I am obliged to noble Lords for their contributions, not only to this grouping but to the debate as a whole that has taken place this afternoon and evening. In speaking to Amendment 54, I shall speak also to Amendments 57, 61, 62, 67, 68, 70 and 71. I do so because, although they were not formally moved in this grouping, the noble Lord, Lord Marks, made it clear that he was addressing the amendments in this group when he spoke earlier. I appreciate his determination not to repeat himself.
As I explained in Committee, the choice between three and five years is not one of principle. The three-year period adopted in the Bill represents a compromise approach based on the responses received to the March 2017 consultation, which included a wide range of views, ranging from automatic reviews at short intervals up to a 10-year fixed maximum. We have listened carefully to the arguments this evening and in Committee from noble Lords about the potential for the gaming of the system, depending on whether there is a three-year or five-year maximum between periods.
I note the observations of the noble Lord, Lord Beecham, who brought himself to agree with the Government on this matter. Tempted as I am to move away from the Government’s position in light of that, I maintain that, overall, it would be appropriate for us to look to three years. But there is no clear-cut case, and I am perfectly content to speak again to noble Lords before Third Reading if they wish to make further representations to the Government with regard to the period. So I do not close the door on that, but our position is that three years would be appropriate, and we would have to be persuaded by something that might be termed “new evidence” before we would consider moving away from that position. However, as I say, the door is open.
Amendment 67 largely replicates the provisions already in the Bill for the conduct of a review, but applies them only to the second and subsequent reviews,
in light of Amendments 65 and 66. But Amendment 67 in isolation makes a relatively small number of changes to the procedure for the conduct of the second and subsequent reviews. First, it adopts the language of advice rather than response to describe the panel’s reply to the Lord Chancellor. Secondly, it makes clear that it is not just the question of whether the rate is to be changed, but also what the new rate is to be, that is subject to the provisions for determining the review in paragraph 3 of the new Schedule A1—and that, in reaching these decisions, the Lord Chancellor should have regard to the advice from the panel. Finally, that amendment would introduce a requirement that the Lord Chancellor will consult the panel within 10 days of the start of the 180-day period for the completion of the review. This is new, but noble Lords’ proposals for the first review contain a similar provision, albeit with a 25-day period, and we are conscious of that.
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I think that everyone appreciates the desire to ensure that reviews are conducted promptly, and the Lord Chancellor would have every interest in starting the work of the panel as soon as is practicable, as delay would only reduce the time available for the Lord Chancellor to consider the panel’s advice when it comes and to decide the outcome of the review. If there is a reason for a delay, it is likely to be a good one, and imposing a short time deadline is likely to be unhelpful to the overall good conduct of the review: that is our concern. I agree, of course, that the Lord Chancellor must have regard to the advice of the panel and that the Lord Chancellor’s decision on what the rate should be is subject to the provisions in paragraph 3. These are clearly the intention of the legislation, and we do not consider that further clarification is needed. These time periods are maxima, and nobody is suggesting, I hope, that the Lord Chancellor will hold out to the end of each of these periods. I hope that, in the light of that, noble Lords will not press their amendments.
Amendments 68 and 71 from the noble Earl, Lord Kinnoull, repeat amendments tabled by the noble Earl that were considered in Committee. In effect, they would reduce the maximum time period for the completion of a review of the rate initiated by the Lord Chancellor from 180 days to 120 days. Amendment 70 repeats an amendment discussed in Committee which would reduce the maximum time available to the expert panel to deliver its response to the Lord Chancellor’s consultation from 90 days to 75 days. That would apply to all reviews. Again, I believe that we are all agreed that reviews of the rate must be carried out properly, with due consideration to the relevant factors and without avoidable delay. The question is how long we should allow the people involved in the review to carry out their statutory responsibilities, whatever the circumstances at the time of the particular review. We, who do not have to fulfil these obligations in person, should take some care as to the additional burdens that we impose on those who do.
The 180-day period was proposed in light of experience under the present law. Setting the discount rate is not an easy task and will probably be even less so under the evidence-based approach now proposed than under
the current approach, which is based largely on the yields of index-linked gilts. We therefore consider that those time periods have to be approached with care. The Government’s intention is that there should be a review of the rate that should be completed in a reasonable time. We consider that the proposed periods are maximum periods, which set a longstop. It would be reasonable and sensible to err, if at all, on the side of caution. Therefore, while I share the noble Earl’s determination that the reviews should be completed as quickly as is reasonably practicable, I hope that, in light of these reasons, he will consider not pressing his amendments.
I add that I am open to further discussion on the question of time limits; I have already engaged in some discussion on this with some of your Lordships and would be prepared to do so again before Third Reading if there is an element of fine-tuning to be carried out. However, I simply emphasise that these are maxima—which, clearly, should be borne in mind when we approach this matter. In light of that, I invite the noble Lord to withdraw his amendment.