Public Service Pensions and Judicial Offices Bill [Lords]

Robert Neill Excerpts

2nd reading
Wednesday 5th January 2022 Commons Chamber

[Mr Clarke]

I thank my hon. Friend for his question; it is a good one. It is important to provide reassurance on this point. The McCloud remedy aims to ensure that where pension members are offered a different benefit to remedy the discrimination they have faced, they will be returned to the same financial position that they would have been in had they always been entitled to the benefits that they end up choosing. That reassurance should be clear. For the majority of individuals affected, there will be no change to the tax position. It is important to get on record that there will be no change for the vast majority, and that the Government will ensure that all the appropriate guidance is provided in good time so that people can make an informed choice and not worry about incurring any losses.

As well as giving our public servants fair treatment for the remedy period, the Bill will ensure that remains the case into the future. From 1 April this year, all the legacy schemes will be closed to future accrual. All eligible members will be placed in the 2015 reformed schemes or, in the case of the judiciary, moved to a new scheme. This guarantees that members within each scheme will be put on an equal footing. It also underlines the Government’s commitment to the 2015 reforms and the principles that underpin them. Those principles are greater fairness between lower and higher earners, fairness for the taxpayer, future sustainability and the affordability of public service pensions as a whole.

The Independent Public Service Pensions Commission also recommended that the new 2015 public service pension schemes should include a cost ceiling to protect the taxpayer from unforeseen cost increases. However, the Government have chosen to go a step further in establishing a symmetrical cost control mechanism. This will not only protect the taxpayer from unforeseen increases in pension scheme costs but protect the value of pension schemes for members when costs fall.

On how the remedy in the Bill will interact with the cost control mechanism, it will give members a choice between two sets of benefits and allow them to choose which will be better for them. The result is an increase in the value of schemes to members, and, as is usual, this is managed through the cost control mechanism. Crucially, however, to ensure that no members’ benefits are cut as a result, the Bill includes a measure to waive any result from the 2016 valuations that would otherwise have led to benefit reductions. That goes to the point made by my hon. Friend the Member for Gloucester (Richard Graham). In addition, the Government have committed to honour any benefit increases that are due.

Hon. Members will be aware that, in the light of concerns that the cost control mechanism was not operating as originally intended, the Government Actuary was asked to conduct an independent review of this particular element. Following that review, and a public consultation last summer, the Government confirmed that three changes would be made to the mechanism. All three changes are recommendations from the Government Actuary.

The first change is to implement a reformed scheme only design. This means that the cost of legacy schemes will no longer be included in the mechanism. The second is to widen the margin of the cost corridor, which triggers a correction, from 2% to 3% of pensionable pay. The third change is to introduce what is called a symmetrical economic check. This economic check will ensure that any breach of the mechanism is implemented only if it would still have occurred had the impact of changes to long-term economic assumptions been considered. These reforms will make the mechanism more stable and ensure that it operates more in line with its objectives of protecting the taxpayer and providing stability and certainty on member benefits and contribution rates.

I therefore wish to notify the House of my intention to table amendments before the Committee stage, to set the framework for implementing a reformed scheme only design and the economic check. The wider 3% corridor will be implemented through secondary legislation in due course. This approach will ensure that the reforms are in place in time for the next scheme valuations. That is important to ensure that the mechanism is operating more in line with its objectives to protect both taxpayers and members the next time it is tested.

As I have explained, the Bill builds on the existing legislative framework for all public service pension schemes. Each scheme is complex, because each one is tailored to fit each workforce’s individual requirements. The Government intend the Bill to reflect those differences, many of which are found in the detail of scheme regulations. Additional detail will therefore come before Parliament in the form of statutory instruments for further scrutiny. To demonstrate the approach to secondary legislation, policy statements have been deposited in the Library of the House for further scrutiny.

