Pensions Bill [HL]

Lord Falconer of Thoroton Excerpts

Tuesday 15th February 2011 Lords Chamber

[Lord Falconer of Thoroton]

My Lords, it is a privilege to follow the noble and learned Lord, Lord Woolf. I hope that your Lordships will listen to what he says. When I became Lord Chancellor, and he was Lord Chief Justice, I found that things went badly for me when I did not listen to him and that they went a lot better for me when I did. Like many noble Lords, I congratulate the noble Lord, Lord Freud, on the clarity and strength of his explanation. I also congratulate my noble friend Lady Drake. We are very lucky to have such an incredibly powerful team dealing with a Bill of this importance.

I should also like to express my profound regret that the noble Lord, Lord Brooke, who participated in our debates on a Bill which we debated over the past 450 years—namely, the Parliamentary Voting System and Constituencies Bill—did not deliver at approximately 3 am on one of those days when we were sitting late the same speech as he delivered about an hour ago. We would have enjoyed it immensely on that occasion.

Perhaps I may make two preliminary points. First, I declare an interest: I might have close relatives in the future who will become judges and be affected by the Bill. I was also Lord Chancellor and the Bill theoretically could affect entitlements that I have. But I do not think that it does, for the reasons which the noble and learned Lord, Lord Woolf, outlined. Secondly, the Bill has an effect on sitting judges. My remarks are entirely my own. They have not been suggested to me by sitting judges.

The issues that I want to talk about are judicial independence and the effect of Part 4—issues not touched upon by the noble Lord, Lord Freud, although they were touched upon by the noble Baroness, Lady Noakes, who said that she hoped the Government would not cave in as they did previously. I take pride in the fact that I was the caver-in on the previous occasion, and I believe that my caving in protected judicial independence and quality considerably.

The constitutional points at stake here are very significant. The Bill represents an identifiable departure from the stance that the state has previously taken. Our constitutional structure is based on democracy and the rule of law, which ensures that individual freedom is protected, in particular against oppression by the majority, and depends on there being an independent judiciary, free from any interference, including and in particular from the Executive in the making of judicial decisions. Part of that freedom involves the Executive not having the power directly or indirectly to influence a judge individually, or the judges collectively, as a whole, whether by pressure before a decision or extracting a price after a decision has been made by the courts. The protection of judges from both direct and indirect interference by the Executive has been reflected in a series of statutory and non-statutory steps taken by the legislature and the Executive over the past 30 years to enshrine those protections.

The obvious pressure point on the judiciary is judges’ salary. Although the Senior Salaries Review Body looks at their pay and makes recommendations, their salary is set by the Government. Section 12 of the Supreme Court Act 1981 specifies that judges' salaries shall be set by the Lord Chancellor in conjunction with the Minister for the Civil Service. Section 12(3) specifies that:

“Any salary payable under this section may be increased, but not reduced, by a determination … under this section”.

The purpose of the section is to avoid a Minister having the power to reduce the salary of the judges either because, in reality, the Government are annoyed with a decision that a judge or judges make or to give such an appearance.

It is plain from Section 12 of the 1981 Act that the same protection does not apply to judicial pensions. Depending on whether the individual judge was appointed before or after 1 April 1995, a judicial pension is payable under either the 1981 Act or the Judicial Pensions and Retirement Act 1993. Neither Act contains an express prohibition on alteration or reduction in the terms of the pension. The current position, which applies broadly to all judges, is that they each have a non-contributory pension for themselves and a scheme to which they have to contribute for their dependants' benefits.

The effect of Part 4 of the Bill is that the appropriate Minister can, by regulations made with the concurrence of the Treasury, require existing judges to make contributions to their own pensions. Crucially, as the noble Lord, Lord Freud, said, that allows for the imposition of contributions for the first time in respect of the judges’ personal pensions and, equally crucially, allows for their increase in those pensions from time to time. The effect of this, as the noble and learned Lord, Lord Woolf, said, is that judges who were employed and took up their office on the basis that they had to make no contributions for their own pension, on the basis of what the noble Lord, Lord Freud, said, will have to face some unspecified contribution. This is an obvious deterioration in their terms and conditions, made the more problematic for the individual judge for the reason given by the noble and learned Lord, Lord Woolf—namely, that while the Executive can change their position, the judge cannot change his or her position by returning to the profession that he or she left in order to become a judge. I should add that it is compulsory for a judge to be a member of the relevant judicial pension scheme, while the Bill specifies—under subsection (2)(c) of proposed new Clause 9A, which would be inserted into the Judicial Pensions and Retirement Act—that any contributions have to be made in,

“the form of deductions from the salary payable”,

to the judge.

