Pensions Bill [HL]

Lord Mackay of Clashfern Excerpts

Tuesday 15th March 2011 Grand Committee

Moved by

[Lord Mackay of Clashfern]

55: Clause 24, page 17, line 5, at end insert—
“(4A) The appropriate Minister must not make regulations under this section where the effect of those regulations is either—
(a) to impose an obligation on the person who would be the recipient of the relevant benefits to make a contribution to the cost of those benefits, when there was no such obligation in the person’s original contract of service as a judge; or(b) to increase the level of any such contribution to a higher level than that specified in that person’s original contract of service, except where the increase is in accordance with the terms of that person’s original contract of service and the increase is authorised in line with the consumer price index.(4B) Where the appropriate Minister makes regulations in breach of subsection (4A), those regulations shall be void and of no effect only to the extent that they are in breach of subsection (4A), or consequential on such a breach.”

[Lord Mackay of Clashfern]

My Lords, this amendment, which bears my name as well as more distinguished names, seeks to follow up the point that I made at Second Reading about the situation of the judiciary in relation to their terms of service. My submission was, and is, that it is a principle of our constitution as it has evolved that the terms of service of a judicial officer shall not be changed to his or her disadvantage during their term of office. In response to that, the Minister who was then replying—not my noble friend Lord McNally but the noble Lord, Lord Freud—said that judges are subject to tax. Of course, but that is not a part of their terms of reference. The arrangements for taxing judicial remuneration and emoluments are absolutely free of any restriction of the kind for which I am arguing.

Secondly, the Minister said that there is already a provision for deduction in respect of dependants’ benefits. However, that is expressly provided for in Section 9 of the 1993 Act, but that makes no provision for any kind of deduction in respect of the judge’s own pension. That is sought to be introduced here for the first time. Undoubtedly, it is a provision adverse to the judge in respect of the terms of service that he undertook.

In this connection, one has to remember that, generally speaking, a judge takes office until he reaches the retiring age, when he must demit office. Apart from that, he is entitled to remain in office on the terms on which he was appointed, subject, of course, to upward changes that may be made during that time. However, in my submission, nothing adverse to his terms of service is appropriate. That does not mean that judges should not be called on to take part in any kind of tax regime that deals with the present situation. Tax is completely free as far as this restriction is concerned. In my submission, this restriction applies to the terms of service of the judiciary and I believe that it is sound. Apart from anything else, I have tried to demonstrate that from the fact that, when I introduced the 1992 Bill, which became the 1993 Act, we made it clear that it did not apply to persons already in appointment unless they elected to join the new scheme of the 1993 Act.

I believe that this restriction is generally recognised. For example, the Latimer House principles embody this situation. Perhaps I may illustrate the point by quoting from the constitutions of some Commonwealth countries. Section 125(2) of the constitution of India states:

“Provided that neither the privileges nor the allowances of a Judge nor his rights in respect of leave of absence or pension shall be varied to his disadvantage after his appointment”.

One can understand the importance of that in the constitution of India, where judges have played a very important part in the development of the rights and privileges of that great country. Article III, Section 1 of the constitution of the United States states:

“Judges … shall … receive for their Services a Compensation which shall not be diminished during their Continuance in Office”.

The constitution of Ireland states:

“The remuneration of a judge shall not be reduced during his continuance in office”.

Incidentally, in 2009 the Irish Government introduced a levy in respect of public service. However, they exempted judges from the levy because of this provision in their constitution. Article 176 of the constitution of South Africa, where judges again played an important part in the development of the country, states:

“The salaries, allowances and benefits of judges may not be reduced”.

Our amendment simply gives effect to that. It does not mean that judges are exempt from anything else, but it does mean that their terms of service cannot be altered to their detriment during their service. I am not arguing that new judges should not be subject to this provision. That is a separate matter, which has to do with recruitment—I am glad that I take no responsibility any more for that. I am arguing only that judges already appointed and presently in service should not have their terms of service as judges altered to their detriment during that service.

Our amendment allows also for an upgrading of the contributions in accordance with a formula. We are not wedded to any particular formula. The provision would be useful in the future and would avoid the need to make a lot of different orders. It would also mean that people would know, when they took office, what the position would be.