Let me now turn to the next element in the Bill, the package of reforms to help to address the resourcing challenges facing the judiciary. Our justice system is world renowned for its excellence, objectivity and impartiality. That is due in no small part to the expertise of our court and tribunal judges, our coroners and our magistrates. However, as the demands on our courts and tribunals have changed, so too has the need to recruit and retain judicial office holders. While we have recruited about 1,000 judicial office holders a year since 2018, we have not been able to attract the full number needed across all courts and tribunals, which has inevitably put pressure on the system. Raising the mandatory retirement age to 75 will, our modelling suggests, retain about 400 judges and 2,000 magistrates per year at a time when we face challenges in resourcing and recruitment.

It is vital that we continue to attract and retain high-calibre judges. The Bill therefore lays the foundation of a new, reformed pension scheme for judges, increases the mandatory retirement age of judicial office holders to 75, and extends the potential for sitting in retirement to the fee-paid as well as the salaried judiciary. It puts judicial allowances on a firmer legal footing, including those for reserved and excepted posts in Scotland and Northern Ireland. I assure the House that the UK Government will engage with the respective devolved Administrations before the introduction of such allowances.

Taken together, these measures will ensure that a judicial career is more attractive, that more of our experienced judicial office holders are retained for longer, and that additional flexibilities are offered. It is vital that we enable our world-class judiciary to meet the demands of today and tomorrow.

[Sir Robert Neill (Bromley and Chislehurst) (Con)]

I entirely support what the Minister says about judicial pensions reform, but, since he wears another hat in his capacity as Chief Secretary to the Treasury, may I raise a further issue that is sometimes an impediment to recruitment, namely the operation of the lifetime cap on pensions earnings? In particular, many who have earned well at the Bar and who might otherwise seek appointment to the High Court bench still encounter a disincentive because of the operation of the overall lifetime cap. At one point a carve-out was arranged to reflect that. Although this does not feature in the Bill, may I ask the Minister to take it away and perhaps speak to the Chancellor about it? It is the final bit of the jigsaw that could be sensibly introduced to encourage the very best people to seek appointment to the bench.

[Mr Clarke]

As Chair of the Justice Committee, my hon. Friend brings a huge amount of expertise to bear on this issue. I can make an absolute commitment that we will look at this, and I will always discuss plausible options to ensure that the judicial pension scheme supports recruitment rather than being in any way an impediment to it. That is very important, and it underpins our wider work on the new scheme for the judiciary. It will move from being tax-registered to being tax-unregistered, and a variety of consequential benefits will arise from that.

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[Sir Robert Buckland (South Swindon) (Con)]

Thank you, Madam Deputy Speaker, for calling me first in the debate. I am delighted to make a contribution to the Second Reading of a Bill that was very much part of the work that I undertook as Lord Chancellor. I was keen to make sure that we made progress with the Bill on several grounds, the first of which was the necessary reform to judicial pensions in light of the McCloud judgment and other legal developments since the previous set of reforms to judicial pensions. The second was the important and generational issue of retirement age for judges. The previous reform to that retirement age had been back in 1995, and it was not of immediate application but took many years to come into effect, bearing in mind its adherence to non-retrospectivity. I took a different view about the way in which we should approach reform this time. I felt very strongly that any change to retirement age should have immediate effect, and that it should benefit those currently in judicial office. I make no apology for that, because with welcome changes and elongations to lifespan, health and wellbeing, I thought that we were losing many talented men and women at the height of their career. I am not going to name names, but there are many people who served in the highest judicial office who left at the age of 70, but who I felt had much more to give. Some of them were able to carry on in retirement, sitting with special dispensation, but I felt that we needed to do something generational. I very much hope that the change that we are bringing about in the judicial retirement age will endure for many years, well into the middle part of this century. We are not saying that people have to sit at 75. We are not forcing people to sit beyond the time they wish to serve, but we are giving them an opportunity to do that.

Can I deal head-on with diversity, because I considered that matter very carefully indeed when I was Lord Chancellor? I have had the privilege of serving on the judicial diversity forum, which is a committee of the Judicial Appointments Commission, ably chaired by Lord Kakkar, and we take the issue of diversity very seriously indeed. In the other place, amendments were tabled to reduce the age of retirement to 72, on the basis that there were concerns about slowing the increase in diversity, but I believe that that worst-case scenario is based on a failure to act. In other words, it is incumbent on the Ministry of Justice, the Judicial Appointments Commission and others interested in and passionate about diversity to do more to attract people of diversity to the judiciary.

