WEDNESDAY 14 FEBRUARY 2001

MRS MARGARET HODGE AND MR MICHAEL RICHARDSON

  20. That brings up a question and then I will hand on to Richard, if I may, about the future of the code of practice. You gave a relatively upbeat assessment of its success so far but you also admitted in your own evidence just a moment or two ago that obviously, everything in the garden was not lovely, otherwise, you would not have been progressing this in the way that you are doing. In the intervening period, between now and the legislation, what plans do the Government have to increase awareness of the code of practice among employers?
  (Ms Hodge) Until legislation comes into force, and we successfully negotiated this six-year transposition period, the code will actually remain our primary instrument of change, so we intend to use it with vigour. You ask what we will do. We will build on what we have done. We have done much more research to highlight the issue. We will continue with our awards. We will continue with a culture change strategy. We will continue to try and work with people like the recruitment agencies or the larger firms to try and encourage action down the supply chain. We will continue to look at other ways to reach particularly small and medium-sized enterprises. We will also continue to promote our New Deal for 50-plus and the New Deal for Disabled People and further publicity campaigns.

  21. Minister, turning to the issue of the EU Directive on Equal Treatment and the Government's plans for legislation, which came first? The EU Directive or the Government's desire to legislate? In other words, did you jump or were you pushed?
  (Ms Hodge) I think the answer is they came together. We committed ourselves in our manifesto to tackling age discrimination. We tried first working through the code and, although we think it has been effective, I have said before I think speed is of the essence in this, given the demographic changes and the extent of disadvantage, so there was a happy togetherness.

  22. So the Government is wholly supportive of legislation within the terms of the EU Directive on Equal Treatment?
  (Ms Hodge) What we want to do with the legislation is ensure that we develop best practice and make best practice the norm. What we also want to do is to ensure that we can actually work together. The reason I have set up this working group with a very wide range of people working with me is so we can find the best balance that works in practice to tackle age disadvantage but to retain business competitiveness. So we want to bring people with us but we want to work through what will be some very difficult issues together with the business community and those with a particular interest in this issue. We want to ensure we get something which is workable, practicable and balances business efficiency with tackling age discrimination.

  23. Can I ask why it is going to take so long? You have already referred, I think, twice to the fact the Government was successful in negotiating this long period until 2006, if we look at those who suffer from disability discrimination, they have an Act on the statute book, those who suffer from race discrimination have legislation on the statute book and will have to have it up-dated, those suffering from discrimination on grounds of sexual orientation will have to have legislation on the statute book under the same Directive by 2004, surely there is a case for older people in this country saying, "The Minister says on the one hand that speed is of the essence because of demographic change, yet the Government is actively putting us way down the queue behind everybody else"?
  (Ms Hodge) It may be your presence in Parliament is short, we are hoping our presence will be long, so for us those additional six years is a sensible transposition period. Why? Because there are a lot of complex issues. We have talked, even around this table this afternoon, about some of the issues Jon Trickett raised as to why an employer might feel it is to his advantage or her advantage to use age as a factor in taking certain business decisions, so we have to think about those issues and see how we can bring that together. We have talked a little bit about age discrimination in young people which of course will be covered in the legislation, and there are some difficult issues there we have to think about. Some of the issues are easier and others are pretty complex. We want to get them right. We want to bring people with us. We want legislation really to reflect practice rather than be distant from practice, and I think for all those reasons it is a good idea to do it over a long period. The other thing I would say is that I am having the first meeting of this working group in a couple of weeks' time, so we are starting straight away. I worked in a similar way around disability, in that I chaired a Disability Rights Task Force—in fact I came to talk to this Committee about it—for about 18 months, and my predecessor chaired it before me, and we in the same way worked through a lot of disability discrimination issues in this collaborative way, then produced a report. The response from the Government to that report is about to come out, and then legislation could follow from that. That has been, I think, a very good model of how to build consensus around some changes which some people may be worried about.

  24. Minister, to be clear on the timescale, in the memorandum you said, "Employer groups were concerned about confusion and a rush to litigation ...", which I think is understandable, "... and age representative groups expressed concerns about ineffective legislation". That is not quite the same thing as saying they want to take five years to get something through. Are any of the age representative groups saying they are happy? Have they actually said to you they are happy to wait five years or have they suggested they would prefer to see it sooner if at all possible?
  (Ms Hodge) You will have to ask them that question. I have to say I have had a warm welcome from all sides to the way in which we intend to move forward. Indeed the fact I have been very swiftly able to put together this very broad range of people demonstrates I think a commitment to working with us to get it right. Everybody has welcomed it, that is all I can say to you. You will have to ask them direct.

