Nigel Waterson (Shadow Minister, Work & Pensions; Eastbourne, Conservative)

I shall not detain the Committee long, Mr. Gale. Somebody once said of President Calvin Coolidge that he looked at someone as if they had been a side dish that he had not ordered. That thought went through my mind as I saw your face, Mr. Gale, so I shall try to keep my contribution short.

Clause 17 and schedule 5 are designed to remove the requirement that the Secretary of State should approve actuarial guidance in certain cases. The current arrangement, set out neatly on page 82 of the regulatory impact assessment, is that when calculating pensions liabilities all actuaries are supposed to use agreed guidelines, to ensure consistency. For reasons beyond my comprehension, those are called either “guidance notes” or a “technical memorandum”.

Various bits of primary legislation require the Secretary of State to approve three of those guidance notes—although there are seven altogether; I do not know who approves the other four—and the one technical memorandum. I understand that the Institute of Actuaries in England and Wales and the Faculty of Actuaries in Scotland, which combine the roles of regulator and professional body, have always prepared those documents. Owing to their dual role and what might have been described or perceived as a conflict of interest, they were required to obtain the Secretary of State’s approval. That was said to be to maintain the public’s confidence, although I cannot imagine for the life of me that many members of the public are even aware that the things exist, let alone who prepares them.

In its 2005 report, the Morris review concluded that the Financial Reporting Council should establish a new regime to set actuarial standards and oversee the regulation of the profession. The Government have accepted the recommendation, and in turn the FRC has set up the Board for Actuarial Standards—oh to be a fly on the wall at its meetings! That is no doubt a relief to the Faculty of Actuaries and the Institute of Actuaries, which continue to have an important role as the professional bodies for their profession.

I understand that on 6 April this year the board will take over responsibility for the guidance notes and technical memorandums. At that stage, the FRC and the BAS become the UK’s independent regulator for corporate reporting and governance, and there is no longer a need for the Secretary of State to have a role. I am sure that that will come as a great relief to him, as he already has quite enough on his plate—the pensions crisis, the failure to tackle reform, the failing Child Support Agency. I could go on.

In a nutshell, the proposal seems to be uncontroversial and therefore we support it. Indeed, I am emboldened in that view by a Library note which tells me that the equivalent provisions in the Companies (Audit, Investigations and Community Enterprise) Act 2004 did not even merit discussion during its Committee stage.

James Plaskitt (Parliamentary Under-Secretary, Department for Work and Pensions; Warwick & Leamington, Labour)

I shall now demonstrate that I share in the hon. Gentleman’s enthusiasm for the clause. I begin by cautioning him about praying in aid the late President Calvin Coolidge. He should remember that when that President died—in 1923, I believe—his death was reported to a dinner party, and the response was, “How could they tell?”

Nigel Waterson (Shadow Minister, Work & Pensions; Eastbourne, Conservative)

Dorothy Parker said that.

James Plaskitt (Parliamentary Under-Secretary, Department for Work and Pensions; Warwick & Leamington, Labour)

Indeed, yes.

As the hon. Gentleman said, clause 17 and schedule 5 remove the Secretary of State’s role in approving actuarial guidance. This arises from one of the recommendations of the Morris review of the actuarial profession. Clause 17 introduces schedule 5, which amends nine references in legislation. It removes the requirement for the Secretary of State to approve prescribed actuarial guidance notes and, in other cases, it removes the power to make regulations to prescribe that the Secretary of State approve such guidance. The references can be found in the Bankruptcy (Scotland) Act 1985, the Insolvency Act 1986, the Pension Schemes Act 1993, the Pensions Act 1995 and the Pensions Act 2004.

Actuarial guidance is currently produced by the Institute of Actuaries in England and the Faculty of Actuaries in Scotland. It ensures that all actuaries calculate pension liabilities on a consistent basis. The Faculty and Institute of Actuaries is also the professional body for actuaries. In order to ensure that there is no conflict of interest between those roles, legislation requires certain actuarial guidance to be approved by the Secretary of State. However, following the Morris review, the actuarial profession is now subject to independent oversight by the Financial Reporting Council, which is the independent regulator for corporate reporting and governance.

The FRC will establish the Board for Actuarial Standards to set technical standards for actuaries and to oversee the prescribed actuarial guidance. The Faculty and Institute of Actuaries remains the professional body for actuaries. It is therefore no longer necessary or appropriate for the Secretary of State to approve actuarial guidance. I commend clause 17 and schedule 5 to the Committee.