In particular, many women have had career breaks to bring up their family in their 30s and 40s. At the moment, they face quite a difficult decision to return to practice, and regard a 70 age limit as inhibiting their ability to take up part-time, then full-time, judicial office. Increasing the age limit to 75 will allow more women who have had career breaks actively to consider what is a career of up to 20 years if they are to enjoy the full benefits of the pension.

We should not forget that in 1995, one of my predecessors, Lord Mackay, not only reduced the pension age but increased the time that people had to serve to take their full judicial pension from 15 to 20 years. That combined decision had quite an effect on the career opportunities presented to lawyers when considering whether the bench was for them. In other words, people really had to make up their mind in their 40s if they were serious about reaching the bench. There are plenty of exceptions—some people who have done very well in their profession could go to the bench later and perhaps take a smaller pension—but many people felt that they could not take full advantage of a judicial career because of that time restriction.

That changes with a retirement age of 75. People can come to the bench in their mid-50s and serve the full 20 years. That is a huge opportunity, not just for women but for people who come to the legal profession slightly later in their career, mainly because the financial burdens are so onerous in their younger years that they do not feel able to join it in the first place. Contrary to suggestions in the other place and elsewhere, the measure could be a spur to the Government and the Judicial Appointments Commission to do even more to attract women, people from an ethnic minority, and people who join the profession late to a judicial career.

[Sir Robert Neill]

Can I perhaps reinforce my right hon. and learned Friend’s point? He may have noted from the statistics released by the Judicial Appointments Commission that there has been a particular shortfall in appointments to the district bench and the circuit bench in recent rounds. Those are precisely the people for whom the ability to access a full pension is important. As my right hon. and learned Friend said, the high-earning silk who goes into the High Court may be able to deal with a lesser amount of pension, but the people I am talking about, who are the workforce, particularly in the criminal and family courts—the senior juniors, the senior solicitors—will be under the most pressure if they are not able to get the 20 years’ full pension. That will be most difficult for them.

[Sir Robert Buckland]

My hon. Friend makes a really powerful point. There is no doubt that the district bench is under huge pressure at the moment. We are not getting the recruits and the applications that we need in order to have a full district bench. The work is some of the most difficult and challenging in the judiciary; it is unglamorous work, but it is vital because it is the bulk, for example, of the civil and family work that goes on in our courts day after day. We have increasing numbers of recruitment competitions seeking to attract more talented people to the bench, but often the vacancies cannot be filled, because there are not enough applications. That, frankly, is a problem. That is why not only the extended retirement age but the changes to the pension will really send a signal to practitioners that the Government value the judiciary and understand the vital importance of having the quality, independent and high-morale cadre of people we need. Without them, we really do suffer as a country.

I should have declared an interest at the beginning, in that I am the recipient, potentially, of a judicial pension because of my service as a recorder of the Crown court, which finished, of course, on my appointment as Lord Chancellor. That is another story, which I will not regale the House with today, but I did have to resign from the judiciary on my appointment as Lord Chancellor. That was not always the case prior to the Constitutional Reform Act 2005, and I think hon. Members know my strong views about the baleful effects of that piece of legislation. I am sure that, with leadership in the Ministry of Justice, we can come back to those issues, and that was certainly my intention when I was in office. However, I parenthesise.

Let me come back to the germane issue of the retirement age. I note the concerns that the senior judiciary and immediately retired judges in the other place had about the 75-year mark. However, I would respectfully but firmly disagree with them. Some 67% of respondents to the consultation agreed with my ultimate decision, which was to raise the retirement age to 75. The bulk of circuit judges, sheriffs in Scotland and other judges considered that the position absolutely pointed in the direction of 75. With the greatest respect to senior judges, many in the senior judiciary have already made their plans and their provision clear, and I do not expect that all of them will wish to serve until 75, bearing in mind the expectation prior to the expected change in the law. Therefore, I am not so persuaded that the logjam that some fear will take place, and I see no reason why there should not be a rise in the retirement age to 75, despite the concerns expressed in the other place.