The consequence of the Bill and the introduction of contributions from the judge to his or her personal pension is that there has to be a further deduction from the judge’s salary, meaning that there will be a reduced salary paid to the judge without any commensurate increase in the benefits obtained. On the face of it, this is at the very least a breach of the spirit of Section 12(3) of the Supreme Court Act 1981, which prohibits any reduction in salary. There will be such a reduction because, as the noble and learned Lord, Lord Woolf, has pointed out, there is at the moment a freeze in judicial pay. Even if that is not a breach of that spirit, it is certainly a breach of the basic principle that it should not be open to the Executive significantly to reduce a judge’s main remuneration.

From my own experience as Lord Chancellor, I believe that this is a matter that most emphatically should be dealt with by the legislature, not by the Executive. I believe that the Executive instinctively understands that they must not interfere with the decision in an individual case. In my experience, when I was among them, no member of the Executive—official or Minister—ever sought to interfere with an individual decision. However, throughout the period when I was Lord Chancellor I was aware that the Executive were occasionally irritated with decisions that were made. It never led to anything, but individual officials and Ministers occasionally expressed the view that the judges did not understand particular positions or were not sufficiently understanding of the Executive’s problems.

The potential for tension between judges and the Executive has inevitably increased over the past 30 years, for two reasons. First, there is a great increase in judicial review, which means that the judges are more frequently challenging, and sometimes striking down, decisions made by the Executive. Secondly, the effect of the Human Rights Act is that there are more direct challenges to the state by the courts—not by challenging their decisions but by having to make decisions in relation to them. That change can be seen from the fact that in the early 1970s the final Court of Appeal, which then sat in the House of Lords, dealt primarily with commercial and tax cases. If you look at the daily diet of the Supreme Court across the road now, you will see that it is made up of many more constitutional cases involving challenges to the Executive. The separation of the Executive from the legislature, and their different roles, has therefore become more important.

I say in parenthesis, picking up on a point made by the noble and learned Lord—and referring not to Russia but to the United Kingdom—that I read an article in the Daily Mail last week which said that Ministers were furious with the courts because of their striking down the cancellation of some or all of the Building Schools for the Future programme. I have no idea whether Ministers were furious, but, as I say, I know from my own experience that Ministers and officials sometimes could be upset, and I also know that this upset with the courts was always misplaced. In the context of future decisions by the courts that are unfavourable to the Government, it might be possible to say that a decision to exercise the power proposed in Clause 24 had been taken in response to that set of decisions. That would erode confidence in the Executive’s inability to interfere in judicial independence.

What is the solution to this problem? In my view, the solution is to put a provision into proposed new Section 9A of the Judicial Pensions and Retirement Act 1993 that says that nothing in this Bill will allow an existing judge’s pension entitlement to be reduced in any way, including by a right to impose or increase contributions where none are paid at the moment. The consequence of such a provision would be that existing judges’ entitlement would not be affected. It would mean, however, that the Government would be entitled to introduce a contract for new judges that had a provision for contributions. In relation to new judges who are subject to a provision for contributions, it would not be open to the Executive thereafter to increase the level of contributions. The position would be that no judge sitting at the moment could have his pension entitlement changed. In the future, it would be possible for a new judge to have contributions introduced, but those contributions would be fixed. They could be reduced but not increased.

That approach would exactly reflect the approach that the legislature has hitherto taken to salaries. It would take away from the state the ability to respond in any way to decisions that it did not like. I make it clear that I am not suggesting that this Government, or any future Government whom one can envisage, would do that. However, to give a Government that power in the future is to give them a classic tool with which to interfere with judicial independence. I agree with every word that the noble and learned Lord, Lord Woolf, said about the importance for our standing in the world not only of having judges of the high calibre that we have but of having judges who—not uniquely, but unusually—are regarded as completely free from influence by the Executive. For the state now to introduce a provision such as this, which we would deprecate if another country introduced it, would be a great mistake.