Pension Schemes Bill [HL]

Lord Monks Excerpts

Committee: 1st sitting (Hansard): House of Lords
Monday 21st November 2016 Lords Chamber

On Amendment 44, given the significance of the provisions, we support the affirmative rather than the negative procedure being used for these regulations. I beg to move.

[Lord Monks (Lab)]

My Lords, I rise to support the arguments that have just been expressed so well by my noble friend. In doing so, I declare an interest as a trustee and chairman of the members’ committee of NOW: Pensions, which has 1 million members and 20,000 employers signed up. The whole area of member engagement and communications is a major preoccupation for us in a period of what has been very rapid growth—not just of NOW: Pensions but of certain other master trusts.

To find the right way to communicate with 1 million people is an extremely tricky task, but we note with some interest that a range of solutions are now being developed. For example, we note that Legal & General, which I think has about 500,000 people in its trust-based schemes, does hold annual meetings, as the amendment calls for, while others who find that concept difficult are beginning to look more seriously at what they can do in that area.

Finding ways to encourage the member voice is pretty close to the top of most of our agendas. Putting communications at the heart of a master trust, which is by definition a rather sprawling outfit, is very important to try to get it to centre stage. The Government’s idea of a dashboard would help. I hope that is not being put on the back burner, because it would be a very useful tool to show people where they are with their pension investments and entitlements. Trustees themselves need to work very hard to explain basic messages about pensions to the people who have signed up. A pension pot, for example, is the members’ money now—it is theirs. If that penny really dropped, a lot of people would take rather more interest in the process rather than simply pushing it to one side as they often do.

Getting members to see how their workplace pension sits alongside the new state pension is also important. Members need a wider view than just the workplace scheme to get a picture of their total position when they are coming up to retirement. Where schemes offer a choice of contribution rates, as some do, drawing the availability of higher contribution tiers—and associated higher employer contributions— to members’ attention would help to make them aware that these higher contributions in fact mean a greater amount of money from the employer contribution. These kinds of points are in the spirit of helping people to maximise their interest and entitlement in the pensions area. Members should be encouraged to set themselves targets, take ownership of their pot and see if they are getting a good return when they try to work out their pension arrangements for the future.

I accept that these ideas will never be legal requirements—nor should they be; they are more good practice—but they are in the spirit in which every master trust worth its salt should be acting, and they put the members of the trust more at the core of its work. A master trust needs a very good communications strategy. I support all the things that my noble friend Lord McKenzie mentioned, such as online technology and forums. We at NOW: Pensions conduct regional meetings of employers at the moment and are thinking of extending it to members, probably on a first-come, first-served basis as we are not inclined to try to hire Wembley Stadium to run the meetings.

In supporting my noble friend, I urge the Government to take this communications area very seriously and put it not on the edge of their requirements but in the middle, right at the core of the work that is to come.

[Lord Stoneham of Droxford (LD)]

My Lords, I very much welcome the opportunity to support this group of amendments. I have put my name to Amendment 10 but, having heard the speeches so far, I can see no difficulty in supporting the rest of the amendments in the group—and if they come back on Report I would be pleased to sign up to them. The arguments have been strongly made but I will make three specific points about why member engagement is really important.

The first reason is that the risk in contributory pensions is totally with the employee. They are not like direct benefit schemes, where the employer is sharing a lot of the risk; in this type of pension, employees are holding the risk and therefore their engagement and involvement with how their money is being handled is pretty important. If you are introducing a regulatory scheme at this stage, it should be a central point.

My second point is that if you are introducing a regulatory system, you do not want sole reliance on the regulator to make sure that things are running well and that members are satisfied; you want a counterweighting source of evidence and interest from members themselves to support that regulatory role. That is why this should have the attention of the Government in the Bill.

The third reason is that, as we have already heard, organisations such as Legal & General are already doing that. If that is good practice, the Government should take the opportunity of the Bill to encourage it, take it forward and make it more widespread. The concept of an annual meeting, which Legal & General already accepts as a valuable new forum for communication with members, should be examined and included as an option in the legislation. That would be a way to introduce the discipline of finding out what members want and to make it the fiduciary duty of the trustees to understand what members want from their pension investment. For all those reasons, the Government must take this very seriously. I hope that they will look at this more closely so that when we get to Report, there will be no need to retable the amendments.