I am particularly pleased that there was unanimity across the three jurisdictions that 75 was indeed the appropriate retirement age. I took a lot of time and trouble to make sure that colleagues in Northern Ireland and Scotland were consulted. I was extremely grateful to the then Lord Chief Justice of Northern Ireland, Sir Declan Morgan, for his careful consideration of the matter and for all the consultations I undertook with him, and indeed to the President of the Court of Session, Lord Carloway, who himself undertook extensive consultations with the Scottish judiciary. I was very grateful to colleagues in the Scottish Government for agreeing with the position that I sought to take with regard to the retirement age, because I thought that a cross-jurisdictional, pan-United Kingdom retirement age was highly desirable, bearing in mind the fact that atop it all sits the United Kingdom Supreme Court, with the members of that court therefore able to enjoy the same retirement age limitations irrespective of jurisdiction. That was a very important consideration that I am extremely grateful to colleagues in the other jurisdictions for agreeing to.

We have reached a position where we have come to an elegant solution: one that allows professionals to make decisions that suit themselves within that outer limit of 75 and acknowledges the reality that we see now, where the Lord Chancellor is constantly asked to allow judges to sit in retirement post 70—up to 72, in any event. It acknowledges the fact that, thanks to modern science and medicine, we have an increasingly agile and able cadre of people in their early 70s who are willing to serve. In the light of other societal changes—in the light of the fact that, thankfully, we are able to do more things at a greater age than perhaps we were a generation or so ago—I warmly commend the increase in the retirement age, in particular to the age of 75, to this House.

When it comes to the magistracy, we have suffered quite a decline in numbers in recent years. It was not so long ago that we had 30,000 volunteer magistrates—let us not forget, these are volunteers—sitting and serving in our courts. That number has declined alarmingly, and therefore it seems to me a matter of very good housekeeping for us to make sure that we can retain as many magistrates as possible while encouraging the excellent recruitment exercises that the Ministry of Justice is undertaking at the moment. The MOJ is to be commended on the vigour and focus of the exercises it is currently conducting, but without that additional help, my worry is that we are going to reach a critical position with regard to the number of justices of the peace that would undermine the viability of the system. That, frankly, would be a real problem, particularly in the family proceedings courts, where the lived experience, good judgment and common sense of magistrates is brought to bear on a variety of very difficult and complex family situations every day of the week.

This Bill was something I wanted to see even more urgently. I am glad that it is getting its Second Reading in early January: if I had had my wish, it would have received Royal Assent by now, but I understand that my ministerial colleagues in Government have to work to timetables, and that they themselves have different and conflicting priorities. However, it is an important signal that we are sending to the judiciary and to other public servants: not only that the Government take the judgments of the courts very seriously but, I hope, to make the point that any perception that this Government are somehow at war with the judiciary—that they somehow see the judiciary as enemies of the people, or think of them as an inconvenient encumbrance—is thoroughly dispelled by measures such as these.

Without a world-class, independent judiciary of quality, this country is no longer a civilised place. Without the important input of robust judicial independence, none of the jurisdictions for which we sit could call themselves world leading. It is vital that in this world of conflicting and competing calls for international investment, we have the brightest and the best from our legal profession serving in judicial office, because that is the most eloquent way in which we can express to the world the fact that Britain and the three jurisdictions are safe and secure places in which to invest, safe places in which to live, and free and fair places in which we can all be equal under the law. I can perhaps be accused of labouring the point, but I think that this sort of measure, detailed and technical though it is, embodies our commitment to that essential quality. That is why I am delighted to endorse the Bill on Second Reading and look forward to seeing it make a swift passage through the House.

