My Lords, the report concerns an important proposal from the European Commission to extend European Union gender discrimination legislation with regard to the supply of and access to goods and services. It is a broad objective that we share in principle and in the interests of British citizens, notably when they are in other member states. It relates essentially to commercial transactions for remuneration.
United Kingdom sex discrimination legislation, notably the Sex Discrimination Act 1975, already largely covers the ground. In important respects, it is more comprehensive in its scope and in its reference to goods, facilities and services. The original Commission proposal of November 2003, however, which was the subject of the Select Committee's examination and report, had one important difference from the United Kingdom's sex discrimination legislation. It concerns the criterion for premiums and benefits for some insurance and related financial services. Any differentiation by gender would have been prohibited by article 4 of the Commission's proposal of November 2003, but it is specifically permitted by the United Kingdom's Sex Discrimination Act, if it can be justified as reasonable. That difference, which is of some commercial importance, gave rise to a large volume of submissions and evidence to our sub-committee.
I shall deal with the main questions that arise on the Commission's proposal of November 2003, notably its scope and exclusions; the question of article 4 and the specific issues of motor insurance and annuities; the monitoring of any exceptions to the principle of equal access and the value of continued research; and the commercial opportunities for British insurers arising from a deepening of the single European market in insurance and related financial services.
First, it is essential that I bring the House up to date on the positive developments that have taken place. There has been a large measure of agreement between the recommendations made by the Select Committee and the negotiating position taken by the United Kingdom Government, with considerable success, in Brussels. That can be seen in the Government's response to our report, which we welcome.
As a result of the position taken by the Select Committee, by the United Kingdom Government and other governments and by the financial services industry, the Commission has revised its proposal. The prospects of an agreement at European Union level that would take account of the practical problems that arose from the original article 4 but would preserve the other advantages of the proposal seem to be good. In so far as the Select Committee contributed to that result, it is to be welcomed. If it were not in bad taste and at a bad time to say it, one might say that the Commission and the Government had shot our fox.
There are some issues that none the less arise from the Commission's proposal and, to some degree, the revised proposal. The Commission's proposal is a draft directive that requires consultation with the European Parliament and a unanimous decision by the Council of Ministers. I make the point because I was struck by the fact that, although there are in the UK many strong views about unanimity and qualified majority voting, in cases where unanimity applies and is important, there are sometimes few references to it.
The sub-committee examined the need for and the scope of the Commission proposal. We believe that the proposal will have a limited impact in the United Kingdom, in the light of our existing legislation and the revision of article 4 of the proposal. It could be of greater value in some other member states, including the new member states, although the Commission's evidence was mainly anecdotal.
There are some significant exclusions from the proposal, notably education, media and advertising and, indirectly, single-sex sporting activities, single-sex voluntary activities and private clubs and religious organisations. We agreed with the Government that the exclusion of education avoids a potential and undesirable distinction between private and public sector education. We also accepted that there could be difficulties in drafting legislation relating to the sexes in media and advertising, in particular because of the difficulty of any draft which might infringe the freedom of the media under the European Convention on Human Rights.
It should, however, be stressed that the Commission indicated that it has decided to adopt a step-by-step approach so that some of those issues may come back again later. But, overall, we have accepted the exclusions. In relation to health, which is not excluded, we recognise that, in due course, the question of whether for this purpose the National Health Service should be considered a service for remuneration may ultimately be decided by the Court.
I come now to the question of differentiation by gender in setting some insurance premiums, particularly motor insurance for newly qualified drivers, and in annuities. The approach of the Select Committee stems from the need to reconcile the commitment to extending the principles of equality, which we endorse, with the practicalities of application in a fair and reasonable manner.
It will be clear from our report that where we have accepted for objective reasons some differentiation by gender, we have done so in a restrictive manner and subject to external monitoring to ensure that the factual basis continues to be correct and justified. Contrary to the impression that may have been given in some comments, our report is not just a carte blanche for gender differentiation in insurance and annuities. It is limited, subject to the continuation of objective differences and, in our recommendation, subject to monitoring.
When I commented at the time of the issue of the report, I said that in time gender can and should be taken out of most calculations for car insurance premiums. But when companies set premiums for newly qualified drivers, gender matters. These and younger drivers have not had time to build up a record of claims, accidents and driving performance. The evidence that we received showed that the average claims cost of males between 17 and 19 years old was about 60 per cent higher than that of corresponding females, although the difference, of course, decreases steadily over a lifetime of driving.
Over a recent five-year period, males committed more than 85 per cent of serious driving offences. That is why, in the UK, motor insurance premiums for young women are justifiably lower. If we were not to take account of gender, younger women would have to pay perhaps 10 to 30 per cent more for their motor insurance, which would be a harsh penalty to impose on women. It is worth noting that most car drivers in the European Union pay premiums that take some account of gender—in France, Germany, Italy, Spain, Belgium, Austria and Ireland.
The Government have negotiated the continuation of some justified differentiation by gender. In their reply to the report, they stress that for insurance pricing to be fair to consumers, relevant risk factors must be taken into account, including age and gender when appropriate. The evidence given by the Equal Opportunities Commission was also important. The committee agreed with its broad guiding principle, which is reflected in our recommendations.
I turn now to annuities, for which the UK market is the biggest in Europe. The substantive issue is the difference in the longevity of men and women. Because women in general live longer than men, premiums for term life assurance are lower for women. But when an annuity converts a lump sum into regular payments from a given age over the remaining life of the policy holder, a female annuity holder will typically receive less than a male because the assumption is that she will receive the sum for longer.
At birth, a female's life expectancy is just over four years more than that of a man. At age 50, it was about 3.6 years more in 2002. Surprisingly, the figures going back over a century show that the difference in life expectancy—for example, at age 45, in favour of a female—is greater now than it was in 1901.
We examined a great deal of evidence on that matter and were satisfied that gender should be allowed—I quote from the report—"for the time being" as a relevant factor in calculating premiums and benefits for life assurance and annuities. However, we recommended more research on the relevance of gender and we made quite clear that if the gap between male and female longevity were to disappear, insurance premiums and benefits should be rapidly adjusted.
I know that some Members of your Lordships' House may not agree with the report. But in view of the limits that we put on our recommendations, that difference may not be quite as substantial as it may at first appear.
To that extent, our recommendations, the Government's position and the revised Commission proposals run quite closely in line. I should add that we wished to see more formal monitoring, which is our recommendation at paragraph 10.19, but that is something that the Government have not accepted. They consider that the cost of such monitoring would not justify the benefit. Instead, the Government seek to rely on the work of a working group, covering government representatives and other interests, which is the subject of a Commission declaration in the Council minutes.
It is unlikely that the directive will be formally adopted before 2005, but the long time and the substantial volume of work devoted to the Commission's first proposal has been very worth while. We shall now have a result that is acceptable to the Government and broadly reflects the approach of our own Sex Discrimination Act 1975. I commend the report to the House.
Moved, That this House takes note of the report of the European Union Committee, Sexual Equality in Access to Goods and Services (27th Report, Session 2003–04, HL Paper 165).—(Lord Williamson of Horton.)
My Lords, I welcome this debate on the report on Sexual Equality in Access to Goods and Services. While I am a newcomer to your Lordships' House, I am long acquainted with the excellent work of the European Union Committee and its scrutiny of European legislation.
