Pensions Bill

– in the House of Lords at 2:30 pm on 8th November 2004.

Alert me about debates like this

Votes in this debate

Further consideration of amendments on Report resumed on Clause 284.

Photo of Lord Higgins Lord Higgins Shadow Minister, Economic Affairs

moved Amendment No. 265:

Page 235, line 25, at end insert—

"( ) The level of benefits to be provided to qualifying members shall be specified in regulations by 1st March 2005."

Photo of Lord Higgins Lord Higgins Shadow Minister, Economic Affairs

My Lords, the amendment is concerned with putting a deadline on when the level of benefits to be provided under the financial assistance scheme is to be specified. We suggest that 1 March 2005 is appropriate. I think that the House recognises that the people who will be helped by the financial assistance scheme have been living in a state of great uncertainty with regard to their prospects for the remainder of their lives. Therefore, it is very important that they have a reasonable idea of their likely circumstances as soon as possible, so that they can adjust their affairs accordingly, to the extent that they are able.

One issue is when the first payments will be made. We discussed that on the previous amendment; even it is very uncertain. Presumably it is possible for the Government to make calculations fairly rapidly so that they have some idea of the likely level of benefits. We do not suggest with the amendment that everything regarding the FAS should be clarified in regulations by that date, but simply the level of benefits. For example, what percentage of the benefits do the Government have in mind as a reasonable amount?

The problem is that we do not know whether the so-called £400 million is a fixed amount. In a previous debate, the noble Baroness referred to it being cash limited. Are we to understand that the payments under the FAS will be cash limited at the amount that the Government have specified? If that is the case, is it to be a cash limit for each of the following years over the life of the people who will be helped? Or will it be some kind of lump sum that is put into a massive annuity, where the benefits of the FAS are then subsequently rolled out? There seems to be much obscurity as to exactly what the Government have in mind, having announced the £400 million and the scheme on the spur of the moment. We still have very little idea about that, and so, I stress, do people outside of what to expect. I hope that the Minister can provide more information. I beg to move.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions)

My Lords, to some extent we touch on previous issues. The noble Lord asked me regarding the previous amendment whether I could provide any guidance at all on when FAS payments might begin to flow. This matter also affects Amendment No. 267.

What I can say has the strictest health warnings attached, due to the genuine issues that the Government have to address. If, for example, all goes well and we have complete information about scheme members at an individual level and we can therefore design the scheme and allocate resources appropriately, and if schemes are close to completion of winding up and members have reached the appropriate age, and the administrative infrastructure is in place—which I was particularly worried about—including the helpline, staffing and so on, then I would hope that by the end of next year, that is November/December 2005, we should be in a position to calculate and administer payments. That is the sort of timetable to which we expect to work at the moment. In terms of Amendment No. 267, which has been ungrouped, if the noble Lord, Lord Oakeshott, was thinking about six months after April 2005, we would not be so far apart.

I must emphasise the health warnings that I have attached. Noble Lords opposite will remember that when they wished for firm deadlines regarding the jobseeker's allowance, it had to slip by six months and return to us, and so on. So I have stated our best endeavours, but all the elements have to be in place. The noble Lords pressed me for this information and I have been trying to use the opportunity given by the Statement to find out whether I could be more helpful than I was earlier and give people some sense of when we hope to be in a position to begin FAS payments.

That leads me on to the point regarding the dates. We want to make the best possible use of the available funds, and we fear that if we prescribe or announce assistance levels too early we may not be able to do so. We risk either overstretching the FAS budget or making a highly conservative estimate of benefit levels which may disappoint people unnecessarily. If we said that everyone would receive at least 5 per cent, we would probably have no problem in fulfilling that undertaking. But if people required a more accurate statement, we might not be in a position to meet the timetable specified in the noble Lord's amendment. Indeed, if we are required on the face of the Bill to prescribe levels of assistance before we have completed collecting data on schemes and members, and before we have actuarial assessments, we would have no option but to set levels of assistance with the utmost and extreme prudence so that they might bear little relationship to the outcome sums. From the Government's point of view that would be gesture politics and unwise.

To meet the timetable sought by the noble Lord we would have to lay the draft affirmative regulations before the end of this year to be sure of having them debated in both Houses and enforced by 1 March. We cannot do that again. We simply cannot have draft affirmative regulations considered by this House in the next four weeks or so, when we still have not collected all the data that would allow us to see how this works out in terms of likely levels of benefit. I wish that I could. I cannot. We are back to the same problem regarding limitations.

