Clause 245 - Power to amend enactments relating to pensions
Civil Partnership Bill [Lords]
2:30 pm

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Mr Alistair Carmichael (Shadow Minister (Northern Ireland), Northern Ireland Affairs; Orkney and Shetland, Liberal Democrat)

I beg to move amendment No. 180, in clause 245, page 119, line 23, after 'amendments', insert

'(including the power to make retrospective pension provision)'.

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Mr Frank Cook (Stockton North, Labour)

With this it will be convenient to discuss the following:

Amendment No. 181, in clause 245, page 119, line 25, after 'pensions', insert

'(including private sector schemes, both contracted-in and contracted-out)'.

Amendment No. 244, in clause 245, page 119, line 41, at end insert

'and calculated on the same basis'.

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Mr Alistair Carmichael (Shadow Minister (Northern Ireland), Northern Ireland Affairs; Orkney and Shetland, Liberal Democrat)

In moving this amendment, which stands in my name and that of my hon. Friend the Member for Gordon (Malcolm Bruce), I place on record my appreciation of the great progress that the

Government have made in respect of pension provisions in the Bill. At the end of consideration on Second Reading, the Under-Secretary of State for Scotland, the hon. Member for Stirling (Mrs. McGuire), announced that same-sex couples in public service schemes would benefit from equal treatment with married couples or mixed-sexed couples in relation to the backdating of their entitlement to 1988. The Minister said that that did not require amendments to the Bill. On this occasion, I am happy simply to let the Government honour their word.

The amendments that stand in my name and that of my hon. Friend the Member for Gordon relate to those people who become parties to civil partnerships and who are in receipt of income from a private scheme. It is a mopping-up exercise. It is accepted that 75 per cent. of the schemes that would be affected by the amendments—

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Mr Alistair Carmichael (Shadow Minister (Northern Ireland), Northern Ireland Affairs; Orkney and Shetland, Liberal Democrat)

The hon. Gentleman says from a sedentary position that the figure is 91 per cent. The figure that I used came from a Unison briefing that was given to me. Perhaps the hon. Gentleman can explain how he got to 91 per cent. At any rate, we are talking about a high level of provision as matters stand. The Unison briefing, which was supported by both Unison and Amicus, also shows that the figure for those funds that persist in not accepting same-sex couples is only 9 per cent.

The question is straightforward. It is one of equality of provision. That lies at the heart of the Bill. The amendment would place an obligation on all such schemes to make that provision. I am sorry to labour the point about the small number of pension funds that are affected but it is important because it means that the cost would be fairly minimal. It is difficult to ascertain exactly what that cost would be, but we can say with a degree of confidence that it would be fairly small.

A number of different groups are affected. One group that has been brought to my attention is that of those who previously contributed to public sector pension service schemes but were then contracted out as the service that they were providing was privatised or contracted out. The important point to note is that those people are often on the lowest of incomes, and any assistance that can be given to them would have a considerable—one might almost say, a disproportionate—effect. As I said on Second Reading about public service pensions, there is also a spin-off benefit in that if people are to obtain benefits from pension schemes in that way, they would obviously not be relying on state benefits such as pension credit and the like.

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Mr John Bercow (Buckingham, Conservative)

I apologise in advance if I am being slow in picking up the hon. Gentleman's argument. Amendment No. 180 is clearly about enshrining the power of retrospection. Is the hon. Gentleman telling the Committee that, on the whole, he thinks that, in relation to contracted-out arrangements operated by the private sector, good

practice will tend to prevail but that the purpose of his amendment is to adopt a belt-and-braces approach?

2:45 pm
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Mr Alistair Carmichael (Shadow Minister (Northern Ireland), Northern Ireland Affairs; Orkney and Shetland, Liberal Democrat)

In essence, that is what I am saying in a roundabout way. The fact that only 9 per cent. of pension funds do not recognise same-sex couples gives weight to the argument. That figure is down from 12 per cent. in 2000, so the trend is on our side. However, when we have an opportunity at this stage in legislation to make provision for everyone, it is incumbent on us to take that opportunity. That is why I felt it was important to start by accentuating the positive.

The Government have taken on the bulk of people who were going to suffer some discrimination but there remain a small but significant number of people who will be affected and placed in an unequal position. Accordingly, it was necessary to table the amendments in order to hear the Government's position on the matter.

