Pensions Bill [HL]

Baroness Murphy Excerpts

Tuesday 15th March 2011 Grand Committee

[Baroness Murphy]

My Lords, I added my name to the amendment. First, I declare my total lack of personal interest in the matter. I am not a judge, I am not married to a judge and I have no judges in my family. However, I do count many judges among my friends. I have often been up before judges—in a professional capacity, I hasten to add. As a result, I have developed an enormous admiration for the judiciary of this country. The quality of their decision-making, their willingness to be unpopular and their independence from the subtle and not-so-subtle pressures of the Executive are qualities that we should treasure.

What is proposed in Clause 24 is a short-term crowd pleaser that will have an impact far beyond what is presumed. It is in direct contravention of internationally agreed guidelines on the protection of the independence of the judiciary, as the noble and learned Lord, Lord Mackay of Clashfern, so eloquently outlined.

Let us face it, these proposals could lead to a judicial pay cut in real terms of up to 10 per cent. I realise that there may well be little sympathy around the House for what I am saying, in the light of the fact that many people in the public and private sectors are taking serious pay cuts and we are debating how pensions will be arranged in the future. It is difficult, but this is a very particular case. The Government’s impact assessment acknowledges that the key risks are that the impacts of this measure are as yet unknown—as are the cumulative effects of existing and future policy decisions about judges’ pay and pensions—that the assumed behavioural response that it would make no difference to recruitment might not apply and that the measure may lead to negative impacts on judicial recruitment, retention and performance.

I wish to deviate slightly from this issue. Research carried out in 2008 by Professor Dame Hazel Genn of University College London found that senior practitioners—solicitors and barristers—are deterred from applying for judicial roles, temporarily or permanently, by practical issues relating to judicial working conditions that include not only geographical and jurisdictional deployment of the senior judiciary but their salary, workload, location, support, patterns of working and general flexibility. We know that it is difficult enough to persuade a top commercial QC earning £2 million a year to accept a judicial appointment, but frankly they are not the judges whom I am worried about. I am far more worried about those lawyers, barristers and especially solicitors, many of whom are women or from ethnic minorities, who cannot see the advantages of entering the judiciary now because of the poor working environment and rewards, but who are attracted to the pension arrangements that would allow them to retire after 20 years. I remind noble Lords that this is not a job that you can enter as an apprentice; you must be a mature and experienced person in the first place.

People say that the arrangements are generous, but they are actually nothing like as generous as for those who remain as solicitors or barristers. There is the difficulty that when practitioners are at their highest earning potential, say in their 40s, they are obliged to seek part-time judicial experience if they want to progress up the ladder. Few are persuaded now. What will this sudden drop in take-home pay do to the application level? It is not the money alone; it is the signal of being undervalued by an Executive looking for PR advantage, but these numbers will make precious little difference to this nation’s debt.

At a time when we are beginning to see the fruits of the work of the Judicial Appointments Commission in appointing more women and people from ethnic minorities, under the admirable chairmanship of the noble Baroness, Lady Prashar, it seems particularly insensitive to throw a spanner in the works with this unnecessary piece of legislation. The experience needed for a High Court post means that only 20 per cent of the pool of eligible senior lawyers are women and only 5 per cent are people from a black or other ethnic minority background. However, boosting numbers of women and other groups is not just a matter of time and a growing pool. One big disincentive is the earnings cut when becoming a member of the judiciary. People marry later, and people in their 50s still have significant financial commitments until late on—commitments to children do not go away.

Let us think back to the last time the Executive attempted to cut judicial salaries. It resulted, among other things, in the following judges’ memorandum and the eventual restoration of salaries. It stated:

“It is we think beyond question that the judges are not in the position occupied by Civil Servants. They are appointed to hold particular offices of dignity and exceptional importance. They occupy a vital place in the Constitution of this country ... It has for over two centuries been considered essential that their security and independence should be accounted inviolate ... In this matter, our country has set an example to the world, and we believe that the respect felt by the people for an English Judge has been partly due to his unique position, a feeling which will survive with difficulty if his salary can be reduced or if he were an ordinary salaried servant of the Crown”.

Clause 24 raises serious concerns in my mind about placing the power to alter judicial pay of sitting judges after appointment in the hands of the Executive. This should be a matter of concern among those who take an interest in judicial independence. There has been little notice of or consultation on that, or any serious look at the real impact.

It is also unclear whether the proposal would impact on the maximum contribution into the judicial additional voluntary contribution scheme, which currently has a 15 per cent ceiling on contributions, with resulting loss of pension in old age as well as lost salary during service. I ask about that because it is especially important for young judges who might not have acquired pensions in earlier parts of their career. If the proposed statutory contributions reduced the amount that one could make voluntarily, it might well significantly reduce the pension available under the voluntary scheme. I hope that the Minister can clarify that for me.