We have a genuine difficulty here. Unless we are to end up saying that in March we will lay down that everyone gets 5 or 10 per cent, or something like that, which would not be helpful, we cannot do what the noble Lord asks. He pressed me regarding the sums of money and the £400 million. We have pledged £400 million of public money to be paid over 20 years. The allocation of the funds across different years must depend on the assistance that the scheme will have to provide and on what would work best for it. So we are looking at issues such as any provision needed for inflation as part of the work that is now under way on how the scheme will work. In other words, we are not yet in a position to determine whether, for example, it ends up being front-end loaded or back-end loaded, or in which pattern liabilities will fall.

So I cannot give the noble Lord the answer he seeks. All that I hope is that he will accept, regarding this amendment and Amendment No. 267, that I have genuine good reason for not being able to give him the information. Even the information that I am offering must have health warnings attached because we may find obstacles that we have not yet foreseen, even regarding being able to give guidance in terms of benefit levels by the end of next year. I hope that with those assurances that we are using our best endeavours that the noble Lord will withdraw the amendment.

Perhaps I should also say that I made much of the point earlier that the detail of this matter will be carried by affirmative regulations and I said that that would allow the House to scrutinise and debate them. The noble Lord, Lord Higgins, perfectly properly, said that that would make it difficult for the Opposition Benches, because one could not amend them and there would be heavy pressure not to overturn them, because it would then seem that the unelected House was vetoing the elected House. I am willing to say that, because those affirmative regulations will be circulated in draft form for consultation with the industry, I would be happy to ensure that at the same time your Lordships receive them in advance. If noble Lords still had concerns, whether we met with officials or noble Lords chose to write to me regarding their concerns, I would see to what extent I could meet them before we laid the formal regulations. So there would be an informal process of amendment and consultation on the regulations, which is not normally offered to this House. It would at least give your Lordships the opportunity which otherwise I would wish to provide by putting more detail on the face of the Bill.

So, given that movement on what are perfectly legitimate concerns, I hope noble Lords opposite will withdraw their amendments.

Photo of Lord Higgins Lord Higgins Shadow Minister, Economic Affairs

My Lords, before the noble Baroness sits down, perhaps I may say that that is an extremely generous and unusual offer. We appreciate the fact that we will receive the draft regulations.

Could the Minister clarify one point regarding the amendment? Are we to understand that the £400 million is a set sum, or one adjusted for inflation over time, which will then effectively be divided up, allowing for the dates of payment, between the total number of people who become eligible? Or is the £400 million not a set sum, but will depend upon the demands on the fund?

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions)

My Lords, no, the £400 million is the set sum. The amount that will be paid in any particular year will depend to a degree on when the liabilities fall. So, although the sum will equate to £20 million a year over 20 years, it is not our intention at this stage to say that in each year there will be £20 million, no more and no less. I am not yet sure, until we have the data, to what extent payments might be front-end loaded or back-end loaded and, therefore, how the pattern will fall. That is still to be determined and the noble Lord will understand why I cannot give him that information.

Photo of Lord Higgins Lord Higgins Shadow Minister, Economic Affairs

My Lords, again, I thank the Minister for her comments regarding the regulations—and I understand the problems that she faces. None the less, my reaction is that the £400 million spread over 20 years—and it is not clear whether it will be inflation linked—will be totally inadequate. The amounts paid out would be tiny. However, perhaps we may return to that. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Lord Oakeshott of Seagrove Bay Lord Oakeshott of Seagrove Bay Shadow Minister, Treasury

moved Amendment No. 266:

Page 235, line 25, at end insert—

"( ) In 2007 and three yearly thereafter, the Secretary of State shall present a written report to both Houses of Parliament on the adequacy of the funds provided by the Exchequer to the financial assistance scheme, including the numbers of qualifying members assisted under the scheme and a comparison with amounts payable by the Pension Protection Fund."

Photo of Lord Oakeshott of Seagrove Bay Lord Oakeshott of Seagrove Bay Shadow Minister, Treasury

My Lords, this is a modest and, as I hope the House and the Government Benches will agree, helpful amendment in my name and that of my noble friend Lady Barker. To clarify matters, we are referring to the amount that people will receive under the financial assistance scheme as a percentage of what they would have been entitled to under the PPF.

In terms of the timing, given the noble Baroness's point about the need to consult and to get things set up, it seems to us that 2007 will allow a reasonable period in which to see how the scheme has been working and for the Secretary of State to come back with a proper report, and to do so every three years thereafter, so that we can see how the scheme develops. Clearly, none of us knows the exact scale of the problem. I share the view that the chances are that the amount will be inadequate. None the less, let us look at that on its merits. However, it seems to me that we need a proper and structured way in which the Government can report back at regular, but not too frequent, intervals. We are asking to be given the facts to enable us, and the Government, to make an assessment of the financial adequacy of the scheme. This is uncharted territory.