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Ms Angela Eagle (Wallasey, Labour)

I rise to speak to my amendment No. 244, make an observation about amendment No. 180 and discuss the general issue. One of the best discussions of this issue one finds appears on page 12 in the Fifteenth Report of the Joint Committee on Human Rights—paper HL 136. It sets out the problem with the Bill as drafted prior to the Government making their welcome announcement on Second Reading that they would remedy it. The Bill extends to civil partners survivor pension rights, first to the state pension as provided for in clause 244 and in paragraph 3 of schedule 23. It is available to surviving civil partners.

I thank the Government for happily conceding that there was a problem with the Bill on Second Reading. As it was originally drafted, it would have entitled survivors who were civil partners to approved pensions only from the date of the commencement of the Bill rather than 1988 when most other survivor pension rights are due.

The hon. Member for Orkney and Shetland (Mr. Carmichael) was somewhat sceptical when my right hon. Friend the Minister announced at the beginning of the debate that she and the Government were willing to consider the issue again. The hon. Gentleman decided, rather cynically, that it was a way of getting her through Second Reading. Happily, that uncharacteristic burst of cynicism was gloriously proved to be completely unfounded when my hon. Friend the Under-Secretary of State for Scotland announced at the end of that debate that the Government had seen a way through the problem and were willing to ensure in secondary legislation that survivors' benefits in state occupational pensions would go back, as with the vast majority of other provision, to 1998.

It is important to say that this is an issue of equity and not retrospectivity. It bears on the wording of amendment No. 180. People who have not been allowed to register partnerships or get married pay the same contributions as those who have. Even though they are in parallel circumstances they have never been able to benefit from the survivor benefits of

either a state pension or, increasingly, the vast majority of private occupational pension schemes. The Government's late but welcome change of heart says not that there is retrospectivity, because that is enormously disruptive to existing pension schemes and should be avoided, but that there is equity for contributions already paid. It is an important distinction, which the wording of amendment No. 180 fudges.

Turning to the final amendment in this group, it is welcome that the Government have conceded in respect of the vast majority of survivor benefits dating back to 1988. Only the small percentage of people who are in private sector schemes, having contracted out of the state earnings-related pension scheme, would—as things stand at the moment and without Government amendment—qualify for survivor benefits. On the figures put forward, only 9 per cent. of those in private sector schemes would qualify for survivors' benefit from 2005, which is when, we understand, the Bill will come into effect. Again, it seems wrong that that anomaly should remain, which is why I tabled amendment No. 244. I doubt whether the drafting is as perfect as it might be in the circumstances—this is a complex Bill—but it emphasises that there is a small group of people in an anomalous position.

When I was a Minister at the then Department of Social Security, individuals in contracted-out schemes were not put at a disadvantage from the position they would have been in if they had been in non-contracted out, SERPS-based schemes. At present, a small group of people will be at a disadvantage. Unison has made submissions and representations to me, as has Amicus, other trade unions and the Trades Union Congress, and they have a fair point. I shall be interested to see whether my right hon. Friend the Minister will be as accommodating on this last remaining kink in the survivors' pension issue as she was on Second Reading. If that were so, I am sure that the hon. Member for Orkney and Shetland would, with joy in his heart, withdraw his amendment and await what she introduced on Report.

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Mr Alan Duncan (Shadow Secretary of State for International Development, International Affairs; Rutland and Melton, Conservative)

I am slightly puzzled by the meaning of the words in the amendment tabled by the hon. Member for Wallasey (Angela Eagle). Clause 245(4) allows—it does not compel—the provision with respect to widows, widowers and independent persons to be made in different ways. The hon. Lady wants to add the words

''and calculated on the same basis.''

I cannot get my head round that. On the same basis as what, and will it be ''may'' or ''should''? Perhaps I do not fully understand the grammar, but it may also be puzzling for lawyers. Perhaps the Minister is convinced that it makes sense. If she is and can explain, I would go along with it, but I cannot make clear sense of it at the moment, so I ask the Minister to do so.