I also very much welcome the proposal for a directive tackling sex discrimination in the provision of goods and services. As is the case in so much EU legislation, it was made in response to a request from the European Council. Its primary purpose is to ensure the implementation of the fundamental principle of equal treatment between men and women, which is of primary importance for a fair society.
As the noble Lord, Lord Williamson of Horton, pointed out, some people are frustrated by the pragmatic position that has been agreed by the committee, the Government and the Equal Opportunities Commission. Perfectionists may argue that there should be no deviation from the principle of equal treatment between men and women. However, while I fervently believe in the principle, I acknowledge that it cannot be achieved overnight in the real world.
The long journey towards equal treatment began when the principle was enshrined by the Treaty of Rome. We have not yet reached our destination, but amendments to the treaties followed by legislation and case law have taken us a long way towards it. In the UK, we now have relatively comprehensive legislation in that area, and I celebrate that.
I was interested to learn from Professor McColgan's evidence to the committee that the proposed directive will help to fill some of the gaps in our legislation. In addition, without the catalyst of EU legislation, real discussions about ending gender difference in insurance and annuities simply would not have begun.
It is right that the Commission should have made a radical proposal, but it is also right that practicalities should be considered in the member states. That is not because I wish to cosy up to the insurance industry; quite the contrary. I deplore its intransigent position, its unwillingness to adapt and to embrace change and the way in which it has used the media seemingly to whip up fears.
I accept the pragmatic position of the European Union Committee because that is the best way ultimately to achieve equal treatment for men and women. Yes, insurance companies will be able to depart from the principle of equal treatment, but only in strictly limited circumstances where up-to-date, relevant actuarial data indicate that there are very clear gender differences at risk. I am confident that with socio-economic change and careful monitoring of risk assessment and insurance practices in this area, within a few years the insurance companies will have to change because they will have to reflect the new realities.
As usual, I was saddened and frustrated by the way in which this directive was dealt with by both the press and the industry. Indeed, I seem to spend too much of my life being sad and frustrated because of tabloid treatment of the European Union.
"EU bans ads for girl-only lodgers", said the Sun.
"The 'Girl wanted to share flat' adverts which fill the accommodation to let columns are to be outlawed by Brussels", said the Daily Mail. Even worse, the press has evoked fears of vulnerable women by alleging that, "hostels for battered women will be forced to take in men as well as women".
In fact, "Girl wanted to share flat" ads are not to be "outlawed by Brussels", and they never were. More important, there is no chance, and there never has been, that hostels for abused women will be "forced to take in men". I am sure it is right, as the report points out, that the wording should be strengthened for the sake of clarity, but it is utterly wrong and disingenuous to state, as some have done in another place, that this directive will mean, "less accommodation on the market and more women worried about safety".
The recommendations made in the report certainly improve the draft directive, and that is one of the purposes of scrutiny. We are particularly fortunate to have a European Union Committee that works in such a serious and effective way. While I am a strong supporter of the European Union, my support is not blind and uncritical. I recognise that in the past not all European legislation has been proportionate, and it could be argued that it has not always respected the principle of subsidiarity. The enhanced role for national parliaments under the constitutional treaty and their greater involvement in European decision making would, I am confident, help to avoid unnecessary legislation.
I also recognise that sometimes, as in the case of the proposed directive on sexual equality in access to goods and services, the rationale for the proposal is sound, but the consultation and analysis is sometimes inadequate and the text frequently sloppy. The Commission is vastly improving its consultation efforts, but clearly there is more to be done. I have to say, however, that draft Bills in our national legislative system are often imperfect and this House expends much time and effort in improving UK legislation. The fact that the directive, when ultimately agreed by the Council, will be rather different from the proposed directive is demonstrable proof that the decision-making powers of the European Union are quite properly firmly in the hands of the Council and the European Parliament, both of which are democratically accountable.
The European legislative process is undoubtedly complex, but it is becoming more transparent. I have to say that this contrasts sharply with the practices of insurance companies and actuaries. The committee itself expressed concern about the apparent lack of transparency in actuarial practices and the difficulty for non-specialists in understanding the basis on which actuarial decisions are made. Many witnesses shared this concern. Indeed, as a layperson and a consumer, I was struck by three points in relation to insurance companies.
First, their methods of calculation are opaque. They do not explain the basis on which their decisions are taken and their communications are unintelligible. Secondly, they seem unwilling to embrace any change, even when it might enable them to shape and better take advantage of developments in relation to the single European market in insurance and financial services. Thirdly, while it is clear that for the moment gender should continue to be used as a factor in life insurance and pensions, I wonder to what extent the industry really is willing to adhere to the principle of equal treatment and depart from it only in limited circumstances.
Like other noble Lords, I received a briefing note from the Association of British Insurers which said, among other things, that,
"much now depends on the way the Government chooses to transpose the directive".
That is absolutely correct and I urge my noble friend on the Front Bench to ensure that "limited circumstances" really does mean limited circumstances. As a member of the Merits of Statutory Instruments Committee, I will certainly take an interest in future statutory instruments.
The subject of annuities is complex and I am no expert. Having read the evidence to the European Union Committee and the research undertaken by the Equal Opportunities Commission, I realise that at present there would be little advantage to most men and women in changing the basis on which life assurance and annuities are calculated. I also realise, as the report points out, that it would be inappropriate to use this directive as a mechanism for dealing with the very real problem of inadequate female pensions. However, as tomorrow is Carers Rights Day, I take this opportunity to highlight the fact that one of the reasons that women's average retirement incomes are just 57 per cent of that of men is because they are more likely to have caring responsibilities and therefore either to work part-time or to be absent from the labour market for long periods. Action must be taken to right these wrongs, but clearly we must use different tools.
In relation to life assurance and annuities, it is clear that much more independent work needs to be done on the assessment of risk factors when calculating premiums and benefits so that the principle of equal treatment can be achieved. It must be possible to take more account of risk factors, especially if the difference in lifestyle between men and women continues to lessen, and the gap between male and female longevity narrows. Why should an unmarried woman who smokes and lives in Wales, who statistically will be dead by the age of 73, pay higher premiums than a man?
The issue that received most press coverage when the proposal was adopted was that of motor insurance. We were urged to believe that the intention of the "meddlesome" Commission was to increase motor insurance for all women, whereas of course the real intention was to take sex out of the equation so that neither men nor women who drive safely should lose out. I accept that, for the moment, gender should still be considered for very young drivers where there is irrefutable evidence that most young men do not drive as safely as young women. However, past the age of 35, why should men who drive safely be penalised for their gender and why should bad women drivers be rewarded with lower premiums?
In conclusion, I warmly welcome this report from the European Union Committee as well as the proposed directive on sexual equality in access to goods and services. The latter is an important step in opening up the single market in insurance and financial services, and in achieving equal treatment for men and women across the 25 member states of the European Union. Where insurance and actuarial calculations are concerned, it is clear that at present there should be provisions for insurance companies to depart from the principle of equal treatment but, as I said earlier, only in strictly limited circumstances. Again, I urge my noble friend the Minister to ensure that the circumstances are truly limited.
Finally, I would specifically ask my noble friend for her assurance that the Government will consider favourably the recommendation made by both the Equal Opportunities Commission and the European Union Committee that independent monitoring should be undertaken in accordance with the principles of this directive, and in order to provide reassurance for consumers.