I repeat that this is a modest amendment. It is designed to bring clarity to a confused situation, transparency to the operation of the scheme and an improvement in accountability to Parliament. In my view, it will help Parliament to do its job of properly scrutinising the spending of public money. As the noble Baroness herself has admitted, at present this is a scheme with very few clear details.

If I may say so, in her opening speech earlier, the noble Baroness trailed her coat most encouragingly on this amendment. I now invite her to rise, simply to say "yes" and to sit down. I beg to move.

Photo of Baroness Turner of Camden Baroness Turner of Camden Labour

My Lords, my own amendment—Amendment No. 283—is grouped with Amendment No. 266. As we have heard this afternoon, Clause 284 has been described as something of an empty box. We know that there will be a financial assistance scheme but the Bill puts no flesh on the bones, and we had a great deal of discussion about that this afternoon. We know the Government's intention, but we do not know what the accepted anticipated liabilities of the FAS will be. We have a cash limit, but we want to know what proportion of benefits will be paid.

The intention of Amendment No. 283 is twofold. First, FAS benefits should be paid at the same level as benefits payable by the PPF in the case of schemes taken over by the PPF after the appointed day. Secondly, the FAS should be adequately funded on actuarial principles to ensure that those benefits are paid. Those actuarial principles will not assume that the FAS will receive in year one what it pays out in year one. It is pre-funded for liabilities which it already knows of or reasonably anticipates in much the same way as an ordinary pension scheme is funded. Benefits will be paid as and when they fall due and actuarial assumptions will be made by the GAD about future financial investment return, inflation and so on, and demographic matters.

It seems to me that Amendment No. 266, moved by the noble Lord, Lord Oakeshott, is reasonable and sensible and my amendment is meant to support that concept. I cannot move my amendment; I am simply speaking to it because it is in this group. I wait to hear what my noble friend has to say.

Photo of Lord Higgins Lord Higgins Shadow Minister, Economic Affairs

My Lords, the noble Lord, Lord Oakeshott, said that this is a modest amendment, and I think that that is so. One feature which has been completely missing from our deliberations has been the Minister standing up and saying, "I accept that amendment". Not once in the whole of the Grand Committee stage did such an event occur; and it has not occurred in the first or second sitting of the Report stage or even now. This is the noble Baroness's opportunity to do so.

I consider the amendment of the noble Lord, Lord Oakeshott, to be admirable. In particular, the publication of such a report would give occasion for those who feel strongly on these issues to assess whether the scheme had worked out as they had hoped. As we said earlier, there has been enormous pressure from Back-Benchers in another place for the introduction of such a scheme. It may well turn out to be, as we hope, a success or it may be a disappointment.

At any rate, a report of this kind will give an occasion for those who are concerned about the issue to express a view on how things have worked out. No doubt, if sufficient pressure is applied, they will be able to obtain an increase in the level of benefits paid and to make a comparison of those benefits and those being paid by the PPF. As I said a moment ago, I think that £400 million will probably be a very inadequate sum, and the report will be able to include an assessment of whether or not that turns out to be so. I strongly support the view expressed by the noble Lord.

Photo of Lord Fowler Lord Fowler Conservative

My Lords, before the Minister fits in, as I am sure she will do, with the proposal of my noble friend, I want to say one word. As the noble Lord, Lord Oakeshott, said, this is a modest proposal. Nevertheless, it is an important proposal and one with which I very much agree.

It raises an important point—that is, that there should be post-legislative reviews of what we do. As my noble friend Lord Higgins mentioned, we should be checking the progress of the legislation as we go along. Although we have had pre-legislative scrutiny in Parliament, I think that we should consider the far wider use of post-legislative scrutiny. Many of the mistakes and errors which occur when Bills become Acts could have been prevented had such scrutiny taken place. Frankly, I believe that there is a great case for doing that with all legislation but, in particular, there is a strong case for doing so with legislation on pensions.

In a sense, such scrutiny would also serve notice on the government department in question that it was expected to report back. Frankly, Secretaries of State change, and the new Secretary of State does not necessarily regard it as his number one object in life to carry out the work of his predecessor. Rather than concentrating on the No. 1 Pensions Bill, he probably wants his No. 2 Pensions Bill to be brought forward. Under those circumstances, the department has a responsibility to report on its stewardship—that is, on how it has operated the legislation passed.

Therefore, although the amendment proposes a modest step, it is an important one. It would be brilliant if the Minister could now accept a post-legislative review of this pensions legislation as I think that that would be of great benefit.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions)

My Lords, on the last point, there is nothing to stop any Member opposite using a Wednesday afternoon debate—rather like an Opposition day in the other House—some time down the line in order to review the operation of the Pensions Bill and to call the Government to account. Again, I am entirely in favour of learning loops, which we normally have through pilot and pathway schemes. There may be other devices and I have no problem with that. But, some time down the line, it would be sensible to have a debate, whether or not it was initiated by the Opposition, as to the efficacy of the Bill and as to whether it was working as Parliament intended. I do not have a problem with that but it will be for your Lordships to determine.