Pension Schemes Bill [HL]

Lord Monks Excerpts

2nd reading (Hansard): House of Lords
Tuesday 1st November 2016 Lords Chamber

[Lord Monks (Lab)]

My Lords, I start by declaring an interest. I am a trustee of NOW: Pensions, a master trust with 20,000 clients and 1 million members, which have built up in the last four years. Like many noble Lords who have taken part in this debate, I welcome in general the thrust of the Bill and its aim to provide essential protections for people in master trusts. We have advocated for a long while that a more robust regulatory regime for these trusts is necessary to ensure that all savers in them enjoy protection. It is certainly now time, as other noble Lords have said, to tighten the rules for master trusts, including on charges and commissions.

Many questions will be debated in Committee, I am sure, and this Bill is a modest measure compared with the many pensions challenges already mentioned that affect this country—whether in relation to the state pension, the declining scope of defined benefit schemes or the apparently increasing risk of the more unscrupulous or perhaps most desperate employers joining BHS and others in dumping their liabilities as best they can into the Pension Protection Fund. More specifically, there is the big question—the stark fact—that, despite the initial success of auto-enrolment, it comes nowhere near providing contribution levels of around 15% of earnings, which most people regard as the basic level of a decent pension in retirement.

There are many people still outside the scope of pensions, not least because of the qualifying earnings limit, which cuts out a lot of low-paid workers at present. A good start has been made but we still have some big challenges to face. Women have been the losers in the main, not just in relation to the state pension age, but given their preponderance in low-paid occupations and part-time work in particular.

How rapidly the pensions outlook has changed in the last few decades. I remember that as late as the 1990s, many employers with healthy defined benefit schemes were taking contribution holidays. Many of us were very worried, but they promised solemnly that they would honour their pension promises and some have done so. I notice that Rolls-Royce, which is not in the papers for reasons it would like at present, a week or two ago put new resources into its pension scheme to keep it healthy. Far too many companies have broken those promises but I note somewhat sardonically that, where senior executives remain in the general pension scheme, there is a greater tendency to keep it going than where directors are in their own separate, hived-off, top-hat scheme.

Maybe the decline of DB schemes was unavoidable because of demographic factors such as the welcome increase in life expectancy but, as the noble Baroness, Lady Hollis, said, that relates only to certain parts of the country—to certain wards in many cities where there is a big difference between the rich and the poor, the comfortable and those in need. That is a major factor. Other factors, such as the accounting and taxation changes and rather sudden actuarial reviews, had a big effect on DB schemes. The coverage of DB schemes was partial; they favoured full-time, mainly male workers in large companies. However, they were a British success story, and I am sorry to see our current position.

This increases the pressure on us to make a success of auto-enrolment. That was a rare thing in British politics: the product of a genuine consensus based on the report of the chair, Adair Turner, my noble friend Lady Drake, who will speak shortly, and Professor Hills. The major political parties did not turn it into a political football match and worked, for the most part—certainly until recently; some of the recent changes are exceptions to this—in a non-partisan way to build up the auto-enrolment system. I hope we can do that with both the Bill and next year’s review of auto-enrolment. Indeed, this kind of approach could usefully be expanded into other labour market issues, but that is a speech for another day.

There will be a major review of auto-enrolment in 2017, and I hope we will manage to make some progress together on that. I hope too that we will address the tough issues. For example, should we start to plan for a higher contribution rate, above the 8% of earnings currently envisaged? This question will of course entail some fine judgments of how both employers and workers would react to the higher contribution rate. Would employers under current pressures, which have been enhanced by the uncertainty caused by the EU referendum result, be in a position to up their contributions? Would such a move perhaps encourage them to go further towards self-employment, and not just those in the gig economy? Self-employment has accounted for half the jobs created since the crash of 2008, and we on this side are certainly aware that that could increase still further if we got some of these things wrong.