My Lords, I am grateful to the noble Lord, Lord Williamson of Horton, for the fair-minded way in which he has introduced this report. I welcome the new equality directive as an important advance in securing equality of opportunity in access to goods and services across the European Union. I am particularly glad that I shall be followed later in the debate by the noble Baroness, Lady Howe of Idlicote, who, as a distinguished former deputy chair of the Equal Opportunities Commission, has unrivalled experience, commitment and knowledge in this area.
I shall focus on only one issue, which is the controversial issue of the actuarial exception. The right to equal treatment free of sex or race discrimination is a fundamental right. As an individual right, it cannot be undermined or negatived by broad assumptions or generalisations. But what may be true of a group may not be true of a significant number of individuals in that group. It is also a basic principle that equality of opportunity and treatment applies equally to both sexes, whether it happens to favour one sex or the other.
Discrimination is often the result of the discriminator's belief, whether accurate or inaccurate, that members of the group to which the victim of discrimination belongs share or are more likely to possess some characteristic, or are more likely to behave in a particular way. That includes, for example, having accidents as drivers or having a different rate of mortality. An employer may believe that women with children are unreliable employees, or that women are unable to lift heavy loads. For these reasons, the employer may refuse to employ a woman who has applied for a job involving heavy lifting. Such treatment is unlawful sex discrimination. It is based on a stereotype of women, which may or may not be true of women as a group but which it is unlawful for an employer to assume to be true of an individual woman on the ground of her sex. The same is true—or ought to be true—of providers of services, including insurers.
Forty years ago it was not unlawful to discriminate in insurance or in the provision of goods or services on a racial basis. When I was teaching insurance law, I personally saw an underwriting guide from a major insurance company advising that black drivers should be charged higher premiums for motor insurance. That was made unlawful without any actuarial exception in 1968 and again in 1976.
There is an actuarial exception in Section 45 of the Sex Discrimination Act 1975, for which I was partly responsible. It was inserted in deference to insurers. Thirty years later, it is outmoded and should be repealed. I agree with the EOC that it is contrary to principle. I therefore do not understand its position when that is applied to this directive.
In accordance with the principle of equality, Article 4 of the directive as originally drafted prohibited the use of sex as a factor in the calculations of premiums and benefits for the purpose of insurance and related financial services. The European Commission rightly noted in its report that equal treatment for women and men is a fundamental right to which the freedom to set tariffs must be subordinated. It pointed out that separating men and women into separate pools is discriminatory. It leads to an unjustified difference of treatment, resulting in disadvantage for one sex or the other, and should be prohibited.
The Commission's original proposal also rightly concluded that,
"differences in treatment based on actuarial factors directly related to sex are not compatible with the principle of equal treatment and should be abolished".
The Commission correctly pointed out that this position is in line with the ruling of the European Court of Justice in the Coloroll case. In that case the European Court held that different contributions for men and women to an occupational pension scheme are discriminatory.
The United States Supreme Court also ruled, as long ago as 1978, in the Manhart case that a requirement that female employees make larger contributions to a pension fund than male employees was unlawful sex discrimination. In its words:
"It is now well recognized that employment decisions cannot be predicated on mere 'stereotyped' impressions about the characteristics of males or females . . . This case does not, however, involve a fictional difference between men and women. It involves a generalization that the parties accept as unquestionably true: Women, as a class, do live longer than men . . . It is equally true, however, that all individuals in the respective classes do not share the characteristic that differentiates the average class representatives. Many women do not live as long as the average man and many men outlive the average women. The question"— said the Supreme Court—
"therefore, is whether the existence or non-existence of 'discrimination' is to be determined by a comparison of class characteristics or individual characteristics".
"If height is required for a job, a tall woman may not be refused employment merely because, on the average, women are too short. Even a true generalization about the class is an insufficient reason for disqualifying an individual to whom the generalization does not apply".
The court went on:
"That proposition is of critical importance in this case because there is no assurance that any individual woman working for the Department will actually fit the generalization on which the Department's policy is based. Many of those individuals will not live as long as the average man".
The court observed:
"Actuarial studies could unquestionably identify differences in life expectancy based on race or national origin, as well as sex. But a statute that was designed to make race irrelevant in the employment market could not reasonably be construed to permit a take-home pay differential based on a racial classification".
The same applies, does it not, to the present directive if it is to be compatible with the principle of equality, which is a general principle of European law? If the directive is designed to prohibit sex discrimination outside the labour market, it is wrong in principle for it to include exceptions which allow discrimination based on sex. That is not a question of being a perfectionist, as the noble Baroness, Lady Royall, described it.
It is unfortunate that the case law is not mentioned or discussed in the committee's report. It is also unfortunate that Sub-Committee E on Law and Institutions was not involved in the scrutiny. The absence of discussion of legal principle weakens the cogency of the report. There is a real risk that the actuarial exception is incompatible with European law.
The insurers argue that they do not believe that the use of gender in insurance calculations should be regarded as discriminatory where such gender differentiation could be shown to be objectively justified. But, in principle, as a matter of law, it is not and should not be possible to justify direct discrimination, whether on grounds of race or sex.
I agree with Professor McColgan that,
"it should be no more acceptable for insurers to use gender as a basis for assessment on grounds of rationality than it would be for them to differentiate on the basis of race, even if a rational basis for that differentiation could be statistically justified".
The EOC's approach—which, as I have said, is inconsistent if it wants to get rid of Section 45—represents what the report calls "striking a balance" by allowing insurance companies to depart from the principle of equal gender treatment in the strictly limited circumstances that the noble Lord, Lord Williamson, has reminded us of. The compromise upon which the Council of Ministers has now reached political agreement—no doubt with leadership from this Government and with a significant abstention by the German Government—will cause confusion and may be difficult to implement in practice. Even the view of the Association of British Insurers is that the compromise text represents a "convoluted outcome".
There are practical alternatives to the gender profiling which the directive will protect. The Commission, in its evidence to your Lordships' committee, cited a number of countries where gender considerations are not taken into account in the determination of motor insurance levels. It pointed out that it is only really in the UK and Ireland—which have the same insurance and insurers effectively—and in France that insurers have expressed any concern at all about the application of the directive in this area.
I find it disappointing—and I am embarrassed to say this because my noble friend Lady Thomas, who will be winding up the debate for my party, was a member of the committee, and her commitment to equality for women is well known—that in its report the committee did not support the Commission's original principled position. It is even more disappointing that the Commission altered its position on Article 4—nobbled by the insurance industry and the British Government—in order to obtain unanimous agreement on the directive as a whole at the October council meeting. I respectfully dissent.
My Lords, it was a privilege to serve on the sub-committee headed by our excellent chairman, the noble Lord, Lord Williamson. I am also a vice-chair of the All-Party Group on Equalities. In that respect I have had the privilege of working closely with the noble Lord, Lord Lester. After listening to the noble Lord, Lord Lester, and the noble Baroness, Lady Royall, it is obvious that my ambivalence in the task that we were set—which was to consider these issues—was somewhat obvious, especially as I have campaigned for equal treatment and equality over many years and the subject is very important to me.
However, I believe that the aim of equality measures is, and must always be, to improve the situation of a minority or a group of people that is treated unfairly. The result of measures to eliminate inequality must be better than if those measures were not introduced. I start from there, as did, I believe, other members of our committee, and our extremely pragmatic conclusions are based on that premise.