The noble Lord, Lord Higgins, asked why I cannot accept Amendment No. 266. He also said that I had not accepted any others. I have to say that that is a bit rich. When I sat on the Opposition Benches, the only time that any amendment was ever accepted by the government was when a negative regulation was made affirmative. That was the only time that I could be sure that I had the drafting right. At times, we have not been able to get the word "sheriff" right—with a decision on whether it is "a sheriff" or "the sheriff".

Noble Lords will see that the Government have effectively made a number of concessions in response to pressure, but they have brought back the changes as government amendments to ensure that they work. I have responded in dozens and dozens of ways but am being blamed for the inadequacy of the drafting of opposition amendments. Perhaps I may gently suggest to noble Lords that it is a piece of effrontery to blame me for not taking the amendment on board and thereby ensure that the provision will go before the courts at some point. But I do not blame them for having a go.

At the beginning I said to the noble Lord, Lord Oakeshott, and I repeat it now, that I have no problem at all with three-yearly reviews. I believe that is absolutely right and they may need to be more frequent than that. I have no difficult with that. That part of the amendment is fine, but the rest of it causes me difficulty. I am bothered by the weight that any court could put on some of the words.

The reports that we will expect to be brought forward, and that the FAS will have to publish, will set out how the funds have been used. I expect them to detail the number of members who have received assistance. I do not believe that there is dispute between us on that. But how can a report be made on the adequacy of the funding. Is it the adequacy in the eye of the beholder? Or does it mean how the sums have been worked out, which will be in the information about how much people receive? Against whose judgment and whose standards is "adequacy" to be viewed? That is where the polemic comes in, which is why I cannot accept the amendment as it is drafted. That can be judged only against a promise that the Government have made, and we have promised that we shall provide a worthwhile package for those who have incurred the most significant losses.

Secondly, in relation to the amendment tabled by my noble friend—Amendment No. 283—I am concerned about comparing the FAS level of assistance with that provided by the PPF. At a mechanical level, any Member of your Lordships' House, any member of a trade union or any member of a pension scheme will be able to make that comparison. We know that there will be 90 per cent for members coming within the purview of the PPF. We have always said that the FAS, as my noble friend acknowledged earlier, will be less generous than the PPF and the Minister of State in the other place said:

"it seems unrealistic to expect that assistance will be set as high as future pension protection fund levels, as in future members will benefit from cover paid for by a premium to the pension protection fund".—[Hansard, Commons, 19/5/04; col. 991.]

In other words, there will not be a levy there.

My key point is that scheme members who will benefit from the PPF in the future will enjoy a level of assistance paid for by a levy on all defined benefit schemes. Because there is a levy, the PPF will be able to offer 100 per cent to some categories of scheme member—those already in retirement—and 90 per cent to others. In contrast, the financial assistance scheme benefits from £400 million of funding from the taxpayer. We believe that it is right to use public money in recognition of the severe losses suffered by some scheme members, but it would not be reasonable to expect taxpayers, most of whom are not members of defined benefit occupational pension schemes, to fund assistance to the same generous levels as the PPF.

Let me give an obvious example. The PPF will offer 90 per cent compensation to all those not coming in. With the FAS we might want to take account of how close people are to retirement and, therefore, to what degree they can remedy the situation they are in by a shortfall in the scheme. If someone has been in a scheme for only five or eight years and it collapses, he is in a different position as regards rebuilding than if he is two or three years away from retirement, when clearly there is very little capacity to rebuild. Those are different kinds of considerations.

I might add that Amendment No. 283 would require the FAS to determine levels of assistance according to the rules devised for the PPF. I hope my noble friend will accept that it would be in no one's interests to squeeze the FAS into the regulatory framework—including a regulator—that has been tailored to fit the PPF. They are different kinds of schemes, and there should be a clear understanding of the water between them, if I can put it like that. This framework has been finely tuned to respond to the needs and concerns of a pensions community—the PPF—that will contribute financially to a compensation scheme. This framework would sit uncomfortably on the shoulders of an assistance scheme financed by the taxpayer. The schemes will be very different.

I return to the original amendment. I have no problem at all with regular reports, whether three-yearly or more frequent, of the FAS. I would expect that to happen anyway. I would expect the FAS to include what I would call the objective information about how many members have been helped, what level of assistance they have been given and so on. However, words like "adequacy", particularly when tested in a court, might seem to imply some other form of judgment with which I would be unhappy and could not accept on the face of the Bill.

