening years, much of the British construction industry has followed suit, and the benefits are plain to see. The industry now has a fatal injury rate of 2.2 workers per 100,000 per year, which is among the best in the world.

Against this background I am delighted to report that the efforts of the noble Lord, Lord Young, and of the Minister for Employment to deliver culture change are already bearing fruit. Following its recent launch by the Health and Safety Executive, already more than 2,000 health and safety consultants have been approved to join the online Occupational Safety and Health Consultants Register. It is not only the noble Lord, Lord McKenzie, who has welcomed the register. We confidently expect more consultants to join the scheme as its reputation grows.

I need hardly explain the importance of the new register. It should spell the end of rogue health and safety advisers. All those on the register will be properly accredited to a professional health and safety body, which is good news for health and safety and, indeed, good news for business.

The consultants register is designed to help employers who need general health and safety advice to find a well qualified and experienced consultant who is able to give that advice. Employers using a registered consultant can have confidence that the consultant belongs to a professional body, has had their experience and qualifications assessed and is undertaking continuing professional development; in short, someone who is committed to providing sensible and proportionate advice and is properly insured.

To pick up on my noble friend Lord German’s point, there will be an annual renewal process to make sure that all those on the register still meet the eligibility criteria. The relevant professional body will deal with complaints and, indeed, could take action to remove consultants from that register. The new register is just one of several online tools launched recently by the Health and Safety Executive, with a view to providing small and medium-sized enterprises, and others, with straightforward guidance on how to manage health and safety.

Health and Safety Made Simple, for example, is a concise and easy-to-navigate website, designed specifically for low-risk SMEs. Similarly, four interactive risk assessment tools have been developed—specifically for offices, shops, charity shops and classrooms—and the HSE has also just published simple web advice making clear that health and safety law is not a barrier to volunteering activities, and explaining clearly when the law applies in practice.

Taken together, these new measures will allow businesses to achieve a basic level of health and safety compliance, and that, again, is good news for everyone. A basic level of compliance means lower-risk businesses delivering on their key health and safety obligations—but not being smothered by red tape, nor health and safety inspections, in the process.

As for my noble friend’s point on asbestos, asbestos clearly must remain a priority. Work to educate and raise awareness of the risk is under way and included in the HSE’s forward business plan.

On inspections, perhaps one of the biggest changes is the focusing of inspection and enforcement on those areas where it is needed most. In the current financial climate, there is no point in claiming that the enforcing authorities can inspect all businesses to the same extent and with the same frequency. On the other hand, why should they? Why should a lower-risk business be inspected as much as a higher-risk one? Equally, why should a business that is in serious breach of its health and safety responsibilities not be charged by the enforcing authorities for putting things right?

Let me be clear: we have no intention of reducing inspections in high-hazard industries. In fact, by the end of SR10, the aim is to have more, not less, nuclear and hazardous industries inspectors. As for unnecessary inspections, an issue raised by the noble Lord, Lord Berkeley, the statement is designed to drive this change of behaviour.

On inspector numbers, as of April 2011, we have 2,500 front-line staff and we are expecting an increase over the next year, with the figures beyond that date dependent. As I said, there is no intention to reduce numbers substantially although, with the reduction in the number of inspections, by implication the concentration on the higher-risk industries will intensify. This is not a net loss but an additional concentration on the higher-risk industries.

The noble Lord, Lord McKenzie, asked about the evidence base for lower-risk classifications of industries. Essentially, it comes from the Office for National Statistics, and trends over that show where sectors are improving their health and safety performance. Higher-risk classifications relate to those industries where performance remains a concern. In agriculture, farm inspections have not proved effective in reducing injuries over the years. The current approach involves new training and education and has proved to be more effective.

As for my noble friend’s point about how to decide who to inspect without proactive inspections, clearly there is a whistleblower element and a follow-up of complaints. More importantly, however, there is also a follow-up of those incidents and an investigation where necessary. Other inspections will reflect evidence of risk and be regularly reviewed.

There was a question about why quarrying and transport have been excluded. It is mainly because of improvements in their performance over recent years.

Given the time constraints, I shall not speak about issues of civil justice. Those issues were not specifically raised so I shall perhaps leave them until another occasion.

[Lord Berkeley]

The noble Lord has just mentioned quarries and transport, but where do railways come into this? I asked whether railways are part of transport or something else.

[Lord Freud]

That is currently being looked at within the Office of Rail Regulation. It was separated—I forget exactly when, but, from memory, I think it was 2004—and is now being brought back together and integrated with the regulator.