Public Service Pensions and Judicial Offices Bill [HL]

Debate between Lord Hodgson of Astley Abbotts and Lord Davies of Brixton

Report stage
Monday 29th November 2021 Lords Chamber

[Lord Davies of Brixton (Lab)]

My Lords, I raised this issue at Second Reading in the context of questioning the use of directions. I believe that there is a general issue here about the respective weight given to primary legislation, regulations subject to approval by one or both Houses, and directions, which are the decision of the Treasury. Clearly, there is a balance to be drawn here on the appropriate level of parliamentary scrutiny; it is a debate that we should have, but it is not one I propose to pursue any more in the context of this Bill.

However, some concerns remain about issues that are being dealt with through directions which, I believe, should be subject to parliamentary scrutiny. In the context of this Bill, there are two issues of concern. The first is the decision that the cost of the remedy—that is, the remedy required to address the issue of age discrimination—should be counted as a member cost in the cost-control mechanism. The second issue is that, in that calculation, the costs of the remedy should be spread over a period of four years.

This is beginning to verge on technical issues but, at heart, these are policy decisions, and ones that should be subject to parliamentary scrutiny. They go far beyond what have been described. This legislation amends the Public Service Pensions Act 2013, and there was a report on that legislation, looking at the directions, which said that the directions did not need parliamentary scrutiny because they were simply technical matters of actuarial practice. My argument today, on those two issues—and I am going to focus only on the issue of whether this is a “member cost”—is around whether this is a technical matter of actuarial practice or whether it is a policy decision that should be subject to parliamentary scrutiny.

There is no doubt that the decision to make this a member cost will mean that members end up paying more money or receiving lower benefits. It will directly affect the benefits that they receive. The issue was raised in Committee, and the Minister at that stage maintained the position that

“Treasury directions … exercise a particular power, rather than creating a new power”.—[Official Report, 11/10/2021; col. GC 353.]


I would argue that the decision to make this a member cost as part of the cost-control mechanism goes beyond the exercise of a particular power and creates a new power, and hence it should be considered as regulations.

This is a complicated issue, and, to understand it, you need to have a clear understanding of the purpose of the cost-control mechanism. It is not, as the Government have suggested, a mechanism for assessing the value of pensions; this is not something that directly affects the calculation of the contribution rate being paid for the scheme. It simply affects the cost-control mechanism, which is the trigger for deciding whether changes should be made to the scheme. The costs of the scheme are the costs of the scheme; whatever the benefits are, they are the costs of the scheme. This is a mechanism for deciding whether those benefits should be changed or, alternatively, whether contributions should be changed.

It has always been accepted that there are certain elements in the calculation involved in the cost-control mechanism that are regarded as member costs that will impact on the cost-control mechanism—but there are also these other elements in the calculation that are employer costs, which do not impact on the cost-control mechanism. The issue has been discussed, and there have been government reports on what counts as a member cost or an employer cost, but they have never considered the issue of the cost of a remedy incurred by the Government’s own error. It was the Government’s mistake to have age discrimination in this scheme and, to address the Government’s mistake, there has to be a remedy. That remedy is the subject of this Bill. Should the cost of that remedy be a cost for the Government, who created the problem in the first place, or a member cost? The Government argue that members are receiving additional benefits and so it is clearly a member cost.

This is an important issue and what I am arguing about now is not an ultimate answer—I have made my position clear; I think it should be an employer cost—but it is not an issue that should be addressed through directions; it should come before Parliament through regulations. Because of the nature of the regulations, they would probably be financial regulations and considered only by the House of Commons. That is effectively what I am arguing, and I have put down my amendment in order to raise this issue. To a certain extent, our deliberations here are not final, because this is the subject of extensive legal action. However, that is nothing to do with the argument today. The argument is technical; it is on the relatively narrow point of whether the cost of the remedy falls to be treated as an employer cost or as a member cost.

[Lord Hodgson of Astley Abbotts (Con)]

My Lords, I have not participated on this Bill before; indeed, I just want to pick up the point made by the noble Lord, Lord Davies, about the way that more and more government actions are taken by subordinate legislation. I chair the Secondary Legislation Scrutiny Committee, and we produced a report last week entitled Government by Diktat. My noble friend Lord Blencathra, who chairs the parallel committee, the Delegated Powers and Regulatory Reform Committee, produced another report called Democracy Denied?

We all know that secondary legislation it is not well scrutinised. It cannot be amended, and this House and indeed the other place are therefore reluctant to undertake what I call the nuclear option—we cannot amend a bit of it, so we have to reject the whole lot. The last time that happened there was a huge constitutional crisis, to which my noble friend Lord Strathclyde had to set up a committee to answer.

However, we have moved from that unsatisfactory position to one where we now have guidance. Guidance may or may not form part of the regulations; sometimes it says that the guidance “must have regard to” the regulations. What does that mean? Does it mean “I thought about it and I did not want to follow it”, or does it mean “The court will decide, and you had better have a jolly good reason for not complying with it”.