Would workers be prepared to pay substantially more into their pension, especially against the background of the very low, real pay increases which have characterised recent years? Would the opt-out rate go through the roof in such circumstances? Should we even continue with the right to opt out, or should membership of a scheme be compulsory? That would certainly simplify administration. Could it perhaps be made widely acceptable as the right thing to do, given the many pressures associated with facing old age without adequate resources? One thing is clear: any changes certainly need to build up fairly slowly, giving people time to adjust to major changes and to maintain the spirit that the Turner commission developed. But the objective must be clear: we need to move towards prompting and helping people to save more for their old age.

The Bill rightly aims to correct some weaknesses in the current system. There has been no licence to operate and virtually no barriers to entry in the master trust world. This has spawned the big increase in master trusts that has been mentioned, and there is a danger that many will fail to achieve the scale necessary to survive. The result could be disorderly exits from the market, with all the uncertainties and possible losses that the noble Baroness, Lady Altmann, referred to. To an extent this is being addressed—certainly in the Bill, through the enhanced role of the regulator, which will become an authorising body, a new market entry test and a fit and proper person test for the trustee. Schemes will have to have these continuation strategies with adequate resources to wind up in an orderly fashion.

We will need to look at the details in Committee but, for the moment, I am unclear as to why master trust assurance would not be made compulsory. It is an existing framework that could be used as part of the licensing regime. It is also desirable that the requirement to hold capital against running costs should be set at a solid rate—one that can cover the emergencies which can arise. In the case of NOW: Pensions, we think around six months would suit us. At the moment, that would mean around £8 million for the organisation.

Although it is perhaps a bit premature to move into the review of auto-enrolment, could we place on the agenda a wish to remove qualifying earnings, particularly the lower limit and, instead, base contributions on every pound of earnings? At the moment, the lower-paid are losing out big time because of the way the system works. Such a change would improve the outcomes for all, but especially for low-paid and part-time workers, many of whom are women. Other outstanding issues include the net pay anomaly—settling once and for all the point at which tax has to be paid, on the money paid in or on the money drawn out.

Finally, will the position of NEST be reconsidered in the 2017 review? Here, I recognise I may differ a little from some colleagues on this side of the House. NEST was set up as a default option, to take care of low-paid workers no other providers would accept. In fact, there has been no market failure and NEST is now looking to expand its range of activities to provide new retirement products, as well as providing pensions for the higher paid. Is this a device that could lead to market dominance funded by the taxpayer? After all, NEST is a publicly funded body. I quite accept that we want our money back from NEST in due course, but I would certainly be interested to hear the Minister’s views on this.

All in all there is much to support in this modest Bill, but it is only scratching the surface of the much bigger issues in the world of pensions that I think will occupy this House a lot in the next few years.

Apprenticeships

Lord Monks Excerpts

Wednesday 26th March 2014 Lords Chamber

[Lord Monks (Lab)]

I thank my noble friend Lord Young for initiating this important debate. Unlike him and certain others here, I was never an apprentice but I went to a boys’ technical school and most of my contemporaries went into apprenticeships in manufacturing or in construction. A decade later I was working on the training brief in the TUC in early 1970s, and the apprenticeship system started to collapse—I do not think that there was any direct relationship between my presence in the TUC and what was happening in the country. The apprenticeship system had covered 44% of boys leaving school at the minimum age and about 4% to 5% of girls, but those numbers plummeted, particularly for boys.

Why was that? First, there was a feeling among employers that those who were doing the training were losing staff to those who were not—that poaching was rife—and the lack of a collective approach was a factor. Industrial training boards, instead of being strengthened, were weakened. I must acknowledge too that there was a growth of a youth culture of having money. If you could earn more money at the age of 16 in a labouring job than you could in an apprenticeship, the lure of the youth culture was a major factor that turned many young people away from apprenticeships. Later, other factors clicked in as universities expanded. The attractions of higher education—“uni”, as became the common phrase—became overwhelming to many young people, and was supported by parents. The privatisation of a lot of the utilities in particular, which trained more people than they needed themselves, contributed to this collapse in apprenticeships outside of some blue-chip companies and one or two exceptional industries.