This is an important aspect of the constitution. The noble and learned Baroness, Lady Hale, speaking in the House of Lords in a case against the Attorney-General of Trinidad and Tobago, recognised that the security of emoluments is an important guarantee of the independence of the judiciary. I beg to move.

--- Later in debate ---

[Lord McNally]

I apologise if I am wrong on this, and I will write to the noble Baroness, but I believe that the 15 per cent right will be retained and judges will be able to make voluntary contributions, as they do now. I should have asked the noble and learned Lord to withdraw his amendment, even if he intends to return to the fray on Report.

[Lord Mackay of Clashfern]

My Lords, I need not make a premature decision on that. I will certainly withdraw the amendment, but I will say one or two things about the speeches that we heard. I am grateful to all noble Lords who contributed. It was good to have the support of the noble Lord, Lord McAvoy, who shares something of my accent, though possibly not everything.

My only point at Second Reading concerned the terms of service. The noble Lord, Lord Stoneham, must have been thinking of somebody else when he said that at Second Reading I referred to the quality of the judiciary. I do not think that I did. At Second Reading, I made the point that when I introduced the 1992 Bill that became the 1993 Act, I faced a terrific barrage concerning the effect this would have on the judiciary of the future. Fortunately, Parliament as a whole decided that the gloomy forecast was not correct. I think that I am right in saying that nobody, looking back, would say now that it was correct. The quality of the judiciary has remained very high. However, I did not make the point about the quality of the judiciary: other noble Lords did. I restricted myself to saying that, in accordance with our understanding of the constitution, the terms of service of a serving judge cannot be altered adversely during his term of service.

The noble Lord, Lord Stoneham, referred to contracts being changed with changing circumstances. Of course, most employees are in a situation where their contract has a definite time. The contract will run for that time and, unless there is agreement, it will be very difficult to change it. Judges' terms of service are until retirement because of the security of tenure that the Act of Settlement gave them. There is no question in my mind that we have thought for many years now that the terms of service of judges needed to be set out in statute. In 1993, we set out new terms that applied only to new judges: that is to say, judges appointed after the Act came into effect.

The noble Lord, Lord McNally, said that the 1995 regulations applied to everybody without exception. With the greatest respect, that is not correct. The 1995 regulations applied only to the arrangements under the 1995 Act, which applied only to those appointed after the Act came into effect. The main regulations came into effect on the same day as the Act. Therefore, the regulations were in place when the Act came into effect. Judges who were serving before 31 March of whatever year it was—I think it was 1995—were not subject to the arrangements. They had the opportunity of opting in to the 1993 Act arrangements, but were not obliged to do so, and a number of serving judges still have a retirement age that is different from that laid down in the 1993 Act.

The noble and learned Lord, Lord Falconer, said that he had an interest in this matter which he should declare. I made it absolutely clear—I thought that I had done so originally, but perhaps I did not do so today—that I was the Lord Chancellor for a while, including at the time the 1993 Act came into force, as well as when it was being brought through Parliament. I was also a judge in the Supreme Court in Scotland and a Lord of Appeal in Ordinary. But so far as I know, I have no financial interest in this whatever, and I am certainly not a spokesman for the judiciary—not at all. The judiciary must speak for themselves, though they cannot speak for themselves in this House any longer as serving judges are not allowed to speak here. Therefore, they will have to speak to the Minister for themselves, and I have no doubt that they will have an opportunity to do that. I am not privy to the sort of consultations they may have, although I have heard a little about it. I will have to leave being a spokesman for the judiciary to others; it is certainly nothing to do with me.

I appreciate the difficulty we are in in the present situation. I can see that everyone is required to make sacrifices. Of course, that is something that one can do under the tax regime. I am not confident enough to suggest how this could be done, but I feel certain that the tax regime is pretty flexible in getting money out of people. So there is no question that tax could be used; it does not infringe the terms of service of the individual. When there was a general reduction in the salary of public servants in the Republic of Ireland, the judiciary was expressly excluded for the reason that the constitution had that arrangement in it. I agree that longevity is an important part of the value of a pension but the terms of service here are perfectly clear, as set out in the 1993 Act. My point is that this is a breach of the general understanding of our constitutional arrangement that a judge’s terms of service should not be altered adversely during his period of service. Of course, I shall withdraw the amendment. Whether I return to it may depend on a variety of circumstances which I am not in a position to control at the moment.

Amendment 55 withdrawn.