It is worth noting, as the noble Lord, Lord Williamson, said, that UK sex equality legislation already exceeds in scope most of what the EU draft directive seeks to address, and it will not be brought down to the level of the draft directive if that becomes accepted in law. The committee took a great deal of evidence and considered it very carefully, as was our role. The evidence revealed the extreme complexity of these issues. They are not as straightforward as they seem and as many of us, wearing our other hats and campaigning for equality of treatment, would have one believe.
It was a difficult decision for all of us. That is why our key recommendation was that,
"insurance companies should only be allowed to depart from the principle of equal gender treatment in strictly limited circumstances, where the assessment of risk can be shown to have been objectively based on accurate, up-to-date and relevant actuarial data, clearly indicating significant risks that are directly related to gender".
In our view, that is the case here.
In financial services, notably insurance, we are dealing only with commercial transactions and risk is the basis of the contract. We came to the conclusion that the financial services industry itself must always make the case for any continued gender differential. However, life expectancy differences are narrowing. We concluded that more research and consultation is needed before changes ought to be made and that continued monitoring must be part of the agreement.
Our ambivalence is obvious also in our conclusion on upholding differential treatment, which is less enthusiastic than that of the Government. However, when there is no difference—that is, when life expectancy becomes the same for men and women—then the differential treatment must disappear immediately. The insurance industry has to be held to that. Our recommendation is conditional and for the time being only. It is very sad that the Government have not responded by saying that they would monitor this.
Our feeling is that the Equal Opportunities Commission is the prime organisation able to take this on board. If it cannot, then perhaps the FSA or the Office for National Statistics could provide that information very quickly. I also agree that transparency is essential. However, even without formal monitoring, those of us who campaign for equality will not let the issue go in the event that the circumstances and actuarial data change. It will not disappear from view as a policy issue.
The paper produced by the Equal Opportunities Commission and the Pensions Policy Institute—in which I declare an interest as its president—concluded that the argument on unisex annuities has not been made conclusively, that annuity rates for men could decrease by up to 13 per cent, and that joint life annuity rates for men could decrease by 4 per cent. Unisex annuity rates would help only a minority of pensioners. More than three times as many pensioners receiving an annuity, including wives and widows dependent on their husbands' annuities, could receive a lower income, not a higher one. That made us think again.
On motor insurance, the committee felt that the industry should work towards a situation in which young drivers, particularly male drivers, could be risk assessed on the basis of their driving records over an initial period of a few years. That would change the need to use gender as it is currently used, where young men are automatically assessed as a very high risk simply because they happen to be young men. So we are some way towards agreeing with the noble Lord, Lord Lester, on that.
On positive action, it is important to note that, in the EU negotiations since our report was published, the Government have secured that,
"the principle of equal treatment shall not prevent . . . measures to prevent or compensate for disadvantages linked to sex".
That is very important. Overall, the committee felt that, at present and for the time being only, on the basis of objective data, we should continue to differentiate between the sexes. However, that must be monitored transparently; change must be effected immediately when the situation changes; and the overall advantages must outweigh the disadvantages to the consumer—the ordinary person who must always be the subject of our main concern.
My Lords, I take the opportunity to thank the noble Lord, Lord Williamson of Horton, for his masterly exposition of our report and for his superb stewardship of our sub-committee in his period as chairman. I also welcome the noble Baroness, Lady Thomas of Walliswood, as she takes up his duties. She will be reinforced by our excellent secretariat, which has played an outstanding role in forging this report.
We have the report before us. We also have the benefit of the Government's response. Perhaps we have similar conclusions but with different emphases. We acknowledged the need for the directive and the common interest of the European Union in introducing legislation to extend the principles of anti-sex discrimination into commercial transactions. We emphasised the need for increased monitoring of the directive when it comes into play and of the marketplace in which these businesses exist. We also emphasised the need for the swift implementation of non-discrimination when, for instance, the facts change—for example, when male and female life expectancy patterns change, impacting on the annuity market and the products deriving from it—and when supporting arguments are undermined by research or social change. I have in mind, in particular, the motor insurance industry.
Our report foresees a middle path of promise and practice. In it, we declare that we support the introduction of such legislation so long as it can be shown to be necessary, soundly based, proportionate and consistent with the principles of competence and subsidiarity. In passing, it is interesting to note that the anti-sex discrimination legislation passed a generation ago by Lady Castle—I have in mind the Equal Pay Act 1970 and the SDA 1975—was more wide-ranging and broadly based than the relatively modest proposals in this draft directive. Not all that emerges from Brussels is as radical and revolutionary as it is sometimes portrayed, and so wilfully misrepresented, as the noble Baroness, Lady Royall, pointed out.
Indeed, it is a further finding of our report that our understanding and our intelligence of these commercial markets, where gender dictates and influences the products marketed, is woefully inadequate, not only across the single European market as a whole but frequently, too, here in the single marketplace of the four countries comprising the United Kingdom. For these reasons, our report is peppered throughout with calls for greater research by the Commission and by the industries involved into deepening our understanding of the relevant markets. Let me give two examples.
I do not think we knew enough about the functioning of the motor insurance market across the now 25 member states of the European Union with respect to pricing policies as they are modified by considerations of gender. Our researches show, for instance, that France had a unisex approach to computing insurance, but it then appeared that it was mono-sex, in the sense that the greater risk of the two sexes was applied universally to both sexes.
When we received the witness from the Commission, it was the first time that we heard a wholly different view about how the insurance market might be informed when she used the word "solidarity", a word infrequently heard in your Lordships' House. In other words, perhaps touching on some of the elements from the speech of the noble Lord, Lord Lester of Herne Hill, the insurance market could be operated by solidarity, evening out the risk of those who have different risk potential.
My second example is the impact on the pensions and annuities markets, which currently discriminate on the grounds of sex in establishing premiums and benefits. We have little sense of either the broader picture of this market throughout Europe, nor of its smaller detailed parts. We badly need more profound research into and analysis of all these areas.
It is for the self-same reasons of rigour that we, unlike the Government, I believe, have suggested greater monitoring of these commercial markets to ensure that where residual sex discrimination remains it must be cogently justified, at least on a short-term basis. We prefer independent monitoring of both the markets and the directive, when it comes into play, at member state level—in Britain's case, the Equal Opportunities Commission—co-ordinated across the EU by the Commission. Ministers, however, were lukewarm, preferring a working group in Brussels made up of the industry and other interest groups. It remains to be seen which of the methods will more greatly favour the consumer, whose champions we on the committee seek to be.
We insist, too, perhaps more urgently than the Government, on greater transparency of the market and its players. Too many brochures and too much literature are produced by pension firms and insurance companies that are frequently unsatisfactory. I also have in mind transparency with regard to the calculation of insurance risk. Some of us want to do the sums ourselves, to check the arithmetic of firms which all too often shroud themselves in opaqueness of reasoning, paucity of evidence and obscurity of language, wrapped up in the body armour of commercial confidentiality.
I give one example from the motor insurance industry to illustrate some of these points. Sex is clearly used as a major—if not the major—criterion for assessing risk and calculating premiums, and the statistics show, as colleagues have mentioned, that young men, newly qualified as drivers, have more accidents and incidents than young women. The facts, therefore, support some continuation of this discrimination. But many other factors contribute to the risk assessment of drivers of which, surely, the soundest is the history of claims, or no claims, that each individual makes. I was of the opinion in the committee, although this was not included in our final report, that a three-year period should mark the phase-out of discrimination in premiums on the grounds of sex. Surely in three years an individual has built up a sufficient history upon which true risk assessment can be accurately calculated.