When any judge accepts appointment, the basis for that appointment is that, however successful the individual may have been in his or her previous career, he or she may never return to it. Financial security and pension provision are an essential part of the decision whether to accept appointment. That is particularly the case with the 52 masters who are on the lowest salary band of the judiciary. They earn the same as a basic NHS consultant salary or approximately two-thirds of what a family GP earns. They are not generously paid for the level of responsibility that they carry and many will not serve 20 years to maximise their pension.

I echo what the noble and learned Lord, Lord Mackay of Clashfern, said about the internationally accepted constitutional safeguards for judicial independence since at least the Act of Settlement in 1701, with restrictions on post hoc adverse variation of judicial terms of service. Those were incorporated into Latimer House guidelines in 2003 and repeated in the Bangalore principles and implementation measures published by the UN-sponsored Judicial Integrity Group in 2010. Then there is the draft Universal Declaration on the Independence of Justice by the UN, also known as the Singhvi declaration, and the Universal Charter of the Judge, approved by the International Association of Judges on 17 November 1999. I could go on: there were also the Council of Europe recommendations, the Consultative Council of European Judges’ opinion and the Burgh House principles. There are clearly numerous guidelines about maintaining the independence of the judiciary by not varying their terms and conditions of service after appointment.

The present judiciary had a legitimate expectation when accepting offers of appointment that their pension arrangements would not be adversely changed after appointment. It would be wrong and damaging to our international reputation for this country not to respect that principle.

Finally, I pray in aid the report of the noble Lord, Lord Hutton, which was published earlier this week. He states at page 146, paragraph 6.92:

“The protections might also cover the extent to which there might be limitations on adjustments to existing judicial pensions to meet international conventions for protecting judicial remuneration, while also having regard to factors such as increases in the value of pensions from increasing longevity”.

In summary, Clause 24 will affect a modest number of people seriously and adversely and contravenes our international agreements on judicial pensions. We are not saying that people who are appointed in future could not make further contributions, but they would be appointed knowing that that was the case. I strongly support the amendment in the name of the noble and learned Lord, Lord Mackay of Clashfern.

[Baroness Butler-Sloss]

My Lords, I have wondered whether to speak on this amendment. First, perhaps, I should apologise to the noble and learned Lord, Lord Mackay of Clashfern, and to the Committee for arriving late. I had not appreciated that Amendment 55 was up on the monitor, but I came in as soon as I could.

I must declare an interest, not only as a former senior judge but also as someone whose father was a High Court judge, so I have spent my entire legal life in the shadow of the judiciary. I strongly support not only the noble and learned Lord, Lord Mackay of Clashfern, but particularly the noble Baroness, Lady Murphy, who made points that are really worth taking into account. It is not so much the senior judiciary—there are probably not more than 110 to 120 of them—as the middle-ranking judiciary who ought to be considered. They labour in the fields, with not particularly generous salaries, as the noble Baroness, Lady Murphy, said. I would add to her Queen’s Bench masters the judges of the various tribunals, who are crucial to the administration of justice in the tribunals; the district judges in the magistrates’ courts; and the district judges across the country trying civil and family work. They are a very important part of the judiciary. Many of them accepted a reduction of income. It is not only the top incomes that senior QCs can make that are reduced, as the people taking these middle-ranking posts also earn reasonable incomes. Almost every person who becomes a judge takes a cut in income.

People generally become judges because they feel that they ought to be paying back to society what they have gained by being barristers and solicitors. It is an important part of the judiciary that they are there to serve the public. They are a special group of people in the country. They are significantly independent and they have to remain independent to be able to challenge the Government in the courts. The Administrative Court is a thorn in the flesh of every Government, of whichever political persuasion. I believe that there is a book called “Looking Over Your Shoulder at the Administrative Court”, which trains new civil servants to cope with the slings and arrows of not so much outrageous fortune as the decisions of the Administrative Court.

I think that the public and perhaps noble Lords ought to remember that our judiciary is not only significantly independent but significantly incorruptible. Since I have left being a judge, I have been on parliamentary visits to various countries. In one of the eastern European countries that had been under the control of communism, I was told by one of the Ministers that the corruption of their judges was the most worrying part about their efforts to improve their country to meet the requirements of the European Community. My husband was a judge in Kenya at one time, under the ODA system, and I was told by my friends who were in the law in Kenya about the judges whom they knew to be corrupt. Eighteen were sacked at one time and my particular friend said that that was not all who should have been sacked. Very recently I was at one of the IPU meetings here in this building. I was talking about human rights and two Kenyan lawyers got up and said, “What do we do about the corruption of our judiciary?”. Forgive me for saying this as a former judge—since I no longer sit, I think that I can say it safely—but we are lucky in our judiciary. What the Government are proposing is in effect to break the contracts of the existing judiciary by substituting something else by statute.