  25. Moving on to the issue of implementation when the legislation is on the statute book, at this stage do you envisage having separate commissions, so there will be a new Age Commission to run alongside the commissions already in existence, like the Equal Opportunities Commission, the Race Equality Commission, or do you think this debate and the Equal Treatment Directive may move us towards a position of having a single-Anti-Discrimination Commission rather as they have in Northern Ireland at present?
  (Ms Hodge) Nothing in the European legislation and therefore necessarily in our legislation demands a commission. One of the issues I will want to consider with the group I have convened, once we have decided the framework for the legislation, is how it should be implemented and what the structure should be. That is the first thing to say. The second is, there has been a lot of thought given to our structure on anti-discrimination and we do have three commissions at present. This is a very personal view, but when I first got this job I was told by everybody, "Look at the American model, look at the Australian model", so I did look at them and I am not sure that the single commission is the most effective way of tackling the disadvantage that various people meet in society, for two reasons. One is that the focus is always on litigation and very rarely on culture change and education and promotional work. Secondly, the focus tends to be on the issue of the day, so the less powerful disadvantaged groups tend to get lost in it. People are tending to look at the Northern Ireland model now because it is the latest around, but it has hardly been working for very long, so I shall watch how it operates with interest. Again with my hat on as Minister for Disabled People, those who are involved in the disability world have only just achieved their own commission and have been struggling for it for generations and at this point they want to use that to promote civil rights for disabled people, and I think they would be pretty fed up if they felt they were being submerged into one commission. So it is an issue which is around and I think it is an issue which will be debated over the coming years but my view at present is it is not one on which we should move.

  26. We have talked about other discrimination which exists, such as sex discrimination legislation, and the other legislation which exists, and you have said already it has not got rid of the problem in 25 years. Do you see other mechanisms working alongside age discrimination legislation as well, or do you have any view as to how you can make it more effective than that which is already in place, which has had some effect but not been entirely successful?
  (Ms Hodge) Yes, I will repeat the ones which I think are the key ones: our labour market interventions; the New Deal for 50-plus; the New Deal for Disabled People; attempts to encourage progressive retirement; looking at how to encourage employers to change their training programmes and ourselves through the Learning Skills Council; ensuring there is access to training and qualifications for older people; attitudinal change and promotional change. Those are the sort of things. You cannot do it on its own. Legislation alone will not change the current structure, I am absolutely convinced of that.

  27. I think, Margaret, I really ought to shield Richard, although he has not complained, from your uncharacteristically cruel riposte about the length of time he might expect to be here.
  (Ms Hodge) You know what I am like, Chairman!

  28. If a week is a long time in politics, six years must run into the Keynes' definition of, "In the long run we are all dead". I am sure you did not intend to be so cruel to Richard.
  (Ms Hodge) I was being slightly facetious, but what is true is that six years may seem a long time to us but I do not think in terms of what we are trying to achieve it is that long, and I think it is appropriate to get it right, I really do. The worst thing you can do with legislation is get people just complying with the letter and not the spirit. If we want people to apply the spirit then it is very important they should feel some ownership of that legislation when it is enacted.

  Mr Allan: Water and ducks' backs, Chairman!

  29. In reply to an earlier question you said you were absolutely certain that legislation on its own will not change the age structure of the labour market, and I accept that entirely, it is a matter of changing the culture and all manner of other things. One of the main things which has to be addressed, I think, is an individual's financial calculations about his or her financial security when he or she finally retires. No doubt from the point of view of the employer, similar calculations are made in terms of the occupational pension scheme, and there again the state will be making fiscal calculations and if a percentage of the elderly continue to work beyond the age of 65, what are the fiscal implications of that as well. You introduced the idea of progressive retirement or flexible and phased retirement, and I am just wondering if you can guide us on any work which has been done so far in advice which might be given to the individuals considering this idea of flexible and phased retirement over a period of time. How will it affect their state pension and, secondly, their occupational pension? What are the fiscal implications of people working beyond 65? Thee must be a fiscal calculation in terms of tax generated and pensions not paid possibly. Finally, what implications are there on occupational pension schemes, most of which are time-limited? Are we talking about people being able to continue for longer to contribute to an occupational pension scheme, bearing in mind there is a ceiling on the amount one can accrue? What will happen in that circumstance? So a series of questions there but in how much detail have we done the work to ensure this is a realistic prospect, which I think is an exciting prospect, people being able to be flexible about their work and so on?
  (Ms Hodge) These are some of the issues we are going to have to consider in the working group. Secondly, both state social security benefits and occupational pensions are exempt from the age discrimination legislation. That was another triumph for the UK in our negotiations around article 13. The third thing to say is that what we are trying to do is bring in flexibility and choice for individuals, that must be our aim, and what we have done so far is that the DSS impediments for progressive retirement were included in the Child Support, Pensions and Society Security Act, 2000, and we have the Inland Revenue and the DSS currently discussing practical issues together with the pensions industry, the National Association of Pension Funds. I hope that work will come to fruition in the not-too-distant future. When you talk about complexity, these are just some of the issues we will have to think through very clearly to make this legislation practicable.