My abiding impression gained from listening to the industry is that a mantle of complacency has fallen upon it. Too few players in the market seem keen to review ancient criteria and ancient practices and to put into the market new products whose underlying risk is based on up-to-date market intelligence and an appreciation of changing lifestyles in modern Britain. I hope that I am wrong about this, but I fear not.
Three other matters of concern are thrown up indirectly by our report. First—and this follows from my remarks on car insurance premiums, and my being a father of two university students, aged 22 and 19—can nothing be done about the wickedly high premiums levied on new drivers? In many ways, we should be encouraging young people to drive and gain practical experience of that imperative skill at a time when their minds are blotting paper and are best framed to absorb these crucial skills.
Secondly, the very poor and inadequate pensions and annuities for women need further reflection. They still reflect a world in which the men in a partnership are the sole breadwinners.
My third and final comment concerns the insurance and pensions industries and the associated financial markets. They boast of their efficiency within the United Kingdom, but I fear that they are not taking advantage of the single European market of 15 member states—now swollen to 25—from which they would benefit in terms of profits and wages to their workers. Doing so would also benefit the consumers in that wider market of 480 million people and lead to increased competitiveness between the industries along the lines of the Lisbon strategy. There is a complacency which ought to be brushed away, and I hope that, in part, this report will encourage a greater examination of the opportunities for British industry in this respect.
My Lords, I, too, thank the noble Lord, Lord Williamson of Horton, for his expert chairing of the committee, our Clerk, Gordon Baker, our researcher, Oriel Petry, and Melanie Moore, who did much of their secretarial work. It was impossible to know what the chairman would leave out of his speech for the rest of us to deal with—in this case, not very much. I am grateful to him for his comprehensive coverage of the inquiry.
Listening to the speeches of the noble Baroness, Lady Royall, and the noble Lord, Lord Lester, I wish that we had heard from them at an earlier stage. Perhaps, on reflection, I would have come away even more muddled than I am now.
I spend much of my time involved with healthcare issues. The directive was about the,
"access to and supply of goods and services".
Services are defined in Article 50 of the treaty as those which are "normally provided for remuneration". The directive does not refer specifically to healthcare services, but they have been included in the broad scope of the document.
Certainly, I am not aware of any gender discrimination in the NHS, but of course there are situations where men and women are treated differently. Certain medical conditions are sometimes targeted for extra resources. But the Department of Health made it clear that it did not wish to open up the possibility of patients of one sex claiming that equal resources were not allocated to conditions specific to the other sex. It seems totally unacceptable that NHS services, which might include cervical screening, prostate cancer risk management and treatment related to gender-specific cancers and breast screening, might be challenged.
Gender discrimination issues might also be associated with patient-choice decisions. The department confirmed its commitment to making NHS services more responsive to patients' personal preferences, which could include choosing the gender of clinicians, but it might not always be feasible for those services to meet personal preferences.
The committee recommended that the health services provided by the public sector should be excluded from the directive, and that a commonsense approach be used over gender-specific treatment and the reasonable rights of patients to choose their medical practitioner. Much of the press commentary on the report centred on the insurance implications of men and women drivers. Most of the speeches today have dealt with that. I was glad to hear from the noble Lord, Lord Harrison, who became our expert on the matter during the committee.
Our report reflected the findings that the EU proposals might lead to anomalies and inconsistencies. It is possible that in time gender could be taken out of car-insurance calculations for premiums but that when companies set premiums for newly qualified drivers—with no track record—gender would be a relevant actuarial factor that should remain.
The cost of insurance cover for women would be likely to increase by 10 per cent to 30 per cent. There might be some reduction for younger men, but the industry said that it would expect to see an overall increase in cost because insurers would be taking the risk that they write more cover for higher-risk men. If the directive were implemented, would not the result be a significant premium increase for many women, who would be penalised by subsidising the premiums for more risky male drivers, by the very law designed to help them?
We considered the effect of the proposed law on advertisements for same-sex flatmates and the letting of accommodation. The rule would make it an offence for homeowners to stipulate whether they wanted men or women when letting rooms or accommodation. I have listened to the speech of the noble Baroness, Lady Royall; I would be delighted if I had misunderstood it. This is further unacceptable legislation that would mean less accommodation on the market and many women worried about their safety. The National Landlords Association said that the matter was fundamental to people, and that they should be allowed to choose with whom they share their living space. The association said:
"It raises issues of privacy and decency. It would be quite wrong to remove the right to stipulate whether people are seeking a male or female tenant or lodger in all circumstances".
We agreed that specific exemptions should be made to cover the right of those letting rooms in private accommodation, especially where facilities are shared, to stipulate the sex of tenants or lodgers. We also recommended that exemptions be made to enable refuges for victims of domestic violence to be reserved for persons of one sex.
I have no intention of going into the complex detail of annuities. For some reason that I still do not understand, I found myself often leading the questions to experts on annuities, to the extent that I have now changed my own pension arrangements. The UK annuity market is different from those of other member states, and the special circumstances of its unique compulsory nature must be considered.
The committee was concerned about the evidence of inadequate female pensions and did not see the directive as a solution. If men and women are offered the same monthly income for the same purchase price, men will be discriminated against, as on average they will receive less back over their lifetimes. If providers could not use gender as a calculation, they would have to price conservatively by assuming that the annuitant's mortality was closer to the female average. That would mean that females would be unlikely to receive higher rates while men would receive lower annual rates.
In conclusion I shall paraphrase the committee's recommendation 10.2, already referred to by the noble Lord, Lord Harrison. Although it is in the common interest of the EU to introduce legislation that attempts to extend the principles of anti-sex discrimination, we can support it only if it can be shown to be necessary and soundly based, proportionate and consistent with the principles of competence and subsidiarity. Would not that be more easily described as the application of good common sense to an unacceptable level of EU regulation?
My Lords, the chairman, my noble friend Lord Williamson, and the other authors of the report have examined the question of sexual equality in these areas in considerable detail. The depth and open-mindedness with which they have examined the proposals in this important draft directive is, I am sure, appreciated by noble Lords.
However, I am disappointed that neither the Select Committee nor the Government are yet convinced that the principle and practice of equal opportunities should now be extended to the areas that still remain, 30 years after our own Sex Discrimination Act 1975—I repeat, 30 years—outside our domestic equal opportunity laws. Of course, the directive sought to include many of those areas.
There are many questions that I would like to address and on which I have much enjoyed hearing other noble Lords' remarks. However, I shall try to confine my remarks to just two areas of discrimination that the directive sought to remedy. Going back to first principles, there were many areas, now covered by the Equal Pay Act 1970 and the Sex Discrimination Act 1975, where, originally, concerns were expressed with considerable strength at the costs involved. The view was prevalent, for example, that equal employment opportunities would mean huge costs for industry when young women left for childbearing.
Happily, however, the landmark Sex Discrimination Act 1975 had set out the basic principle that a person's gender should no longer be a criterion governing decisions in employment, education or the provision of "goods, facilities and services". I hardly need to remind noble Lords that it was not too long before that original concern subsided. Employers came to recognise the bottom-line benefits that they gained by including the talents, experience and expertise of the other 50 per cent of the population in the pool of potential employees.
But, yes, certain exceptions were included in the 1975 legislation. One such was in respect of retirement age. Interestingly, as we began our work at the Equal Opportunities Commission, the quantity of complaints—from both sexes—that we received about unequal retirement dates remains engraved on my memory. Men complained bitterly that they had to work five years longer than women; women complained that they were not allowed to work up to 75 years and thereby earn a higher retirement pension.