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Ms Jacqui Smith (Minister of State (Industry and the Regions and Deputy Minister for Women), Department of Trade and Industry; Redditch, Labour)

Today's debate has, to some extent, been a continuation of the case made by some of my

hon. Friends on Second Reading. As my hon. Friend the Member for Wallasey identified, it was made very strongly by several of my hon. Friends, Stonewall, several trade unions, the TUC and many individual correspondents with me and other Ministers. The Government have listened carefully to the debate on survivor pension provision for civil partners and to those representations from the wide range of organisations and colleagues from whom they have come. That is why, as the hon. Member for Orkney and Shetland pointed out, we announced on Second Reading that surviving civil partners in public service schemes will accrue rights on the basis of service from 1988. That will not require further amendment to the Bill, because public service schemes already have sufficient powers to amend their schemes in line with that announcement. As my hon. Friend and the hon. Member for Orkney and Shetland have said, that provides equality and parity for the vast majority of those pension schemes that do not already have a parity of provision in survivor benefits for same-sex and opposite-sex partners.

However, my hon. Friend and the hon. Gentleman have identified and continued to push for the final piece in the jigsaw of equality, if I may put it like that, on the Bill's current position on the rules around pensions that are contracted out. The Government have some sympathy with the argument that the picture will be complete when we are able to insert that last piece of the jigsaw, so I am pleased to announce that my right hon. Friend the Secretary of State for Work and Pensions has further agreed that all members of contracted-out pension schemes will be able to build up rights for surviving civil partners on the basis of the contracted-out rights accrued from 1988. That will achieve the objective rightly identified by my hon. Friend the Member for Wallasey of providing parity of treatment for surviving civil partners in contracted-out schemes—for example, survivors of members of schemes such as the privatised utility or transport companies.

That will require amendment to the Bill, and I know that that is what my hon. Friend the Member for Wallasey and the hon. Member for Orkney and Shetland have attempted in amendments Nos. 180 and 244. On judging between those, I am more taken by the arguments of my hon. Friend, whose amendment recognises this as an issue of equality and parity, than I am with the wording of amendment No. 180, which sees it as an issue of retrospection. However, even though I am more taken with my hon. Friend's arguments—this partly responds to the point made by the hon. Member for Rutland and Melton (Mr. Duncan)—a problem with amendment No. 244 is that I cannot be certain that it technically would achieve what it sets out to achieve, which is to allow schemes to calculate survivor benefits on the same basis as for widowers.

In fact, neither amendment would achieve precisely what we need, but I hope that hon. Members will be reassured if I say that following the agreement with my right hon. Friend the Secretary of State for Work and Pensions to which I have already alluded, the Government will further consider what amendment

to clause 245 is needed to ensure that its power can be used to require schemes that contract out to provide survivor benefits for civil partners on the basis of members' contracted-out rights accrued from 1988, and that we will look to introduce an amendment to fulfil that commitment on Report.

That will address the concerns that have been brought to our attention about employees in private pension schemes. It will achieve, as far as possible, pensions equality with surviving spouses in the requirements about surviving civil partners of members of contracted-out pension schemes. It is in line with the Government's policy on civil partnerships and with the decision on public service schemes announced on Second Reading. As I have suggested, that should meet all the concerns expressed by hon. Members and others outside the House of Commons, and I hope that on that basis, hon. Members will not seek to press their amendments.

3:00 pm
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Ms Angela Eagle (Wallasey, Labour)

My right hon. Friend's response, again, has filled us all with joy, at least on the Government side of the Committee, and I suspect various Members on the Opposition Benches. We all like to see jigsaws completed, especially jigsaws of equality.

I have no pretension to being a lawyer, and although I do not have the chance to withdraw my amendment, there are those in government much better qualified than me to get the technicalities right to bring about the aim that my right hon. Friend has just expressed. As a former social security Minister, I would like to say that the involvement of my right hon. Friend the Secretary of State for Work and Pensions has had a positive effect, and I would like to place on record my thanks to him and Treasury Ministers for being so understanding. I look forward to the final piece of the jigsaw being put in place on Report.

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Mr Alistair Carmichael (Shadow Minister (Northern Ireland), Northern Ireland Affairs; Orkney and Shetland, Liberal Democrat)

The Minister leaves me at something of a loss. As far as I have understood it, proceedings in this place run something roughly along these lines: we make eminently sensible suggestions, Ministers stand up, suck their teeth and say, ''We'd like to, but we can't really'', there is a vote, we lose and that is the end of it. I did not realise until today that the mere expression of my scepticism was such a powerful tool. I shall bear that in mind for future reference.

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Mr John Bercow (Buckingham, Conservative)

I do not want to encourage the hon. Gentleman to entertain unrealistic expectations, but is this the first example of pre-emptive gratification that he has enjoyed and does he not think that we can look forward to other examples from the Treasury in future?