  30. Do you envisage that when a person reaches 65 they may continue in work and receive a state pension simultaneously? If so, will they continue to pay into the national insurance fund, because they will be employees even though the national insurance fund is intended for pensions contributions which they are already receiving? It seems to me this is a complicated issue. I sat on the Bill you have just referred to and I must admit it went totally over my head and I do not remember addressing those kind of issues. Have we thought that through or are we looking at that as well at the moment?
  (Ms Hodge) I am not sure what the answer to that is. Just to make one thing clear, your entitlement to state pension will not change, so you will continue to be eligible for state pension as at present. On the other issues I think we will have to write to you. You are just demonstrating the beginnings of that conversation in the working group.
  (Mr Richardson) It must be the case that things do not change, because plenty of people work beyond 65 now and their income is taken into account for tax purposes along with the state pension. Subject to confirming that, I think nothing will change.

  31. Before we let you go, can we touch on this issue of compulsory retirement ages which will be illegal once the Directive has been implemented. What impact do you think this will have upon an employee's ability to make contributions to occupational pension schemes over a reasonable time period?
  (Ms Hodge) Can I clear up something, Chairman? There is nothing for us to abolish, to be absolutely honest, because there is no such a thing as a national retirement age. There is a state pension age and that will not change. What we will need to do is to look at the issue of discrimination and our purpose will be to try and ensure choice and flexibility for the individual, so any discrimination that arises out of a whole range of current practices will need to be examined. One of those will be a contractual retirement age which an individual employer may have, but there are all sorts of other things involved. But the idea there is a national retirement age is just wrong. It is one of those areas where it might have been better to have given the evidence.

  32. Is your view then, Minister, that it is likely that the legislation may make illegal something such as happens currently within the NHS where, once somebody reaches the age of 65, they cannot be employed, which is a term and condition within that particular area of service? Alternatively, where a private sector employer says, "At age 65 I will get rid of you". Those are the sort of things which you are saying may be made illegal?
  (Ms Hodge) What we will have to look at, and again this is why we are taking our time over it, is where there is an occupational requirement for there to be a specific age. Let me give you an example, a television show which is geared towards youth, it may be appropriate to have as the compere of that show somebody who is young, so where there is an occupational requirement to have a specific age, that might be an issue. The other thing is that there has to be an objective justification, and we will have to work through those situations where an objective justification would make an age limit for retirement an issue. There are all sorts of other issues like specifying age in adverts, which will be one we will have to think about; redundancy schemes would be another one. There are a huge range of very, very complicated issues.

  33. The standard contractual terms and conditions which say, "You will retire at 65", which is very common now, aside from all this objectivity, will be the sort of thing we can expect to be made illegal?
  (Ms Hodge) My quote here is, "Compulsory retirement based on age would only be possible where it is objectively justified by a legitimate aim."

  34. In thanking you, Margaret for addressing our questions so well, can I ask if I am right in believing that it is the Government's intention to promote flexibility in retirement, that is where it is both in the interests of companies and individuals to retire before the age of 65, whatever its proper designation is, and also to go on beyond that, and you are presently addressing all the tax and benefits issues which impinge upon achieving flexibility?
  (Ms Hodge) Thank you for the opportunity to reconfirm that, Chairman. Flexibility and choice are what I hope will inform the deliberations as we consider how to take the legislation forward. Something which perhaps I should have said earlier, it could be—and you and I might like this—work combined with leisure, volunteering, further education—I have this desire to learn the harp and do a good science A-level which I missed out—or indeed caring. So there are all sorts of flexibilities we want to bring in. Equally, on the other side, it is an outrage that we are not making the best use of the widest pool of talent by ensuring that people have the opportunity to participate in the labour market whatever their age.

  Chairman: Thank you very much indeed on behalf of all of us here.