Clause 52
Pensions Bill
1:45 pm
Danny Alexander (Shadow Secretary of State for Work and Pensions, Work & Pensions; Inverness, Nairn, Badenoch and Strathspey, Liberal Democrat)
Amendment No. 154 is lengthy and the purpose behind it might take a little time to explain.
The Bill naturally and rightly contains provisions in clause 52 for the consultation of scheme members and employers, and the establishment of a members’ panel and an employers’ panel. I am grateful for advice and suggestions from Age Concern about the amendment, which tries to set out in more detail what the role of the members’ panel should be, how it should work and, particularly, the fact that it should be properly resourced.
The members’ panel will have a big role in ensuring that the scheme acts in the best interests of members. It is thus essential that the members’ panel is given both appropriate powers and sufficient resources to carry out its responsibilities and meet its obligations effectively. Giving the panel the power to make formal representations and the right to a formal reply would mean that it could quite simply not be ignored. The Minister might say that the panel would not be ignored in practice, but the amendment would ensure that it could not be ignored.
Any good approach to consultation, in which many hon. Members will have been involved in their constituencies or elsewhere, will encourage the sponsoring body to seek the panel’s views at an early stage. Certainly, the principles of good community consultation would suggest not getting to the end of one’s deliberations and reaching conclusions, and only then asking people what they think. A proper consultation engages with those who have a right to be consulted along the way, thus leading to better policy making. That reduces, but cannot totally eliminate, the likelihood of serious disagreements emerging late in the process. Such an approach would also demonstrate to members and potential members that the panel was independent of trustees.
The amendment would empower the panel to carry out research, and that would ensure that there was a good evidence base for its advice. Employers and the financial services industry, which quite properly takes a great interest in the development of personal accounts, as members of the Committee will be all too aware, are likely to have access to considerably greater expertise and financial resources than members and potential members. A statutory right to carry out research would ensure that funding was available to redress the balance and to plug the knowledge gap from a perspective that had scheme members’ interests at heart. Without such a statutory right, any research funding would be available only at the discretion of trustees. The right would also ensure that the panel was able to research the views of members and potential members so that it could represent their views fairly, although I am sure that the Minister would envisage that anyway. PADA is already doing some research among potential members and is seeking public opinion to try to understand how people view the scheme.
Meaningful participation in processes that are designed to make policy often requires detailed work to analyse the possible impact of future developments. I am told that the experience of existing panels is that the work requires individuals with both a strong personal commitment and the time to devote to understanding issues that are often highly technical. That is why it should be possible, when necessary, for trustees to pay panel members more than just expenses. If a substantial time commitment or effort is required for a particular piece of work, it needs to be made clear that panel members can be paid so that they are enabled to participate fully. Without that, there will be a risk that the panel will either attract only those who can afford to take time off, or that its advice will be rushed or ill-thought, neither of which would be the Minister’s intention when seeking to establish a members’ panel.
In addition, there is an argument that membership of the panel should not necessarily be restricted to people who are current members of the scheme because it should also be able to take account of the needs of future members, who are specifically referred to in the principles of PADA, which will be debated under clause 62. Such a measure would be unduly restrictive, such as if a panel member had retired and was no longer a member of the personal accounts scheme. The panel will also benefit from the involvement of people with particular knowledge and skills who might not be attracted from within the membership base. Research by the National Consumer Council found that people sometimes simply wanted to be confident that their interests are being fully represented by others.
The amendment would also provide for the right to reappoint members. That right, within the context of an overall maximum term of appointment, would avoid any suggestion that an individual could be leaned on. Such a practice is followed in other bodies.
The amendment is detailed because it relates to an important aspect of how the system works. It seeks to reflect the Government’s intention properly. I hope that it will give the Minister the opportunity to put on record that he has detailed intentions in many of the areas to which the amendment refers. Those areas include how the system will work, how panel members could be appointed, how their work could be resourced, and how the contribution of panel members could be properly paid for so that we were able to attract the broadest range of people as members.
Other issues are the fact that the panel’s terms of reference and the way in which it is constructed should not deter people who might not have the resources or personal means to take lengthy periods of time off work, and that outside experts who might not necessarily be members of the scheme could also be involved in the panel when appropriate so that it could act as broadly and independently as possible in the interests of members and with full consultation with the trustees from the beginning.
An area to which we will no doubt return is the fact that while the Bill sets out clear principles for PADA, it does not set down principles for the Personal Accounts Board to follow, when it inherits the scheme and takes it over. The members’ panel will have a critical role in ensuring that members’ interests continue to be at the heart of what we expect to be a scheme that will last for a long time.