So where are we now? Retirement age for women is well on its way to a legally required equalisation with that of men—ironically, at a time when demographic trends indicate a predominately ageing population, which makes it increasingly unlikely that any fixed age for employee retirement will make sense. But, so long as there remains any retirement date, it will soon be the same for both sexes.
Yet, most perversely, as the noble Lord, Lord Harrison, pointed out, as more and more women rise to executive positions, as a result of which they will want to make extra provision for their retirement, this country still apparently thinks that they should be satisfied with lesser pensions and annuities than received by men with the same employment entitlements. That is based on the increasingly squalid argument that women live a little longer than men. I hope, however, that the noble Lord, Lord Lester, the architect of so much that is good on the equal opportunities front in this country, has laid that point to rest. As some witnesses pointed out, too, it would be at least as relevant to take a view on where an individual lived or on their lifestyle, as on the sex of a person receiving an annuity or pension.
The Select Committee was rightly critical of the lack of transparency about how insurance industry figures justifying this difference were arrived at. But we need to remember, too, that however good the intentions—and we may differ in our views about that—built-in sexually discriminating assumptions may still exist and distort how the figures are arrived at. I have in mind here the practice which the EOC unearthed early on: a general rule existed that no credit facilities were granted to those in part-time employment, however high the part-time worker's salary. This was seen, under the new law, as unlawful indirect discrimination, as the vast majority of part-time workers were, and still are, women.
My second illustration, and where I am glad to see the Select Committee was almost as sceptical as I am, and as others are, of the insurance industry's arguments, is in the field of motor insurance. If ever there was an area where the sex of an individual was irrelevant, I would have thought that it was this one. In this case, of course, the argument is that it is the woman driver who gains from the current situation. Women are said to be safer drivers, especially young women compared with young men, therefore it is argued the premium women are charged should be lower. But can it really still be justifiable to depart from the principle of equal treatment of the sexes here? Would it not be far more sensible, let alone more just, to spread the risk evenly from the start and put the premium up substantially for any individual, male or female, when and if there was evidence of dangerous driving?
I am sure that we shall return frequently to these issues. We have heard how far the negotiations have gone—but this is an issue which will not lie down. My hope certainly had been for some "jam today", and a real step forward, with the directive, on every issue of equal opportunities, not only in the UK but throughout Europe. I am afraid that I am not quite as brave as the noble Lord, Lord Lester of Herne Hill, but if we cannot move immediately to "jam today", "jam tomorrow" would be my preferred option.
The Select Committee has made plain its belief that research, not least on longevity, and genuine independent monitoring of relevant actuarial data used, to which noble Lords have referred, are essential. The EOC's latest briefing also points to the need,
"for an independent regulatory regime in place to provide reassurance"— to consumers. We must hope that the Government will change their mind and see the importance of this, not least if they are to keep faith with their own belief in genuine equal opportunities.
My Lords, it is always difficult to wind up a debate when a piece of work has been done largely in one's absence and one is following one of the greatest experts on the subject, who is present in your Lordships' House. However, I shall try to return to the subject of the report.
I joined the committee at the last evidence-taking session. We had before us Ms Pavan-Woolfe, who is quite as determined and fierce a fighter for equality as my noble friend Lord Lester, who has been my mentor for many years on these subjects and whose record is irreproachable. She stated quite categorically that life insurance should be offered on the same terms to men and women, but acknowledged that the result would be that the risk would be carried by the pool of insured people and that men would therefore have to pay more and women would be able to pay less for a similar product. That is the disbenefit to which the noble Baroness, Lady Greengross, referred. It was something that had a good deal of influence on the committee's thinking.
Ms Pavan-Woolfe made a further point—that, in effect, what should happen is that each person should be given life insurance on the basis of their lifestyle as well as all the other things relevant to the individual person. The noble Baroness, Lady Royall, made that point in her opening remarks. That would be the ideal. In an ideal world—and I believe that is a world in which Ms Pavan-Woolfe would find herself very comfortable—men and women would all be working, and working at the sort of job that enabled them to save for a pension. Then they could be treated completely equally and judged on the value of the work that they were doing, their lifestyle, their attitude to their life, their ordinary levels of sickness, and any other considerations that might be taken into account. But that is not the world in which we live.
One thing that the EOC has put before us very clearly in its various recently issued papers on that subject is that even now women do not live in that world. Even if they get management jobs—and of course many of them do—their work will be interrupted, mostly by pregnancy and other caring aspects of their life. In my own case, no sooner had my own children flown the nest than I began to be involved in the care of my mother. Most women of my generation, with the fairly wide gaps between the age of the mother and the eldest child, found themselves in that position.
These matters are not easy to determine in absolute terms. It is wrong that insurance companies should use sex as "the" determinant. The report would clearly not agree with that; it refers to sex as simply one determinant with regard to life insurance, annuities and car insurance and not necessarily as the defining determinant. Until men and women have equal employment lives, it is difficult to take sex out of consideration when providing insurance. I suppose that it could be done. However, my mentor, Ms Pavan-Woolfe, clearly indicated where the costs would fall.
The matter of insurance for drivers is a relatively simple one. We take a pretty robust attitude to that; we say that the sex bias should be got rid of as soon as possible. The only exception to that should be when insuring young drivers of whose expertise and safety one knows nothing. In those cases, one might say that the statistics show that in general women are safer drivers than men, so until there is a record of each person's driving it might be permissible to allow sex to determine the rate of insurance. Obviously, after a record becomes available, the only thing that ought to determine the rate of insurance is whether a driver has been safe, as well as the size of the motor, the expense involved in case of an accident, and so on.
The report is clear on that matter, although there is a dispute—which we have heard in your Lordships' House today—about the attitude that the committee should have taken to life insurance. But even in that regard, the committee says that as soon we know that people's life expectancy—which represents the basic input into life insurance—is the same, the sooner we shall be able to get rid of the problem. It is a great shame that the Government have not acceded to the committee's request to introduce a system to monitor these issues on a rolling basis to see where the inequalities of insurers' current policies lie.
As the noble Lord, Lord Harrison, so kindly said, I will be taking over this committee, if I may put it like that, as its chair. From my several attendances at meetings chaired by the noble Lord, Lord Williamson, I know what a hard act I have to follow. Because of his background, he is extraordinarily knowledgeable about the workings of the Community, and I will have to run very hard indeed to catch up. However, I am sure that other members of the Committee will be able to help me, and, as they have said, the support and assistance of our excellent staff will be available to me as it is to them. I look forward very much to the next report that we write.
My Lords, first, I apologise for not being present at the beginning of the debate. I was taken aback by the speed with which your Lordships so enthusiastically began.
I thank the noble Lord, Lord Williamson of Horton, for facilitating this debate today, and for chairing the committee that undertook such a detailed examination of this EU directive. I find it immensely encouraging, at a time when we are often warned of the reams of directives and regulations that come flooding over from Brussels to infiltrate our domestic legislation, to see an EU directive that has been so painstakingly and conscientiously examined. It was obvious from the content of the report that the committee has been rigorous in scrutinising the technicalities of this directive and the implications that it holds for the UK, both for consumers and for industry.