We have come a long way from the apprenticeship model which has survived, albeit not without problems and pressures, on the other side of the North Sea and of the channel. I well remember a visit I made to an apprentice school for motor mechanics in Vienna, where I took part in a discussion in English with the students. I told them their English was excellent and they said, “All our drawings are in English; we have to work in English”. Their apprenticeships were done in a foreign language, which was extremely impressive and showed the high quality of the apprenticeships and the veneration of the concept which existed there. Where we have 11 apprentices for every 1,000 employees, Germany, Switzerland and, I think, Austria—as well as, interestingly, Australia, which is a different culture and more like ours in some ways—have round about 40 per 1,000 workers. Switzerland has a lot of apprentices and not so many young people going into higher education. The university route there has not got the same cachet as it seems to have here. However, we know that even in those countries apprenticeships are under pressure: a lot of young people are aiming for higher education and some employers are looking to substitute much cheaper and shorter training courses, linked to specific jobs, for more expensive ones. It is not a paradise over there, but we succumbed to these pressures to a greater degree and earlier than others.

I am also in the camp welcoming the resurrection of apprenticeships which was started under the previous Government and has been continued under this one. There is a lot to be proud of. There is a lot of agreement in this area, although from our side, as my noble friend indicated in his opening speech, we would like things to go more quickly and more purposefully on this issue. The point he made about procurement was very important—we should know what employers are doing. Looking at what training is going on and the apprenticeship model in particular should be part of the purchasing process of public authorities. Investors in People may be a very useful initiative for this purpose.

I know the Government have started to think about this, but we need to do more to make sure that the minimum wage is properly paid. At the moment, the estimate from the latest apprentice pay survey is that 30% are being paid illegally, which is a very high figure: three out of 10 kids, and in some cases adults, are not getting what they are entitled to. We also know that the whole scheme in most sectors is still geared towards white boys—if I can put it like that—rather than girls or ethnic minorities, who do not feature too strongly in quite a lot of sectors.

The other point to make is about the importance of employer and union co-operation in this area. I was very proud when I was at the TUC of being one of the instigators of Unionlearn, and of the idea that unions could use their influence to get people to have a go at learning who did not have the experience of getting glittering prizes at school and for whom learning was frightening. We could reach parts that employers on their own could not, and that relationship was very important. Although welcoming the Government’s commitment to supporting Unionlearn, I ask the Minister whether they intend to continue that commitment into the future and to give that very worthwhile and big-scale scheme the support it really deserves.

Employment

Lord Monks Excerpts

Thursday 20th March 2014 Lords Chamber

[Lord Monks (Lab)]

My Lords, I add my thanks to the Minister for initiating this debate. He has every reason to be cheerful given the rise in employment that has taken place. It would be churlish not to welcome the fact that the British economy is in a better place than it has been over the past six years, and the rising employment rate is the best feature of that.

As the Chancellor recognised, there is a long way to go before we can say that we have a balanced and sustainable economy. I note that he was not quite as upbeat and positive as the noble Lord, Lord Bilimoria, about the prospects for the British economy. While I welcome the national fall in unemployment, it is not being felt in all areas of the country or all areas of the economy. In the north-west, my region of origin, the number of unemployed has risen by 22,000. That is the largest rise of all the regions in the country. As the Minister said, the figure that raises the greatest concern is the rate of long-term youth unemployment. For example, in south Warrington in the north-west, between May 2010 and January of this year, the number of unemployed young people increased sixfold. In Rossendale over the same period, seven times as many young people have been unable to find work. Further north, in Lancaster and Fleetwood, the number of unemployed young people has increased tenfold over that period.

The harsh facts are that fiscal austerity has slowed and weakened the recovery rather than led to it. Exactly the same thing has happened in the eurozone. Both of these are in contrast to the United States, which has bounced back more rapidly and powerfully than this side of the Atlantic.