With the set of signals coming from the Government—they are not confused but involve "on the one hand" and "on the other hand"—I hope that the noble Lord, Lord Oakeshott, will be able to withdraw his amendment. At Third Reading he may wish to return with a more tailored amendment, which pins down the issue on regular reporting, while leaving out words such as "adequacy", let alone a comparison with the PPF. People would have no difficulty with that because they would be able to put the two reports side by side. I seek to resist the linkage that one can measure the adequacy of one by the payments of the other. With those comments, I hope that the noble Lord will feel able to withdraw his amendment and, when the time comes, I hope that my noble friend will not press her amendment.

Photo of Lord Oakeshott of Seagrove Bay Lord Oakeshott of Seagrove Bay Shadow Minister, Treasury

No, my Lords. We have had a thorough, interesting and revealing debate. I believe that the time to resolve this issue is now rather than at Third Reading. First, I thank the noble Baroness, Lady Turner, for her support of my modest amendment that does not go as far as hers, but supports the principle of reporting. I appreciate that very much. I say to her that ultimately we hope it may be possible that the FAS will pay the same benefits as the PPF, but, at this stage, it is fair to say that that is not something that we would want to support because we do not yet know the scale of the problem. We shall have to see how it goes. I hope that the noble Baroness will support my more modest proposal.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions)

My Lords, as the noble Lord appears to be indicating that he wishes to test the opinion of the House, is he saying that because these two amendments are grouped, that means that a vote on his amendment would also carry the amendment in the name of my noble friend, which would require that the FAS pay at the levels of the PPF?

Photo of Lord Oakeshott of Seagrove Bay Lord Oakeshott of Seagrove Bay Shadow Minister, Treasury

My Lords, I am moving Amendment No. 266 and asking for support for that. I have just made it clear why, were Amendment No. 283 to be pressed to a vote, I would not support it.

I was most unimpressed, to be honest, with the reasons given by the Minister. I do not want a report every year. I believe that three-yearly is the right period for a proper report. I am in the investment management business and we have proper performance reviews at regular intervals. I was very taken with the points made by the noble Lord, Lord Fowler, that the prospect of a regular review on a reasonable basis like this concentrates the mind wonderfully. I believe that it will concentrate the minds of those running the FAS, of the civil servants and of the Minister of the day. I believe that that is the right time period, that that should be set out, and that one should work towards and expect that.

I was sorry to hear the spat about amendments just now. I hope the Minister will accept that we on these Benches have tried not to get into a large number of drafting amendments, but on this one we feel strongly. I cannot accept her argument, if indeed she is arguing that this is defectively drafted because of the word "adequacy". It is quite clear in whose eyes that is; it is in the eyes of the Secretary of State. The Secretary of State is being invited to bring the report and to report on the adequacy of the scheme. We would be testing and measuring it against the statements that were made when the scheme was set up. To me that is quite clear and that is the basis on which I am moving it.

The more I think about this and the more I listen to the interesting points about post-legislative scrutiny on a regular basis from the noble Lord, Lord Fowler, the more strongly I feel that this is a sensible amendment. To be frank, I am most unimpressed with the reasons given for not accepting it and I beg leave to test the opinion of the House.

On Question, Whether the said amendment (No. 266) shall be agreed to?

Their Lordships divided: Contents, 135; Not-Contents, 137.

Division number 3 Private Parking: Ports and Trading Estates — Pensions Bill

Aye: 133 Members of the House of Lords

No: 135 Members of the House of Lords

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

Resolved in the negative, and amendment disagreed to accordingly.

[Amendment No. 267 not moved.]

Photo of Lord Higgins Lord Higgins Shadow Minister, Economic Affairs

moved Amendment No. 268:

Page 235, line 25, at end insert—

"( ) Payments made under this section shall be made by the Treasury and not from the vote of the Department of Work and Pensions."

Photo of Lord Higgins Lord Higgins Shadow Minister, Economic Affairs

My Lords, we have already stressed very strongly that the decision by the Government to allocate the sum of £400 million spread over 40 years, which in reality is a much smaller sum in present value terms, was made very much in a panic reaction to the danger of defeat in the House of Commons. One cannot help but feel that the Chancellor of the Exchequer, having decided by some process of osmosis that £400 million was the right amount and having bought off the threat of a revolt, may seek to reduce the cost to the Exchequer. For that reason, we are rather concerned about where the money is coming from. Therefore, I have a simple, straightforward question for the Minister—whose attention I hope I have—namely: is this new money? Is it money that was not previously going to be spent by the Government either this year or later? Is it new money?

One suspects that there may be a certain amount of spare money around—to be found, strangely enough, in the Department for Work and Pensions, the reason being that the Chancellor is fond of increasing amounts which are to be paid under various benefits, a high percentage of which are never claimed because people do not understand what it is all about. That is particularly so with regard to a vast array of tax credits. So there appears to be a massive underspend by the Department for Work and Pensions.