We on these Benches are firmly behind the promotion of sexual equality. As some noble Lords may be aware, I have spent considerable time during my career channelling my energies into encouraging and supporting equal opportunities and standards for women, not merely in the workplace but in all aspects of life. At home, I am known for my motto, which is taken from one of my favourite pieces of graffiti on a wall in New York, "women who seek equality with men lack ambition".
I was therefore extremely encouraged to read at the beginning of this report that the UK is one of the most progressive EU states in its legislation for, and attitude towards, removing sexual discrimination. This is a fact of which we should all be immensely proud. It is clear from the content of the report that the directive will therefore be of little practical benefit in terms of redressing sexual inequality in the UK. We are fortunate to have the Sex Discrimination Act 1975, which is much broader legislation than the rather narrow remit of this directive, and which has served as an admirable barrier to inequality for over 25 years.
I was struck by the comments in the report that there was little evidence of consistent sexual discrimination in terms of access to goods and services, and the evidence that they did have was for the most part "anecdotal". There is some question about the benefits gained by implementing a directive into our already comprehensive legislation if evidence is neither "substantiated" nor "quantified". We must look carefully at what wrongs we are trying to redress.
We are considering today a very circumscribed form of sexual discrimination; discrimination in access to goods and services. We should consider the directive in terms of necessity, practicality, proportionality and consistency. In this vein, I support the conclusions that the committee reached on education, health and housing. I have a wholehearted belief in providing and facilitating single-sex services in those areas. We must be aware of the law of unexpected consequences whereby, in hoping to promote equality, the end product is detrimental for those who currently benefit from such services.
I am thinking in particular of the wonderful work that single-sex refuges provide for victims of domestic violence, as mentioned by the noble Baroness, Lady Royall, and of some of the work carried out in our clubs and institutions. Until two years ago, I was a director of the Bolton Lads' and Girls' Club, which is one of the largest youth clubs in this country. We have a large Asian population in Bolton, and we realised that a number of young Asian women were not coming to our club. We carried out some research, and we discovered that they were not coming because their fathers did not want them to come, so on Sundays we now have girls-only clubs for young Asian women. It is terribly important that that work carries on. The effects on women in those circumstances, were they to be opened to men, would be disastrous.
It is important to understand that those who provide health and education services are professionals who should be trusted to know how best to provide their services in the interests of both men and women. I was shocked and appalled by the mention in the committee's report of complaints made or cases brought against hospitals for not splitting their funds 50:50 between male and female health services. There is no justification for forcing a hospital to spend the same amount on cervical cancer as prostate cancer. It is up to the professionals who run the hospital to make such a judgment, and I do not believe that there is any case for claiming sexual discrimination should funds not be equally distributed, which was rightly pointed out by my noble friend Lord Colwyn.
I now move onto the implications of the directive, in particular Article 4, on our financial services industry. There seems to be a great danger of damaging both consumers and the industry itself should the directive be implemented in its current form. I will disappoint the noble Baroness, Lady Howe of Idlicote, by repeating that it is well known and widely borne out by the multitude of statistics quoted in the report that women live longer than men. If we accept that fact, it is surely right that those who provide life insurance and annuities take sex into consideration when calculating premiums and annuity payments.
Again, if we return to the law of unintended consequences, it seems extremely important to emphasise that as most families rely on annuities from the male in the family, to remove sexual differentiation in terms of annuities payments would actually be detrimental to women and to all families as a whole, since male annuity rates would obviously fall in order to compensate for having equal rates for both. The noble Baroness, Lady Greengross, expressed that so well. We must again look to utility and practicality.
There is no point in preaching the principle of equality when it leaves all consumers worse off. In the case of annuities, the issue should be considered all the more carefully. After the victories on the Pensions Bill in your Lordships' House a few weeks ago, we know that the Government may well be looking again at the unique situation in Britain where the purchasing of annuities at 75 is compulsory. After my noble friend Lord Higgins won three victories here in your Lordships' House to remove compulsory annuitisation, it is apparent that many people have deep reservations about the annuities policy in this country and that the Opposition have forced the Government to have a major rethink on this issue.
I take the same common-sense approach on motor insurance as that adopted by the committee. The statistics are blatant in highlighting the fact that young men are more dangerous drivers than young women and should therefore have higher premiums. To deny that and remove the differentiation in terms of sex would lead to higher premiums for all as the industry struggled to adjust to the new system. It is interesting to wonder whether the motor insurance industry will be attacked next for discriminating on age in offering cheaper insurance for older drivers. One could take the principle of equality to such an extreme, but it would not be in the interests of the industry, consumers or road users.
The overwhelming impression one gets from the report is that the European Commission has undertaken little consultation. In terms of the fact that the insurance industries are unique and differ from state to state, it is vital that there is thorough consultation before the directive is implemented. Although we are looking to protect consumers and ensure that they are not discriminated against, we must not end up righting a negligible wrong at the expense of our native industries. It is clear that there has been little cost-benefit analysis for our insurance companies. The issue is proportionality and we must be sure that the ends justify the means.
I congratulate the chairman, all the members of the committee and the secretariat on the report. Having found out at a very late stage that I would have to speak today, I was grateful and I must say relieved to find that the report, which I picked up only last night, was extremely thorough, concise, easily digestible and pragmatic. I am pleased to say that we agree with many of the conclusions and recommendations which have been reached, and can only thank the noble Lord and his committee for all their assiduous hard work and good common sense.
My Lords, I too owe the noble Lord, Lord Williamson, an apology, as I too was caught out and not in my place. I hope that he will not take it ill that both the Government and Her Majesty's loyal Opposition were not here to welcome this sterling piece of work. In time, I hope that he will come to forgive me.
I am very grateful to have the opportunity of the debate to listen to the views that noble Lords have expressed on these important issues. I would especially like to pay tribute to the European Union Committee's detailed work on the directive. I wholeheartedly agree with everything said by the noble Baroness, Lady Morris, whom I welcome to her place. I think that it is the first time that she has appeared on the Front Bench, and if her speech was an example of to what we shall be treated, we will all welcome that very much. I agree with her about the good sense demonstrated in the report.
I thank the noble Lord, Lord Williamson, who opened the debate so eloquently, and all the members of his sub-committee, particularly the noble Baronesses, Lady Greengross and Lady Thomas of Walliswood, my noble friend Lord Harrison, and the noble Lord, Lord Colwyn, who all spoke today. I also thank my noble friend Lady Royall. Bearing in mind her sterling work in the European Commission, I think her support very valuable. However, I am sad to cause the noble Lord, Lord Lester, any disappointment. The intellectual purity of his argument is, as always, seductive; in this House, we have long valued his wise words, drawn from a wealth of knowledge and experience. However, as his noble friend Lady Thomas of Walliswood made plain, that purity must always be set alongside the practical effect that the directive has. As the EOC has demonstrated in its research, one has to look at the long-term benefits that we wish to see on the issue. I was particularly taken by the comment made by the noble Baroness, Lady Greengross, that when we look to see the change we want, we must look to see the advantage derived from it.
As noble Lords know, the inquiry conducted by the European Union Committee has been very much welcomed by the Government. We have been grateful for the contribution that it has made to the negotiations in Brussels, which have been conducted over a relatively short space of time for such a complex directive. As we said from the outset, the Government welcomed the draft directive and its aim to expand equal treatment to goods and services across the whole of the enlarged EU.
