Judicial Pensions Regulations 2022

Baroness Kramer Excerpts

Monday 4th April 2022 Grand Committee

[Baroness Kramer (LD)]

My Lords, on one level, I do not object to this legislation. In 2015, I think, the Finance Act made yet another round of changes to the various pension rules in our usual, chaotic way because we do not have properly consolidated legislation. Nobody recognised the unintended consequences that would flow from that for a wide range of taxpayers.

I am entirely with the noble Lord, Lord Davies of Brixton, on this: it was not just judges who found themselves in an unacceptable position that made it difficult to recruit and retain. We have had the same thing with senior medics, as he said, and senior people in the military. After ignoring the problem for months—people were constantly trying to raise the issue with them, for perhaps more than a year—the Government finally recognised that something had to be done. They have made different changes in different situations. I suspect that the temporary fixes that were put in place for the medics, military and senior civil servants will now run into serious trouble, given the inflationary pressures that will push up wages and the freezing of various thresholds.

I must say that judges clearly have the ear of those in power in a way that other professions do not. They have done an absolutely brilliant job of managing to carve out a solution that protects them entirely from the impact of those thresholds, which essentially meant that every additional penny people earned required them to pay a huge number of pounds in additional tax—talk about badly drafted legislation that was not thought through. I was particularly involved with some members of the military. We now have almost no three-star colonels as a result of people leaving that profession, and we had so many consultants, even during Covid, going out and working over weekends but knowing that it would have an awful impact on their take-home pay because of tax consequences which were probably never originally intended. I do not have a problem with that, but here is my problem.

The Government say that they have put in place the new scheme to deal with the threshold problem, and that it will cost an initial £20 million a year. That is not that much; what I object to are the other measures that the Government have taken to offset the full cost of the scheme. One change which flows from it is to raise the retirement age of judges from 70 to 75. I am afraid I was involved only in the early stages of the Bill but was then trying to juggle too much legislation and relieved of duties on it.

The Minister said that we must have a scheme that encourages recruiting and retaining the highest calibre of judges. Unfortunately, over many years—this country is like many others on this—we apparently looked at those who were women or people of colour and decided that they did not meet that high calibre, on the grounds of either their gender or race. We have embedded discrimination that has affected the shape of our whole legal system. In this day and age, we find that unacceptable and are attempting to change it fundamentally but it has been a very slow process.

The Government produced a judicial diversity statistics report in 2021. The higher courts in this country in no way reflect our population among their judges—not by a wide margin. That flows out in all kinds of ways. When judges are appointed, an eligible pool is first identified and then there are recommendations for appointment. I read from the Government’s report:

“From the eligible pool, recommendation rates for Asian, Black and Other ethnic minorities candidate groups were an estimated 36%”—


that is for Asians—

“lower respectively compared to White candidates.”

For black candidates, they were 73% lower respectively compared to white candidates and for “Other ethnic”, which I think includes mixed-race people, 44% lower. The report noted:

“All of these estimates were statistically significant.”


It goes on:

“The proportion of Asian and Mixed ethnicity individuals in the judiciary has increased since 2014, while the proportion of Black individuals has stayed the same in that time.”


The number is shocking:

“As at 1 April 2021, 5% of judges were from Asian backgrounds, 1% were from Black backgrounds, 2% were from Mixed ethnic backgrounds and 1% were from Other … The proportion of ethnic minorities is lower for senior court appointments (4% for High Court and above) compared to others”—


that is for the entire cluster. The Minister will know that I could go on and on with similar statistics showing the lack of diversity in our more senior courts.

When the core legislation that sits behind this SI first came to the House, the noble and learned Lord, Lord Judge, gave an estimate that the Government have not challenged: that by extending the retirement age from 70 to 75, producing sets of judges on our courts who reflect the population was put back by 13 years. It is huge, and the report on diversity helps us understand why. It says:

“It is worth bearing in mind that changes in representation will always be gradual due to the relatively low numbers of joiners to and leavers from the judiciary each year”.


The number of leavers from, and therefore joiners to, has been dramatically slowed by that increase in the retirement age.