Monetary looseness and quantitative easing has been a factor in the UK. It has helped the recovery, but it has also helped it to be rather unbalanced and, for that reason, fragile. One could say that the economy is still on life support while we have quantitative easing. We have been under the delusion, as the noble Lord, Lord Skidelsky, described it, that the policies which made the recession worse would be the same policies that made recovery possible. In fact, public investment is still down 35% from pre-crash levels. Resources still stand idle and must be mobilised in all parts of the country, not just in the relatively prosperous south-eastern corner.

That brings me to concern about the British economic model. Just over six months ago, it was said in the Economist that:

“The bones of Britain’s economy are rotten. Shoppers are consuming not because they earn more but because they can borrow more … Firms with cash … are hoarding rather than investing. New firms … find it hard to borrow: the banks will lend only against property. Britain still buys far more abroad than it sells, despite a weak currency”.

Things have moved on since then. They would not write the same thing today. However, I ask noble Lords to appreciate the fact that some of that is still very true.

The Chancellor recognises these structural weaknesses. He mentioned them in his speech on Tuesday. However, his prescriptions still fall well short of what is necessary to cure our problems. It would be so depressing to think that we are condemned to a future in which we might get a debt-fuelled property boom, particularly led again by the south-east, followed by another financial crisis, followed by another period of austerity. What can we do to avoid that? There are things being done in the banking system but it is important that this rebalancing of the British economy becomes a national priority.

Can we be bolder in this area? The noble Lord, Lord Heseltine, has certainly had a go and is very active in this field. With his report, No Stone Unturned, he pointed to lessons from our neighbouring countries on the eastern shores of the North Sea, including Germany, the Netherlands and the Nordic countries—lessons about decentralisation, skills and active public intervention to spur growth. These lessons need to be learnt here, along with other features of the more successful economies of our North Sea neighbours. These include: the equality of Scandinavia; the collaborative, long-term culture of Germany, with its voice for workers; the widespread, effective collective bargaining systems in all the countries that I mentioned on the other side of that sea; and the general excellence of their infrastructure, public services and welfare states. They did not follow the cult of deregulated labour markets being the route forward to prosperity, and they did not adopt the easy hire-and-fire policies that were largely pursued in the English-speaking world. Even in Germany, the Hartz reforms introduced by Gerhard Schroeder were, by our standards, rather modest and marginal.

Collective bargaining is a term that you do not often hear in this House and sounds quite quaint and historical to many here, although it is prevalent in most of our top companies, including those on the list that the noble Lord, Lord Bilimoria, mentioned as exemplars. It is still strong at a sectoral level in the countries I mentioned and has a major influence in pressing against inequality. After all, if you are the boss and you have influential unions, it becomes far harder for you and your colleagues to sustain a culture in which you tend to help yourself and give yourself the benefit of every doubt when it comes to sharing out the company’s income. If you have effective information and consultation arrangements, involving company councils and even workers on the board, then you strengthen the forces that seek a long-term perspective on company performance—not those who see companies as a bundle of assets to be traded in the City, where the hunger for deals and transaction commissions seems undiminished. That certainly runs counter to our need for a better-balanced, more sustainable economy. The approach of those North Sea economies has much assisted greater equality and better productivity as well as longer-term perspectives about the future of their economies.

I accept that there are many good things about labour market flexibility. When applied functionally it enables workers to respond flexibly, and we have seen some of that in companies through this recession, which has helped to keep employment levels up. Flexibility in skills is obviously important, too, and enables individuals and companies to flourish. In passing, I hope that the Government continue to support Unionlearn, the programme that has done a lot to promote a learning culture among the workforce in this country. It would be a false economy to cut it back. That is not the responsibility of the Minister’s department but is on the Government’s agenda.

Flexible working hours are clearly important for the future to employers and employees alike, but while labour market flexibility has good features it also has some much less good features, particularly where it benefits unscrupulous employers by letting them fire people without adequate consultation. It is a process that has been encouraged in recent months and years by the Government’s moves. It is therefore important to consider labour market flexibility in its different segments, and regulation sometimes produces better practice.