Can the Minister tell us what the level of underspend is expected to be in the current year and what it was last year? It is no good the Minister shaking her head. It clearly was not a positive number in the sense that it was totally spent. Exactly how much has been underspent, and how much is likely to be underspent given the nature of a department which constantly announces benefits which people do not claim? Our rather sordid suspicion is that the Chancellor may suddenly discover that the best way of spending the £400 million which he was obliged to spend over 40 years is out of the budget of the Department for Work and Pensions, where there has been an underspend.

The other part of the amendment is concerned with who will pay it. It may be that this was a drafting mistake on my part. I have written "the Treasury". Perhaps I should have said "the Chancellor" or perhaps, curiously, "the Inland Revenue". Oddly, under the present Government, the Inland Revenue, which has long spent its time collecting money from people, suddenly finds, under the Chancellor's various tax credits, that it is repaying money to people. That strikes at the very ethos of the Inland Revenue and it really is not very keen on it.

The result has been that the Inland Revenue has collected money that it should not have collected and then did not want to refund it. None the less, it has now had some experience of disbursing money as well as collecting it. It would therefore seem appropriate that if the money is not going to come from the vote of the Department for Work and Pensions, it should be new money, and it should perhaps be administered by the Treasury rather than the Department for Work and Pensions.

On the second point, I am not totally committed to the idea. So long as it is new money, I am not terribly worried whether it is the Department for Work and Pensions that disburses it, since it is certainly better at disbursing money than the Inland Revenue, except in the circumstances where the Inland Revenue collected money that it should not have collected.

The purpose of the amendment is to ensure that the commitment that the Chancellor gave for obviously political reasons actually benefits those whom the financial assistance scheme is designed to help, rather than be removed from the department's underspend and therefore not be available should anyone by any chance suddenly understand some of the tax credits which they previously had not understood. I beg to move.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions)

My Lords, as the noble Lord will know, I have to deal with the amendment as it is on the Marshalled List. Given that the noble Lord has greater experience of the Treasury than I have, I was surprised to be somewhat confused by the amendment. Perhaps it will help if we first see whether we have a shared understanding of the principles behind the government funding arrangements.

All government departments are voted funds so that they can implement the policies for which they bear responsibility. That includes the Treasury, which is voted funds singularly for its own policies, just like any other department. The Treasury does not have privileged access to public funds in this sense.

If colleagues in the other place agree to vote funds for the FAS, as the Government are expecting them to do, these funds will be voted to the Secretary of State for Work and Pensions. That is because the Secretary of State for Work and Pensions, my right honourable friend Alan Johnson, is responsible under the DWP Delivery Plan 2003–06 for delivering policy to,

"combat poverty and promote security and independence in retirement for today's and tomorrow's pensioners", and because the department is responsible for meeting the costs of the programme which it adopts from within the resource made available to it for this purpose.

It is only by following this procedure, whereby Parliament votes specific funds to each Secretary of State, that we can ensure transparency for the public accountability of each respective Secretary of State. I therefore do not see how FAS payments could be made from the vote of the Treasury. That is not my understanding of how public finances work.

The noble Lord expressed the idea that because less is being spent on benefits—perhaps because unemployment is decreasing—the Government could use that, so to speak, spare money. It would not work like that. The noble Lord will know the difference between DEL and AME better than I do. AME is the annually managed expenditure of the department, which is responsible for benefits. That is an open-ended commitment because benefits are a right. If unemployment increases, that money will have to be paid. The Chancellor of the Exchequer or the Treasury will not then say, "You can have only 90 per cent of your benefit moneys for unemployment because we have rather more unemployed people than we first thought". Unemployment benefit is an entitlement and has to be met fully.

DEL, on the other hand, is the departmental expenditure limits which are cash-controlled within, for example, a three-yearly spending plan, within which the Government and the departments must manage their resources. As that sum is fixed and is not an open-ended commitment, it is included in DEL rather than AME. Therefore, the noble Lord's concern that this might be a type of virement of underspent benefit money is not founded because of where the budget would fall. In other words, it is a capped commitment.

I hope that I have answered the noble Lord's questions and that he will feel able to withdraw his amendment.

Photo of Lord Higgins Lord Higgins Shadow Minister, Economic Affairs

My Lords, before the Minister sits down, can she say whether it is new money? Will it come from money that is not already in the Chancellor's overall expenditure plans?

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions)

My Lords, the Department for Work and Pensions has a substantial budget. Within the spending review cycle, it is not unusual for the department to reallocate resources internally in response to changing policy priorities or the emergence of a new priority. That is what the DWP has chosen to do to accommodate FAS in the 2004 spending review. In future spending reviews, the DWP will take account of the Government's promise that a total of £400 million will be made available for FAS from public funds. FAS is being designed to offer a worthwhile package of assistance to those who have suffered the most significant losses from within those funds. In that sense, the noble Lord's question cannot be answered in the way that he has posed it, but I have given the answer as best I can.

