Pensions Bill

Part of the debate – in the House of Lords at 3:07 pm on 27 October 2008.

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Photo of Baroness Noakes Baroness Noakes Shadow Minister, Treasury 3:07, 27 October 2008

My Lords, the new clause would introduce a requirement for the Government to make a report to Parliament on the costs and implementation of personal accounts. In Committee, we pressed the Government hard on various detailed aspects of the personal accounts scheme which the Government, with the assistance of PADA, are seeking to deliver. We did not get very far on any of the crucial issues about the costs of personal accounts or the likelihood of their being delivered by 2012. The Minister variously stood behind commercial confidentiality and the existence of some high-level information on implementation from the chief executive of PADA, which had been placed in the Library of another place.

We have lent our support to the concept of personal accounts, but that support is not unconditional. No one can be expected to sign up to personal accounts at any cost or in any form that PADA considers itself capable of delivering. Given the huge problem of lack of saving for retirement, no one can be expected to sign up to the possibility of a delivery date beyond 2012, especially as the Pensions Commission report recommended an earlier delivery date. More importantly, no one should be expected to sign up to a project whose detailed implementation is shrouded in mystery. No one should give the Government a blank cheque on this, and we certainly have not done so.

We fear that personal accounts will be delivered late. The latest weasel words are that they will be launched in 2012, but there has been no description of the functional capability of the scheme at that date. There has certainly been no confirmation of a start date of 1 April 2012, and anybody who has ever run a payroll department will tell you that implementing payroll changes on dates other than 1 April is a potential nightmare.

Importantly, we do not know the total cost of delivering personal accounts and how those costs will compare with the 0.3 per cent annual charge that the Pension Commission put forward in its final report. The Government subsequently said that they thought that the initial cost might be 0.5 per cent to take account of various factors, but all of the noise in the system suggests an even higher cost, and the Government have been developing a case for public subsidy for their invention of a public service obligation.

In Committee, we tabled an amendment to wind up PADA, not in 2012 but by the end of 2013, because we recognise that PADA would overlap with the start of personal accounts. We reckon that that should disappear fairly shortly after personal accounts have been set up. The Government did not accept 2013 and would not even accept my offer of an extra two years to 2015. We fear another runaway computer project. The public sector is littered with IT projects that failed to deliver either functionality or within cost budgets, or both. I will name just a few to remind the Committee—the Child Support Agency, tax credits, NHS IT. We all have our own personal examples.

We have no idea about the nature of the solution that is being adopted for personal accounts and we do not know how the risks to implementation are being identified or how they will be managed. Mr Frank Field, who has devoted considerable time in this area and who has become a personal account sceptic, warned recently in Pensions Week:

"There is ... the likelihood that the Personal Accounts Delivery Authority will implode. The new body will depend on a specially commissioned IT scheme. When did the government last commission a successful IT operation?".

In short, we know almost nothing about personal accounts, but are fearful about what we do not know. Parliament is expected to take delivery of personal accounts on time and at a reasonable cost as a matter of faith because the Government say so.

Against that background, we crafted Amendment No. 68 to ensure that Parliament is kept informed of the progress of personal accounts. It requires a report six months after the passing of this Bill and annually after that until the Secretary of State says that the scheme is fully operational. Subsection (2) sets out that the report should contain estimates of the amount spent and to be spent over the following 10 years. It must also state the date on which the scheme will be fully operational. Those are the basic building blocks; cost and timetable. The subsection also asks for the amounts that will not be recovered from members and which could well be subsidised, and for the charges to be made to members so that we can calibrate them against the Pensions Commission's 0.3 per cent.

Most of the rest of the amendment is taken up with definitions of the terms that we have used, but I draw the Committee's attention to subsection (8), which is an exemption in order not to prejudice obtaining value for money. I am not convinced that it is appropriate, since it allows the Government an easy excuse for non-transparency, but when the Government conceded a similar clause in the Identity Cards Act 2006, that exclusion was built in. I would be happy to trust the NAO to act as policeman to ensure that the exemption is not abused. As I mentioned, there is a precedent for this clause in Section 37 of the Identity Cards Act. There we faced similar frustrations in not getting any detailed information during the passage of the Bill and we now get six-monthly reports on that scheme. My amendment modestly asks for only annual reports.

I would have preferred the Government to have adopted an open and transparent approach throughout the development of personal accounts. All that has been on offer has been some personal briefings from PADA and DWP personnel, and those are not a substitute for transparency in general—not only for parliamentarians but for those outside who have a legitimate interest in the progress of the scheme. I beg to move.