I understand the concern of many people who become judges. They step away from very lucrative practices and cannot take side business to enhance their income. They are concerned about the impact on their pensions for the rest of their lives, and therefore they are keen to keep working longer. I notice that we have Members of this House, often with friends whose calibre they admire and whose skills they regard very highly—I have no question about that calibre and those skills—who are very supportive of allowing people to extend their working life from 70 to 75. But no one has been able to give me any satisfactory answer on the issue of diversity and courts where the judges reflect the make-up of our population.

I know there are various programmes to get more and more people from different backgrounds into the legal profession, but that is at the beginning of the pipeline. At the end of the pipeline, in effect, a major block has now been put on that progress. The consequence of trying to save them money has driven the impact of this statutory instrument, so I would like to know why the Government did not simply decide to bear the additional cost—I am not sure what that number would have been, but I doubt it is huge—and allow diversity to come into our courts in the way it would have with the retirement age of 70. We need to understand how the Government set their priorities and how much they thought was too much to spend on avoiding 13 years of delay in getting senior courts that reflect our nation, which I think is fundamental in any democracy. There will be a number, and I am sure the Minister is able to give it to us.

[Lord Ponsonby of Shulbrede (Lab)]

My Lords, I thank the Minister for introducing this statutory instrument. The parent Act to it, if I can call it that, is the Public Service Pensions and Judicial Offices Act 2022 and the Explanatory Memorandum states:

“These regulations establish the Judicial Pension Scheme 2022 … a scheme for the payment of pensions and other benefits to, or in respect of, eligible members of the judiciary … The JPS 2022 will be the only judicial pension scheme in which eligible judicial office holders can accrue a pension for service from 1 April 2022, on which date all other judicial pension schemes will be closed to future accrual”.


The scheme is made by the statutory instrument which we are dealing with today.

In his introduction, the Minister rightly said that the objective is to attract and retain excellent judges and to diversify the cohort of judges who apply to the court. The noble Baroness, Lady Kramer, majored on that issue and I will come back to it later in my comments. It is right that the noble Lord pointed out the substantial contribution that the legal services industry makes to the national Exchequer. He mentioned the figure of £29 billion a year and it is clearly right that we should support that. He also gave examples of judges being caught by lifetime tax limits on the amount that they can put into their pension schemes and reiterated the point about getting the best people to apply.

My noble friend Lord Davies made a substantial contribution to the Public Service Pensions and Judicial Offices Bill when we dealt with it relatively recently, for which I was personally grateful. He made a very fair point: it is difficult to constrain unique circumstances. He used those exact words, and it was an interesting challenge for the Minister. I agree that judges are special people in the way that we run our society, but there are other special people as well, as both noble Lords who spoke before me have said. Everybody, including humble citizens who just have an ordinary pension scheme, is suffering from the freezing of the overall pension pot and of the amount of money that one can put in regularly.

Turning to the contribution of the noble Baroness, Lady Kramer, perhaps I might give a brief anecdote. One of my magistrate colleagues has recently been appointed as a judge. His career profile is interesting: he qualified as a barrister and then, when he was in his early 20s, decided to become an airline pilot. He worked as a pilot for nearly 20 years, at the same time as sitting as a criminal and family magistrate. He has just resigned from the magistracy and is sitting as a criminal recorder—in south Wales, as it happens. That is a good example of widening the cohort, which is to be welcomed. But the noble Baroness raised a much more substantial problem about the lack of diversity among judges, particularly senior judges, and gave some stark statistics of which I suspect the Minister is well aware.

The noble Baroness also made the point about the delaying effect of the extension of the retirement age from 70 to 75. I know that she made that point at Second Reading of the Public Service Pensions and Judicial Offices Bill, because I was there. I was very sorry that she could not follow that up in later stages of the Bill because I moved an amendment to make the retirement age 72 rather than 75, partly to mitigate the effects that she talked about. Unfortunately, that amendment was not won. Nevertheless, the substantive point remains: there is a very long way to go to diversify the judiciary, particularly the senior judiciary. I will be interested to hear the Minister’s answer as I know that he is very much aware of that issue.

However, we on the Opposition Benches support this statutory instrument. I suspect that this is not the last we will hear of it, as it seems to be an iterative process to amend public sector pensions and judicial pensions, but we support the instrument.

[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.