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[Sir Robert Neill (Bromley and Chislehurst) (Con)]

It is a pleasure to follow the right hon. Member for Hayes and Harlington (John McDonnell). He brings detailed knowledge of these matters to the debate, and although we do not always agree, it is always interesting to listen to the careful arguments that he deploys on pensions matters. I remember that from my time as the junior Minister responsible for the local government pension scheme.

I note the points raised by my right hon. Friend the Member for Newark (Robert Jenrick) about the potential conflict between a boycott, divestment and sanctions approach involved in taking a political attitude to pension schemes and the fiduciary duty of the trustees of those schemes to their members. That is something that we will return to, but with no disrespect to other Members, I want to concentrate on the elements of the Bill that concern judicial pensions and the retirement age, which obviously engage my interests as the Chair of the Justice Committee.

I will not repeat much of what has been said with great eloquence by my right hon. and learned Friend the Member for South Swindon (Sir Robert Buckland), who made the case very clearly. I welcome what the Government have done, as it was clearly right to respond to the McCloud judgment, and I am glad about the way in which they have done so. It is also good news that the Bill brings an even-handed approach to fee-paid judicial office holders—recorders and deputy district judges, for example—so that they are on a much more equitable basis with the full-time judiciary. That is a sensible approach.

By and large, the changes are welcome and necessary, but I hope that the Minister will take away the point about the interaction of the annual cap and the lifetime cap, which is particularly important to those who tend to be appointed to the High Court bench. Generally, those people are drawn from high-earning, highly experienced Queen’s Counsel and senior partners in solicitors firms. The reality is that we have to make it worth their while to undertake what is a public service in the latter stages of their career. Having been successful in practice, almost inevitably they take an income cut to go on the bench. There should not then be a tax penalty on top. If we want the very best on the bench, especially in the commercial court and other specialist jurisdictions, which have a reputational and financial value for the United Kingdom because our judicial system is a centre of excellence and venue of choice for high-value litigation, we have to make sure that we always get the very best to sit in those jurisdictions.

I want to deal with the issue of the retirement age, particularly the impact that that has elsewhere in the system. The Justice Committee considered the legitimate point that has been made and referred to about the impact on diversity of increasing the retirement age to 75. It is a fair point to make. There is no doubt that 70 is too low. The world has changed massively since the time when, as has been observed, Lord Denning was sitting into his 80s. Happily, many active 70-year-olds are well able to continue to contribute in many areas, and the judiciary should reflect that, as much as this House and anywhere else. My right hon. and learned Friend the Member for South Swindon rightly, prompted by others and by me, some time ago increased the age at which jurors can sit to 75. The burdens on people serving on a jury, even in a long case, are nothing like those for a full-time judge, but it is significant that we accepted—and the House accepted—that decision makers, in fact, could continue perfectly reasonably until 75. There is no reason, for example, why that should not be the case for the magistracy as well. I can think of many able magistrates whom we have needlessly lost at an artificial cut-off age of 75.

The same applies to the bench. One can think of a number of distinguished former members of the High Court and the Supreme Court who have had to retire at 70, with many years of service still to give, and still do so, often sitting as arbitrators in important areas of commercial litigation and mediation. I am glad that they can do so, as they perform a great service, but many of them would be happy to continue in public service as justices in the High Court and the Court of Appeal. We are therefore right to reflect societal and medical changes that have taken place.

The concern about opening up vacancies was debated at some length in the other place. As I say, it engaged members of the Select Committee, and a majority expressed concerns about it. I speak for myself in this regard, as I think that 75 is the right age in the circumstances. I am persuaded by the majority of respondents. I am conscious that a number of those in the senior judiciary would have gone to the age of 72, but it is currently possible to make a business case on an individual basis for members of the judiciary to sit until they are 72, so I do not think the difference is great.

The impact assessment indicates that the potential diminution in diversity opportunities is minor in reality. As has already been observed, there is a great gain in particular for women practitioners who have taken a career break and have therefore not necessarily had the opportunity to gain sufficient seniority within the professions to qualify for appointment, but who will be able to serve for the full 20 years required to qualify for the full judicial pension.