The noble Baronesses, Lady Morris and Lady Howe, mentioned that our national Sex Discrimination Act has worked well for nearly 30 years, and we firmly believe that the directive, when formally adopted, will be instrumental in developing sex discrimination legislation throughout Europe in a similar way to ours. I want to say to the noble Baroness, Lady Howe, that the directive provides us with jam today. Perhaps it is not quite so thickly spread as she would like, or of quite the flavour that she finds the most pleasing, but we should not ignore the fact that it is jam none the less.
As the noble Lord, Lord Williamson, said, the Government have already substantially presented our position in response to the report of the committee. As he was kind enough to indicate, the Government agree with most of its recommendations. That is especially welcome on issues such as: the exclusion of education, which must be outside scope both to maintain the principle of subsidiarity and to protect our single-sex schools; the importance of enabling the renting of a room in a person's own home; the continued provision of single-sex shelters for victims of sex-related violence to be permitted under the directive; and allowing positive action to benefit men or women as required by circumstances. That was ably outlined by the noble Lord, Lord Colwyn, when he talked about the challenges that we have to face in the health service, in terms of difficult decisions that must be made.
The committee rightly made much of the potential impact of the directive on life insurance, annuities and motor insurance. That area of the directive has been the main focus of debate during the negotiations and represents perhaps the most significant challenge in industry practice and implementation. It is therefore welcome that more than half of the committee's recommendations concern those issues.
The text which the committee examined is not the same text discussed at the Employment Council on
Some member states have relatively small insurance sectors and a heavy emphasis on social insurance provided through the state. The noble Lord, Lord Lester, referred to the difference of approach. Others, such as the United Kingdom, have a greater emphasis on private pension provision and a thriving insurance sector. The UK insurance industry is the largest in Europe and the third largest in the world. It is an important contributor to the economy, a major employer and a significant source of overseas earnings. Whether we are looking at health insurance, life insurance, pension annuities or motor insurance, the directive has potentially significant impacts on not only the insurance industry, but consumers and pensioners.
The text that has emerged gives an option to member states not to apply the principle of equal treatment in setting insurance premiums and benefits where the use of sex is a determining factor in the assessment of risk based on relevant and accurate actuarial and statistical data. It is not a time-limited opt-out, but a genuine recognition that a "one size fits all" solution is not always the right way forward, and that there are important differences between member states in existing practice.
My Lords, the Minister has been kind enough to refer to my purity, which is not something that my friends would normally describe as my best-known quality. My speech depended on my view of the law, not my purity. I have argued that this exception is unlawful. Does the Minister disagree with that view and, particularly, does she disagree with my comments about race and gender? If young black drivers had a worse accident record than young white drivers, she would agree, as would the Government, that that should be unlawful. What is the difference between race and gender when it relates to relying on accurate actuarial calculations which involve generalisations that discriminate against individuals? What is the difference? If she accepts that it is wrong for race, why is it not wrong for gender and why is that not unlawful under European law?
My Lords, the Government's view is that the directive, as currently structured, complies with discrimination law and, indeed, with the ECHR. That is a view which has been held for a significant time. I understand the point made by the noble Lord and would be happy to write to him in detail regarding why we came to that view. The nature of the noble Lord's question would involve us in a long debate and today is not, perhaps, the time for that. However, I take the noble Lord's point. We do not agree with him on that issue. The issue of race deals with a whole section of people; the issue of women and men is one where the discrimination laws have been cast slightly differently, as the noble Lord well knows. I also appreciate that the noble Lord said that there should be no such differentiation in our law and that sex discrimination and race discrimination should be put on precisely the same footing. That, too, is a debate for another day.
Returning to the issues that we have been debating today, my noble friend Lord Harrison made a powerful speech about the importance of avoiding complacency in the insurance industry and said that there must be rigour and control. I very much take on board my noble friend's comments. The Commission has also listened to the concerns of the industry, which were shared by your Lordships' committee, that the Commission should engage in full consultation with representatives of UK insurers and actuaries and corresponding national bodies in other EU member states to look further at the impact of the likely consequences of removing sex from the equation. A working party will be established which will include representatives of the governments of each member state, of the insurance and related financial services sector, European consumer bodies and bodies for the promotion of equal treatment. I can assure your Lordships that we will be vigorous in that working party. It will examine how to implement the insurance provisions and look at the quality and availability of the data relevant to the use of sex as a factor in pricing insurance premiums and benefits.
It would be wrong to deduce that the Government have simply bought into the insurance industry's arguments or missed an opportunity to extend anti-discrimination legislation to all forms of insurance annuity. I would reassure noble Lords, many of whom have raised this matter, that we have not ruled out during that process looking at the recommendation about monitoring the price-setting of gender. That is an issue which we will continue to take into account.
The committee expressed views about unisex premiums for experienced drivers. It is an excellent principle that good drivers who make few claims should be rewarded with lower insurance premiums. I know that my noble friend Lord Harrison has said much regarding that. A good driving record is reflected in premiums through no-claims discounts of up to 60 per cent, which apply irrespective of gender or age. In practice, premium rates for male and female drivers tend to be equalised at around the age of 30. Legislation to enforce a practice that has been adopted voluntarily by the market would seem unnecessary. It would impede competition among companies who specialise in different client groups.
In addition, the Government note the committee's recommendation for independent monitoring of the use made of sex-based factors by insurers and suppliers of related services. As I have tried to make clear, we will continue to look at that matter vigorously.
I had hoped to assist your Lordships regarding implementation, as the noble Lord, Lord Williamson, mentioned that. We believe, as my noble friend Lady Royall so ably said, that the onus will be on the insurance industry to ensure that its practices are defensible. Are they using up to date mortality tables? Do the accident statistics back up the differences in premiums? I can assure your Lordships that the UK insurance industry is in a much better state in terms of the relevance and availability of such data than many other member states.
These are early days in terms of implementation. There are three years before this directive comes into effect and we shall, of course, consult widely. The Government have argued strongly during these negotiations for the continued use of sex-based differences in insurance where they are fair to consumers. We will adopt the same approach during the implementation phase of the directive. I should tell the noble Baroness, Lady Thomas of Walliswood, that I am certain that in her chairmanship of the committee, she will apply the rigour that has been applied by the noble Lord, Lord Williamson, she will ensure that the Government are kept on their toes and that no stone will be left unturned. I would expect nothing less of her. I also welcome the vigour and energy that the noble Baroness, Lady Morris, brings to this issue—and her passion, because it is a passion that is shared by many noble Lords, not least by me.
Once again, I thank your Lordships' committee for its very useful inquiry. It has been extremely helpful to the Government in their negotiations on this important and complex directive. The agreement that has been reached is a sensible and, as the noble Baroness, Lady Morris, said, pragmatic compromise which we worked hard to achieve. The Government are looking forward to sharing their experience of the Sex Discrimination Act and our expertise on insurance issues with our colleagues in other member states. We are confident that what will come from this directive across Europe will be better than the present position.
My Lords, I thank all Members who have participated in this good debate. That includes those who have spent hours and hours reading the report. It includes the noble Baroness, Lady Morris of Bolton, who was thrown in at the deep end yesterday, but who, perhaps I may say, showed a remarkable capacity to swim. I also thank the noble Baroness, Lady Scotland, for the Government's reply. I particularly thank those who disagreed with the committee's report. I would have been disappointed if, in a big debate on such an important issue, everyone had agreed with it. It is good that the House is clearly alive and well. So, thank you to everyone, and to our Clerk and our researcher for the report itself.