Photo of Lord Higgins Lord Higgins Shadow Minister, Economic Affairs

My Lords, that was a fascinating discourse for which I thank the Minister. I fear that, ultimately, the answer to the question of whether it is new money is probably, "No", but that it will be shuffled from some other part of the budget of the Department for Work and Pensions. In all events, it has been an illuminating discussion. I need to consider a little more carefully what the Minister has said and be a little more precise in my wording on the next occasion. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Lord Skelmersdale Lord Skelmersdale Shadow Minister, Economic Affairs, Deputy Chief Whip, Whips, Shadow Minister, Health

moved Amendment No. 269:

Page 235, line 29, leave out ", at such time as may be prescribed,"

Photo of Lord Skelmersdale Lord Skelmersdale Shadow Minister, Economic Affairs, Deputy Chief Whip, Whips, Shadow Minister, Health

My Lords, a constant theme of the proceedings on this Bill has been its inclusion of great chunks of detail of which we knew nothing—to a great extent, we still do not know. There has been general agreement among the Front Benches today that this is a skeleton clause. In my book, that gives skeletons a bad name, because at least archaeologists can discover an enormous amount about skeletons. On this occasion, we are very limited in our ability to discover anything. Before the noble Baroness opposite explodes, I should add that, on many, many occasions, there are very good reasons for that.

Having got that off my chest, I shall now deal with the three amendments, all of which probe the phrase,

"at such time as may be prescribed".

Under Clause 284(2), on the financial assistance scheme, a "qualifying member" is somebody,

"who, at such time as may be prescribed, is a member of the scheme in respect of whom the scheme's pension liabilities are unlikely to be satisfied in full because the scheme has insufficient assets".

I seek to establish the start date not of the scheme itself but of the pensioners, deferred pensioners and so on who will become eligible to be covered by the scheme.

Subsection (2)(b) states that a "qualifying member" is someone who,

"at such time as may be prescribed, had ceased to be a member of the scheme".

In other words, one assumes, the subsection refers to a deferred pensioner of the scheme. Will the start date be the same as I asked previously or is it some other time?

Again, subsection (2) states that a "qualifying pension scheme" is one,

"which, at such time as may be prescribed, is not—

(i) a money-purchase scheme, or

(ii) a scheme of a prescribed description".

A scheme of a prescribed description is the subject of another amendment, which I shall move shortly. Is that "time as may be prescribed" the same as the start date—in other words, the backdating of the eligibility for falling into the scheme—or is it some other time?

The Minister has given the impression that both Opposition parties are asking questions on their own behalf; in this case, we are not. We were originally led to suppose that 60,000 people were waiting on the noble Baroness's every word—everything that she could possibly say to describe the operation of the scheme. Since then, the figure has been revised to 63,000. The most recent estimate by the department is 65,000. For all we know, by the time the scheme starts—whenever that may be—there may be more.

Having listened to the discussions earlier, a point occurred to me about the fact that the £400 million is supposed to last 20 years. During the past 20 years there must have been several actuarial revisions of life expectancy. In the next 20 years, presumably, there will again be several revisions of actuarial life expectancy. Therefore, it is extremely difficult for the Government or anybody else to work out exactly what we are in for. In this case, I am prepared, as is my noble friend, to buy what I can only describe as a pig in a poke; but the more flesh the noble Baroness can put on to that particular pig, the less unhappy will those 65,000 members be. I beg to move.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions)

My Lords, I shall do my best to answer some quite detailed questions. The noble Lord is right to say that they are matters of concern.

This group of three amendments all refer to the powers taken in Clause 284 to describe who would be a qualifying member for the purposes of the financial assistance scheme (FAS). In particular, each amendment seeks to remove powers that would enable regulations to prescribe time frames relating to aspects of member qualification. The clause is littered with regulations, precisely because it is a framework—the noble Lord does not like the word "skeleton", so perhaps he would prefer the term "framework". I do not like the words "pig" and "flesh"; we need not go that far.

Noble Lords have already voiced frustration at the lack of detail. I shall clarify our intention in taking the powers that the amendments seek to remove, and illustrate the ways in which we would like to use them. I shall take them in the order in which they are laid.

Amendment No. 269 removes the power to prescribe in regulations the time at which a member must actually be a member of a pension scheme, in order to be considered for financial assistance from the scheme. When the clause was introduced, it was deliberately drafted to support a wide range of options for the design and delivery of the financial assistance scheme. Noble Lords will note, for example, that subsection (3) enables the scheme to be set up as a trust or in some other way; and for the Secretary of State, a prescribed body or some other person to be scheme manager.