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Mr Alistair Carmichael (Shadow Minister (Northern Ireland), Northern Ireland Affairs; Orkney and Shetland, Liberal Democrat)

I am trying to get my mind round the concept of pre-emptive gratification. I suppose that I should take my hands out of my pockets as I do so.

I am grateful to the Minister for having taken on the concerns, and in such circumstances I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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Ms Jacqui Smith (Minister of State (Industry and the Regions and Deputy Minister for Women), Department of Trade and Industry; Redditch, Labour)

I beg to move amendment No. 77, in clause 245, page 120, line 10, leave out from '(1)' to 'may' in line 14.

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Mr Frank Cook (Stockton North, Labour)

With this it will be convenient to discuss Government amendment No. 78.

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Ms Jacqui Smith (Minister of State (Industry and the Regions and Deputy Minister for Women), Department of Trade and Industry; Redditch, Labour)

This is a slightly less exciting but nevertheless important Government amendment, which contains the power to amend existing provisions within pensions legislation to make provision for surviving civil partners or dependents of deceased civil partners. I am sure that hon. Members will agree that the power will fulfil a useful purpose in line with the overall policy of the Bill. We have made it clear that we intend to use that power to amend the contracting-out rules governing private and public sector pensions, the judicial pension schemes and church legislation in relation to survivor pension benefits.

In the other place, Lord Higgins drew attention to the report of the Delegated Powers and Regulatory Reform Committee, which recommends that in the clause either some indication of the policy should be included or, failing that, any order made under the clause, whether it amends an Act or not, should be subject to affirmative parliamentary procedure. Ideally, we would have included all those provisions in the Bill.

Clause 246 and schedule 25, which we shall come to, already include amendments to statutory pension schemes, but pensions legislation is immensely complex and detailed, as I have discovered during the past few weeks. It is therefore important to ensure that the changes made by the Bill fit with the overall scheme of that legislation, particularly as the Pensions Bill currently progressing through Parliament will make further changes.

I am happy to accept, however, that the exercising of the power that we are taking in the clause should be subject to full parliamentary agreement through use of the affirmative procedure, as the House of Lords required. That is what Government amendments Nos. 77 and 78 achieve.

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Mr Christopher Chope (Shadow Minister, Environment and Transport; Christchurch, Conservative)

I welcome the amendment as a step in the right direction, because without it the existing power would be extremely wide. However, I would be grateful if the Minister would answer a question that still troubles me. She said that clause 245 is subject to amendment because pensions legislation is very complicated. Similarly, inheritance tax law is highly complex. Why have the Government been prepared to incorporate in the Bill detailed provisions and powers in respect of pensions but have not been able to do anything about inheritance tax?

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Ms Jacqui Smith (Minister of State (Industry and the Regions and Deputy Minister for Women), Department of Trade and Industry; Redditch, Labour)

As has been said previously, while we can appropriately legislate through the order-making power in respect of pensions in this legislation, it is a long-standing convention, not only of this Government, that tax provisions are the subject of Finance Bills because of the interrelatedness of all such matters. We made it completely clear that the inheritance tax implications of our policy will be made real in the first available Finance Bill. That is the right and appropriate place for considering such

provisions, and I hope that the hon. Gentleman will take my assurance in respect of the policy that we have set down.

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Mr Christopher Chope (Shadow Minister, Environment and Transport; Christchurch, Conservative)

When the Minister says ''the first available'', does she mean the first one?

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Ms Jacqui Smith (Minister of State (Industry and the Regions and Deputy Minister for Women), Department of Trade and Industry; Redditch, Labour)

No, I mean the first available Bill in which it is appropriate to put into place the tax changes that would come from the policy set out in this Bill. I assure the hon. Gentleman that we will certainly be in the position when we implement the provisions of the Bill also to have in place the tax provisions that will stem from it.

Amendment agreed to.

Amendment made: No. 78, in clause 245, page 120, line 24, leave out subsections (11) and (12).—[Jacqui Smith.]

Clause 245, as amended, ordered to stand part of the Bill.

Clause 246 ordered to stand part of the Bill.

Schedule 25 agreed to.

Clause 247 ordered to stand part of the Bill.

Schedule 26 agreed to.

Clauses 248 and 249 ordered to stand part of the Bill.