Perhaps the worst thing about labour market flexibility as it has been applied in the UK is the lamentable performance on productivity. Output per hour in Germany is 31% higher and in France it is 32% higher. These are pretty disastrous figures. If we are to keep up with other countries, never mind soar to become the economic leader that the Chancellor talked about on Tuesday, then productivity must become a national campaign. It must become something that we improve and we must all work together to achieve that.

The Chancellor was right to warn against complacency because things are getting better, but I believe that he is wrong not to reach for more ambitious plans—perhaps, for a start, applying some of the lessons that we can learn from the other side of the North Sea.

Pensions Bill

Lord Monks Excerpts

Tuesday 3rd December 2013 Lords Chamber

[Lord Monks (Lab)]

My Lords, I start by declaring an interest: I am a trustee of NOW:Pensions, which is a subsidiary of the Danish pensions institute, ATP. Those noble Lords who know about pensions internationally will know that Denmark has an enviable record in pensions.

Pensions in this country have become an area where successive Governments in the main have sought a degree of continuity with their predecessors. From time to time, there has been an impressive degree of cross-party agreement; my noble friend Lady Hollis has just reminded us of one or two significant contributions made by the current Pensions Minister. There is a recognition that this is a long-term problem and that long-term approaches need to be taken to pensions. They should be taken rather more in other areas, which are perhaps more politically controversial. Given the uneven nature of pension provision in Britain, we certainly need a continuous effort to tackle some of the more glaring inequalities that abound. Still, the degree of agreement has been impressive. That stems from a report by the Pensions Commission, which the noble Lord, Lord Turner, chaired and of which my noble friend Lady Drake was a member.

Despite a general welcome for the main pillars of the Bill, there are problems that I want to touch on briefly. I will look first at the statutory override in Clause 24 and Schedule 14, which provides that private sector employers must make changes in their schemes that are commensurate with the higher national insurance costs that arise from the end of contracting out, and for that be done without trustee or member consent. Because the calculation will be done at the aggregate level, not per individual, many scheme members may well lose out. Despite the requirement in Schedule 14 for actuarial certification of scheme changes, we believe that these protections are not solid enough to make sure that people do not lose out significantly.

On the state second pension itself, the concern has to be that the majority of future pensioners could well be worse off under the single tier, because its accrual rate is lower than the current system for people not contracted out. Those retiring later are more likely to lose out and to lose out more. It is not fair that people close to retirement and not contracted out of the state second pension will be unable to accrue a state pension above the single-tier starting rate, despite continuing to pay full national insurance contributions.

There are also problems with the accelerated timetable for increasing the state pension age to 67 in Clause 25. My noble friend Lady Hollis has just spoken eloquently along the same lines. There has not been enough time to address some of the inherent inequalities that exist both regionally and between manual and professional workers. It seems that you have won the jackpot if you are a professional worker in Dorset; if you are a manual worker in one of the old industrial areas, you are in trouble. Yet it is “one size fits all”, and that one size does not fit some, for whom, in the years after retirement, the forecasts are pretty poor. I hope that these will be considered. Certainly, if the state pension age is to be changed again, I hope that this review will lead to some independent process, to give people confidence in the judgment about retirement ages.

Of course, there are some obvious losers in the changes. In particular, dependent relatives look as though they are getting a pretty hard deal. As we go through the Bill, I hope that we can take a good look at their position.

On private pensions and auto-enrolment, Clause 35 extends government powers to cap pension scheme charges. Lower charges are very important. From my Danish knowledge, the contrast between low charges there and high charges here, historically, has been extremely marked and I welcome what is being done to bring down the British level. The principle is good, but the worry is that the changes over a single year can distort the benefits that come with long-term saving. We ask that the Minister and the House take a look at perhaps having a cap over the lifetime of the scheme, which would offer greater flexibility. In the current consultation exercise, it is important that we do not rush this fence too fast, without looking at the longer period over which to compute the appropriate cap.

On the “pot follows member” principle, several speakers have already questioned whether there is a problem with making that totally automatic, when a person could be transferred to an inferior scheme—and there are plenty of inferior schemes around. What about the costs for workers who change jobs frequently? They are often the lowest paid, on insecure contracts, and will be vulnerable to this kind of process.