I am well aware that everyone in the pensions system is going to suffer and I well understand people asking why the judiciary should be immune from the suffering of the public. So far as the future is concerned, as the noble and learned Lord, Lord Mackay of Clashfern, said, I express no view. It may well be entirely appropriate that the judiciary of the future should be asked to make the contributions that it has not been asked to make in the past; if I may say so, the Government ought just to think of the points that the noble Baroness, Lady Murphy, has made about that. However, breaking the existing contracts of existing judges who have given up their practices as barristers and solicitors to serve the community under a certain arrangement, where you take on that job without making a contribution, is something that the Government ought to think about long and hard. I very much support the amendment.

--- Later in debate ---

[The Minister of State, Ministry of Justice (Lord McNally)]

My Lords, as always, this has been an interesting debate. It is always difficult to respond to the noble and learned Lord, Lord Mackay, because his wonderful accent means that if he read from the telephone book it would sound like he was reading tablets of stone. Nevertheless, I may have to challenge him before the end of my remarks. The noble Baroness, Lady Murphy, was almost unique in her contribution, until the 7th cavalry arrived in the shape of the noble Lord, Lord Stoneham, but she at least is a friend of judges. She was quick on the attack by calling the government plans a “short-term crowd pleaser”, and saying that the Executive were looking for short-term advantages and imposing a real-terms pay cut of 10 per cent.

Running through many of the contributions has been an “Apocalypse Now” threat that does not stand up against the content of the proposal. I listened to what the noble Baroness said about women and about black and other ethnic minorities in the judiciary. I am the diversity Minister at the MoJ. Having looked at the problem of diversity in the judiciary, I honestly do not think that a modest request for contribution to pensions is the real problem about the disgraceful level of employment of women and other groups in the judiciary. I assure her that I am in close touch with Dame Hazel Genn and the noble Baronesses, Lady Neuberger and Lady Prashar, on those issues.

We went right back to 1701 to find the threat to our judiciary. The noble and learned Baroness, Lady Butler-Sloss, is not only a judge but the daughter of a judge. She made a moving appeal for the middle ranking judiciary—the toilers in the field, as she put it. Nobody challenges the fact that we have a judiciary motivated by public service, independent and incorruptible. I believe, and the past 10 months have deepened my conviction, that we are extremely lucky in our judiciary. Again, the arguments deployed do not bear close examination against the Government’s modest proposals. I also have to disagree with the noble and learned Lord, Lord Scott. I do not think that the proposal will affect those applying for the Bench.

I understand why the noble and learned Lord, Lord Falconer, is not here. We are not arguing that the contributions will have a significant impact on the economy. Of course not; the numbers are not large enough. I will not even try to suggest that we are all in this together, but I take up the point made by the noble Lord, Lord McKenzie: before fighting this to the last ditch, the judiciary should look at their reputation in appearing to fight so hard on a matter of self-interest—even if dressed up in constitutional garb—when others much less well equipped to do so, as the noble Lord, Lord Stoneham, said, are having to face serious sacrifice.

I take up the challenge of the noble and learned Lord, Lord Falconer: is what we are proposing reasonable? I believe that the vast majority of people in this country would find what we are doing reasonable. To suggest that the Government are somehow threatening the independence of the judiciary or the rule of law is not sensible. There is no sword of Damocles or anything like it. I urge the judiciary not to cry wolf too loud on this.

I turn to the noble Lord, Lord McAvoy. My goodness, I am sorry that we are in the Moses Room, because his intervention deserved a much wider audience. I thought that he was going to say that even his old colleagues in the Unite shop stewards’ movement would have blushed at some of the arguments deployed today, but as he rises ever higher in the hierarchy of this House by defending its institutions, it did not surprise me when he intervened on the side of the judges.

I am grateful to the noble Lord, Lord Stoneham, for his intervention. Judges’ pensions are extremely generous: 648 former judicial officeholders receive a pension of between £40,000 and £70,000; 23 former judicial officeholders receive a pension of between £100,000 and £110,000. The average annual pension across the judiciary is just over £41,000. That is not at the lower end of the mass of our society.

That is why the noble Lord, Lord McKenzie, was quite right to warn about reputational risk. I do not believe that this is a slippery slope. I do not believe that it is a reputational risk. On the specific point of how we would handle the powers of the Bill, regulations would be brought forward by statutory instrument subject to negative resolution.