The point from the noble Lord, Lord Davies of Brixton, takes it further away from the control of this House. We have what is now tertiary legislation: directions and decisions made by bodies that are not answerable to Parliament but whose decisions and regulations are enforced and required to be obeyed by every single member of the population of this country. Whatever the rights and wrongs of the point from the noble Lord, Lord Davies—I am not in a position to judge—he raises a very important matter for the House, which needs to be debated and discussed. As we move to new ways of regulating and legislating, because our society is moving on faster than the rather stately pace of primary legislation, we need to find new and better ways of making sure that Parliament, as the legislature, is not subject to the creeping, increasing control of the Executive—the Government.

My committee and my noble friend Lord Blencathra’s committee are pretty convinced that the situation needs seriously addressing here—and of course in the other place, which must lead the way on this—if we are to make sure that the balance, which has shifted, is put back in the right place and in the right form. The speech by the noble Lord, Lord Davies of Brixton, underlines some of the dangers that we are facing by direction, which is not good enough because it does not come before your Lordships’ House or indeed the other place but will nevertheless have a very significant impact for our fellow citizens.

Social Security (Up-rating of Benefits) Bill

Debate between Lord Hodgson of Astley Abbotts and Lord Davies of Brixton

Committee stage
Tuesday 26th October 2021 Lords Chamber

[Lord Davies of Brixton (Lab)]

My Lords, I am as keen to get home as anybody, and I was looking forward to leaving, but I would not have missed this for the world. It has been the most gripping sitting that we have had.

I have a question for the Leader of the House. I cannot add anything to the substance of the debate, and I very much agree with what has been said about universal credit, but I am concerned about what the noble Baroness said about what counts as being in scope. What was said appeared to discount the significance of the Long Title; we were told that we could amend only in terms of what was already in the Bill. Potentially, that seems extremely restrictive; in future, we could be told that something is not provided for in the Bill so we cannot introduce an amendment on that subject. In her role as speaking on behalf of the House, and not as a Minister, can I ask the Leader of the House whether it is the case that nothing has been said that is intended to restrict, now or in future, what amendments can be laid, and whether the Long Title has an important role in determining the scope of a Bill?

[Lord Hodgson of Astley Abbotts (Con)]

My Lords, it is very late and I have not participated in the Bill before, so I shall be extremely brief. My interest is not so much in the matter we are debating; I understand that people feel very strongly about it, on both sides, but I have no particular dog in that fight. My intervention comes because I am chairman of the Secondary Legislation Scrutiny Committee of your Lordships’ House. As is well known, we produce a report every week where we try to provide a commentary on the instruments that are coming up through the process so that your Lordships have some guide—some thoughts, some suggestions—about areas that might usefully be probed as we undertake our primary role, which is of scrutiny and the ability to hold the Government to account.

I have read my noble friend the Leader’s letter with great care and I recognise and accept the seriousness of the points she makes and has spoken about this evening; that we are a self-regulating House and how this amendment, if I may summarise what she is saying, is pushing the envelope too far. I introduce to the House the concept of Isaac Newton’s third law of motion: for every action, there is an equal and opposite reaction. I think Newton’s third law of motion may explain some of the background to the issues that we are debating so strongly tonight.

The SLSC, along with many other Members of your Lordships’ House, is increasingly concerned about the use—some might say misuse or misapplication—of secondary legislation, which, as all Members of your Lordships’ House know, and the Government very conveniently find, has a very much lower level of scrutiny. So, in summary, while my noble friend may be pushing the envelope, I think the Government have been pushing the envelope in recent months and years a great deal. What do I mean? I shall give just two examples which I think are of particular relevance to our debate this evening.

Permanent changes to our laws, which probably should be introduced by primary legislation, are being rushed through in regulations, and sometimes being rushed through under the excuse that they are needed for the pandemic. Planning regulations have nothing to do with what we are discussing today but are something that may change our high streets, perhaps for ever. They have nothing to do with the pandemic, yet are now law because of regulations made under a pandemic regulation. The noble Lord, Lord Davies of Brixton, made a point about impact assessments. Regulations with sunset clauses have no impact assessments because they are going to last for less a year, and then—surprise, surprise—they are extended, they go over the year, but still no impact assessment is produced; or impact assessments are introduced long after the debate in your Lordships’ House, when regulations are in place, and are of no real value, therefore, in influencing the way the House decides.

Last week, we looked at the Motor Vehicles (Driving Licences) (Amendment) (No. 2) Regulations 2021: these concern critical issues about road safety and no impact assessment has yet been provided. If debate and scrutiny are stifled, as they are by not providing this information, the Government must expect Members of your Lordships’ House to try to find ways to get round the point, and that is what brings us to the issue we are facing tonight. The system for scrutiny has not provided a way for a proper extent of looking at and considering issues which mean so much to people on both sides of the argument that we have been discussing for the last couple of hours.

I will not go on but will conclude by saying that while of course I understand my noble friend the Leader’s concerns and worries, I say to her gently that I think there is a view in your Lordships’ House, and outside in academia, within the Hansard Society and elsewhere, that the Government, the Executive, have made a grab for power at the expense of Parliament, the legislature, and that these actions have led to the equal and opposite reaction that we are debating tonight.