My next issue concerns Clause 34 and the extremely broad power to create exceptions from the employer duty to auto-enrol staff into a workplace pension scheme. For our part, we are worried about the risk of abuse and are looking for strong safeguards to be built into this part of the Bill.

It is a useful Bill, but I hope that we will find the energy and time, and make the effort, to see whether we can make it better as it progresses through the House.

Mesothelioma Bill [HL]

Lord Monks Excerpts

Monday 20th May 2013 Lords Chamber

[Lord Monks]

My Lords, I am pleased to add my voice to those congratulating the Government on moving forward. Some of us intend to ensure that this movement goes forward a bit more. Correctly, generous tributes have been paid to the Minister and to my noble friend Lord McKenzie. As my noble friend Lord Jones mentioned, others have been involved over many years in the battle to combat the damage that asbestos has done: people from the trade unions, the media, the medical and legal worlds, as referred to by the Minister, and many in this House and the other place.

I would have preferred the Bill to go further than it does and to address more purposefully some of the concerns raised by noble Lords tonight. I live in hope that we can make some improvements in Committee and that perhaps we will get some assurances about action in the future. My concerns are those of others—I will not labour them at this time of night. Limiting the Bill only to mesothelioma excludes 50% of those who suffer from asbestos-related diseases. I understand it would cost about 20% to 25% more if the levy included those and I do not think that this is an impossible ask—if not now then shortly in future.

The more immediate problem is the cut-off date of 25 July 2012. Comparing the treatment of someone who is diagnosed the day before with that of someone diagnosed a day later seems a sheep and goats distinction, which will be hard for some people. If the date is pushed back, then because of the short life expectancy of many sufferers, the problem will be a little easier. I hope that this will be a problem we can discuss.

My third major concern is about this 70% limit. It is unfair discrimination, as my noble friend Lord Howarth so ably put it, against people who cannot find their employer or insurer. Maybe it will be in the interests of some of the less scrupulous insurers to hide a bit and not volunteer all the information that they might. In those circumstances, to discriminate in the compensatory award against the individual concerned is not right. Fourthly, the insurance industry has helped a little in funding research into the treatment of these diseases and I hope that the levy on them will include provision for them to help research even further into the treatments available.

I worked in a brake lining factory more than 40 years ago and was one of the lucky ones. I worked there for six weeks. Many of my contemporaries are not around now. Male life expectancy in the ward where the factory was located was only 59 in 1993. That shows the pernicious effects that this substance has had. Congratulations on continuing the battle against it and let us go a little further than we are at the moment.

Enterprise and Regulatory Reform Bill

Lord Monks Excerpts

Monday 14th January 2013 Grand Committee

[Lord Monks]

My Lords, I rise to support the question put by the noble Baroness, Lady Turner, and to follow some powerful speeches that have been made in support of it. I declare an interest. I am a non-executive director of Thompsons, probably the most prominent trade union firm of solicitors.

The Government cannot be accused of inconsistency when it comes to rights at work. I see Clause 61 in a wider context: namely, that the direction of travel which the coalition has adopted is pretty clear. It is to keep chipping away in the name of deregulation at a range of rights, some more fundamental than others. When the opportunity comes along to chip away a bit more, it is taken. The Bill enabled this late amendment to be added. It can be seen in the context of raising qualifying periods and other obstacles to justice, changing the personal injuries area, without touching road traffic accidents, which is the major problem area of a compensation culture, and generally moving to disadvantage the already vulnerable. It is a kind of convoy and Clause 61 is one ship in the convoy.