The noble Lord asked me: what is our response to the amendment? I have to tell your Lordships that we believe that it is simply incorrect to assert that the clause could have any impact on judicial independence or raise any concerns about judges’ terms of service. This measure is part of a wider action aimed at ensuring that public service pension provision remains fair and affordable. The Government will not do anything to undermine judicial independence and the rule of law, which is of fundamental constitutional importance. The measures will not affect the pension entitlement of judicial members in any way. Once a member of a judicial pension scheme satisfies the provisions regarding entitlement under the particular scheme, they will still be entitled to their pension benefits, which will not be affected by the contributions they have made. The aim of the measure is that the contributions, when payable, will go towards the cost of the scheme overall—a situation which, as the noble Lord, Lord Stoneham, pointed out, is not enjoyed by many people in many other pension schemes.

The principle that serving judges must pay contributions out of their salary towards the cost of pension provision is already well established. I am pleased to note that the amendment does not object to the principle of taking personal contributions from judges. To take the Judicial Pensions and Retirement Act 1993, which provides the main scheme referred to by the noble and learned Lord, Lord Mackay, members of that scheme pay contributions towards the cost of dependant benefits. That is provided for by Section 9. When the provision was implemented under the Judicial Pensions (Contributions) Regulations 1995, it applied to all those who held qualifying judicial office under the scheme at that time. There were no exceptions for serving judicial officeholders.

The inability of the Government to reduce judges’ pay is seen as an important element of judicial independence by a number of international agreements and recommendations, which have been referred to in the debate by several speakers—the fear being that in some parts of the world, judicial salaries may be reduced if justices do not make the right rulings. I am sure that none of us would seriously suggest that we are in danger of that in this country.

However, that aside, as a matter of ordinary language it would not be usual for a requirement to pay a contribution to a pension scheme to be characterised as a reduction of salary; gross levels of payment to judges will remain unaffected by this measure. Crucially, it would not be correct to assert that the Executive will establish and vary the level of personal judicial pension contributions because the rate at which such contributions will be taken will be set by secondary legislation and so will be subject to the scrutiny and will of Parliament.

Furthermore, this measure does not contravene the letter or the spirit of statutory provisions covering judicial salary protection. Just as it would be incorrect to assert that this measure could impact on judicial independence, so it would be wrong to state that it is inconsistent with the terms of appointment of judicial officeholders. The entitlement to, and benefits derived from, a judicial pension are set out in legislation. Judges’ terms of appointment do not add to, or repeal, the provisions of judicial pensions legislation and do not, therefore, provide any independent source of “right” to the maintenance of the present legislative arrangements in respect of those already appointed to qualifying judicial office.

Any expectation that Parliament may not legislate to alter judicial pension schemes enshrined in legislation cannot be right, particularly when the proposed measures are designed to ensure that such schemes remain affordable and are proposed as part of a consistent range of measures regarding public service pension schemes as a whole. Concerns about judicial independence and judges’ terms of service with regard to this measure are, therefore, unfounded.

It is important to be clear that this measure will apply to judicial officeholders in post in April 2012. However, I should also emphasise a point made by my noble friend Lord Freud during the Second Reading of this Bill; that is, that contributions will only be taken during the period in which an individual judge is accruing pension benefits. For those judges already entitled to a full pension before implementation in April 2012, contributions will not be taken from their salary. Those judges who have part completed their full accrual period before April 2012 will pay contributions only for the outstanding balance of that period. The value of the pension benefits accrued up to the point of introduction of the measure will be unaffected.

At the spending review, the coalition Government took the tough decision to put the economy back on a sustainable footing. To do this they had to consider carefully where spending could be reduced and where costs could be rebalanced to reduce the burden to taxpayers. The noble Baroness, Lady Murphy, called in aid the noble Lord, Lord Hutton, and so do I, for he states clearly that there is a strong case in the short term for increasing the contributions to meet the costs of providing these pensions. This is what we are doing. It is right that judges should begin to contribute towards their own pensions just as other public service pension scheme members will be expected to contribute more.

There are currently around 2,200 salaried judges. Of these, around 200 are estimated to have already accrued a full pension and so would not make personal pension contributions. Therefore, the requirement to pay personal pension contributions will apply to approximately 2,000 salaried judges when it is introduced.

On average, in recent years, around 120 salaried judges have joined the judiciary each year. To restrict the introduction of personal contributions only to new judges appointed from April 2012 would, therefore, either not allow us to make the level of short-term savings on judicial pensions costs which we need to seek in tackling the deficit, or would require an extremely high level of contribution by new judges to help cover the costs of existing judges’ pensions. There is, anyway, as I hope I have made clear, no justification for restricting the measure in this way.

As I said, I will not try to persuade noble Lords that we are all in this together but it would be widely misunderstood if judges seemed to opt themselves out of the realities faced by the rest of the population.

[Baroness Murphy]

Before the Minister sits down, will he clarify the point about the judicial additional voluntary contributions scheme? I believe that at the moment individuals can exercise their right to add up to 15 per cent. What impact would this new proposal have on the ability of individuals who have a relatively short time to make their contributions before retirement to add to that scheme?