As my right hon. and learned Friend the Member for South Swindon observed, in essence we had a reduction of the age to 70 and an uplift in the number of years that had to be served from 15 to 20—in other words, if someone was not on the bench by the time they were 50, they would not get their full pension. As I observed in my intervention, those at the very high-earning end of the Bar and the solicitors’ profession may well have made other provision in that regard during their earnings in practice, but it is of particular value for the people who are—I hope they will not regard my use of this phrase as in any way disrespectful—the real workhorses of the system, who sit in the Crown court and the county court, to have the full judicial pension. Those on the circuit bench and the district bench take on the vast volume of judicial work and generally—certainly in crime and family work—will have largely done publicly funded work so will not have been in the position to put by great provision for the future while they were in practice but will none the less have undertaken important, critical work in the latter stages of their career and have a reasonable expectation of being able to serve the full 20 years to get their pension and to bring their expertise to bear.

It is significant that in the latest recruitment round there has been a shortfall of around 49 in respect of recruitment to the district bench. The vacancy rate in the latest round was 106, and 57 appointees were recommended for appointment to the district bench, and in the circuit bench there were 63 vacancies and 53 were recommended. Despite the excellent work done by the Judicial Appointments Commission, there is a shortfall—the Lord Chief Justice indicated recently in evidence to the Justice Committee that it is a continuing shortfall—in those key areas that deal with the vast volume of serious work: crime, family and civil. It is important to give people the opportunity to serve that much longer in terms both of judicial people power, if I can put it that way, and of making the career prospects attractive.

We do need to make the judiciary more diverse and more representative, but the way to do that is not to keep down the retirement age to such a low level that able people are needlessly lost to judicial service. We must redouble our efforts to attract people from diverse backgrounds and particularly from some ethnic minorities. The truth is that it varies, because it is not a homogeneous issue: the Select Committee heard compelling evidence that some minority groups are much more willing than others to consider a career in the law and in the judiciary. Let us do more to reach out right across the board to engage other groups and let us reach out to get more women to return. There has already been improvement on that, particularly in the magistracy and elsewhere, but there is more to be done.

We must of course encourage people to advance up the judicial ladder and to recognise that to advance from, for example, the district bench to the circuit bench and then into the High Court is something that is open and to be encouraged for all. I commend the work of the noble Lord Kakkar and his colleagues on the Judicial Appointments Commission in that regard. They recognise that we can always do more, and we as a House would recognise that, as would the Minister and his colleagues. We should not accept that the commitment to diversity that we all share, and our equal commitment to excellence and to having the very best people available to serve on cases which, after all, at almost every level change people’s lives to a greater or lesser degree, mean there must be an either/or trade. It is perfectly plausible and viable to have both, and that must be our objective. I therefore think that, on balance, we have the right position. I am conscious that I differ from some Members of the other House, who, as lawyers, I greatly respect. Equally, however, other highly experienced lawyers in the other place came to a different view. I am persuaded on this occasion, not for the first time, by the noble Lord Mackay of Clashfern, who reduced the age to begin with. If James Mackay is prepared to do a John Maynard Keynes and say, “The facts have changed; I have changed my opinion”, that is probably good enough for the rest of us and it certainly is for me.

On balance, I think the Government have got this right. I am sure that we will return to it on Report but, overall, this is a good measure. I hope that it is a part of package that we must have to make a judicial career attractive. I say to the Minister—this is strictly outside the scope of the Bill, but I hope you will indulge me, Mr Deputy Speaker—that it is not just the pensions that matter, but the tax treatment, as I mentioned, and, as the Minister is responsible for the courts, the working conditions, including the maintenance of the courts, the support that judges get from court staff, some of the lowest-paid in the public sector, and making sure that there are not leaks in the corridor and that the heating does not break down, as he and I know happens in some Crown courts. It is also about ensuring that there is general public respect, which we can all have for the judiciary at every level. All of us, whether we agree with any individual decision, should treat the judiciary at every level with the utmost respect because they are fundamental to the maintenance of our democracy just as much as this House is.

I hope that the House will pass the Bill swiftly and send it forward to an early Royal Assent.