For those of us who have spent most of our lives working to advance good relationships and security at work, and particularly to make sure that health and safety is of the best possible standard, Clause 61 is disappointing and frustrating. Of course, for the victims it is much worse than that. Clause 61 removes the ability of an employee to enforce a civil claim for workplace injury on the grounds of workplace regulations. I hope that we can take advantage of what my noble friend Lord Browne said, and pause and have a better look at this. If this change is enacted, the employee would have to rely on the common law doctrine of negligence to enforce a civil claim, but it is not always about negligence. The noble Baroness, Lady Brinton, picked an example where negligence did not come into it, certainly on the part of the employer, even if it was not quite in the mainstream of the Health and Safety at Work etc Act. As she said and as others have repeated, health and safety legislation is always looking for a balance between different types of obligation. In my long trade union career I have not met too many employers who are totally blameless, but I will accept the suggestion that there are some.

Before today’s discussion I did some research on this issue. In this House in 1969 Lord Morris of Kenwood introduced some regulations on protecting machinery. I summarise what he said, “If both parties are innocent and neither is to blame, who should bear the loss?”. The reality is that the legislation up until Clause 61 has favoured putting the liability on the employer. He has more resources. As the noble Lord, Lord Browne, powerfully pointed out, he also has insurance. The principle is a mutual one which means that the insurance payment does not go up very much if, because of the mutual process of sharing the burdens, a pay-out has to be made by the insurance company.

However, an employee has no such resources to fall back on and removing strict liability at civil law makes the process that much harder. Removing strict liability does not remove unfairness; it merely shifts it on to the most vulnerable. I worry, too, about the cultural signal that this clause sends out. It is basically saying, “Health and safety is a bit overregulated. You do not have to take it quite so seriously as you did before. We are removing one bit of liability and if you are not negligent you might get away with this in future”. It is the wrong kind of signal. It is a signal that bad practices will be encouraged rather than good practices; that health and safety is not quite such a central feature of business culture as it is in many places, I acknowledge, and should be in all places.

I am proud of the United Kingdom's record on health and safety. If you look at the comparison with similar countries in the European Union, whether on skills, productivity or a range of other issues, we are not at the top of the league. We are at mid-table in most areas. But in health and safety we are at the top of the league. This is an area of excellence and many of the EU directives on health and safety have been the British Government's diplomacy spreading good practice through some countries that have some pretty ropey practices in this area. It is an area of excellence and our regulations, plus the fact that they enjoyed support on a wide basis, have laid the basis of a good record. It is not as good as we would have liked: there are still too many people killed, as has been recited today. There are too many people being injured and whose lives are wrecked, but this is an area of comparative excellence.

I ask the Government to think again and pause. They should have a look at this before Report. I have one question to add to those that have already been asked. In the impact assessment, there was no mention of the applicability of the European framework directive on health and safety. If an injured worker has no redress outside the negligence area, some legal opinion is already beginning to form that says that they can exercise the right under the European directive against the Government. In other words, they cannot take action against the employer so they will take it against someone else. Will the Minister comment on that particular expression and view? Generally speaking, this is a clause that goes in the wrong direction and I hope that while there is still time we can turn back in the right direction.

[Baroness Whitaker]

My Lords, as a former head of bits of HSE policy, I want to say that this clause undermines the main concept behind the Health and Safety at Work etc. Act to make it clearly enforceable that employers should not with impunity be so recklessly negligent as to imperil life, limb or health if they can help it—that is part of the Act, too. Clause 61, as has been said, does not minimise the potential criminality of this behaviour, but it prevents anyone using a proven breach with any degree of liability as grounds for compensation. Injured employees must fall back, as my noble friends have said, on the common law duty of care, which is very hard to prove.

Recalling the debates over the Health and Safety at Work etc. Act when it was passed—and it received all-party support—Section 47 was put into the Act for this exact reason: so that the workforce could have something effective and tangible if they were severely injured, not just the knowledge of a successful prosecution in which they were a passive witness.

Section 47 was widely consulted on. I would like to ask the Minister the response of the Governments of Scotland, Wales and Northern Ireland to this provision, Clause 61. Can he confirm that they were consulted?

Finally, there is a potential increase in National Health Service costs from this clause because costs are clawed back from the employer if there is compensation and they will not be if there is none. Does the Minister agree? I fear that the Government will be going backwards in their understanding of workplace risks, let alone in recognition of justice for injured work people if the provision goes forward in this form.