The power to which the amendment refers was included in case, as development work, data-gathering and consultation on the scheme progressed, there was a good case for limiting assistance to those who had been members of their scheme before a certain date—for example, before 6 April 1988, when employers could choose to make membership of their occupational pension scheme a condition of employment. However, I can assure the noble Lord that this is not now the approach that we intend to pursue. We do not intend to determine people's eligibility for the FAS based on the dates at which they were members of their schemes. I hope that that is helpful.

Noble Lords will appreciate that there remain very many complex and detailed points to sort out when drafting the regulations. We will seek the technical input of pensions industry colleagues to ensure that we have covered all bases for the variety of different situations in which winding-up companies find themselves. It is much messier and more complex than the "clean slate" enjoyed by the PPF. Given the unique circumstances of the FAS, where we are doing much of the detailed work and consultation after rather than before taking primary powers, it would not be prudent to restrict our flexibility to make as yet unforeseen technical adjustments by removing this power. As we originally intended, we do not think that we will move in that direction, but we want to ensure that we have the power to do so, rather than coming back to the House again needing primary powers.

Amendment No. 271 would remove our ability to prescribe in regulations that some people, who had been members of schemes at some point in the past, would not qualify for assistance from the financial assistance scheme. There are two reasons why members could have ceased to be members of a scheme. First, the scheme could have been fully wound up. Such a scheme does not, by definition, have any members at all. I assure noble Lords that we have always intended to allow people who were members of schemes that have already wound up to qualify for the FAS. Indeed, the Bill recognises that. However, members could also have ceased to be members because they voluntarily transferred out of their scheme, whether the scheme has already wound up or not. It could also be the case that people voluntarily accepted transfer values that were reduced as a result of their scheme being underfunded at that point. That could have happened many years prior to the scheme starting to wind up.

However, the option has always been available to leave transfer values in the scheme in question—provided that they have been there for two years. We are still considering whether the FAS should offer assistance to those people. That includes considerations about how it might be administered and assessments of the potential impact on funds available to help scheme members who left their accrued rights with their scheme.

The amendment would prevent our prescribing that members who took a transfer value at some point in the past would not qualify for the FAS. We continue to explore whether we would like to use the power in the Bill that would enable us to do that.

Amendment No. 273, would remove our ability to prescribe dates on or by which a member of an occupational pension scheme must meet certain conditions in order to qualify for the FAS. For example, we would be obliged to include all scheme members irrespective of their age at a particular date thereby leaving smaller amounts of available funds to assist the older members who are in no position perhaps to rebuild. That would remove one way in which we could provide significant help to those who face the most significant losses.

It is an important principle that great amounts of assistance from the FAS are provided to those who are least able to make up their loss. Should all members of occupational pension schemes potentially qualify for assistance from the FAS, it would mean that the FAS would be forced to cater for cases where negligible, if any, assistance would be provided.

The negative consequences of such a situation should not be underestimated. The FAS would be forced to deal with possibly thousands of cases where the assistance to be provided potentially would be less than the costs of considering the claims. They would be quite small sums such as £100 or £200. That would increase the administrative costs on the FAS, thereby reducing the amount available for assistance to older members, surely an undesirable effect. It would wipe out a sector.

I hope that my explanation of our intention in taking these powers has been helpful. I am sorry that I have spoken at such length, but I have gone into detail. I accept the significance of the amendments. I hope noble Lords understand the framework within which we hope to make use of the powers. With that extremely detailed explanation, I hope that the noble Lord, Lord Skelmersdale, will be able to withdraw his amendment.

Photo of Lord Skelmersdale Lord Skelmersdale Shadow Minister, Economic Affairs, Deputy Chief Whip, Whips, Shadow Minister, Health

My Lords, before the Minister sits down may I say that one date that I have established from the Minister's long and very helpful explanation is that the eligibility of the scheme will start some time after April 1988? I have no other clue whatever. Could the Minister go a fraction further before I withdraw the amendment?

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions)

My Lords, I did not even say that. At one stage we were going to say that it might be restricted only to people before 1988 and now we shall not bring such restriction into place. In our very early thinking months ago an argument was put to us that people had no choice because it was laid down as a condition of the job. Therefore, it was a question whether that should be a consideration as opposed to people who have more voluntarily entered an occupational pension scheme. That is why I hinged on that. I cannot go further at this stage: when I can I will. I am sorry.

Photo of Lord Skelmersdale Lord Skelmersdale Shadow Minister, Economic Affairs, Deputy Chief Whip, Whips, Shadow Minister, Health

My Lords, even that does not hold out much hope of satisfaction for the 65,000 members of schemes who, we believe, will be affected and could be helped by the financial assistance scheme.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions)

My Lords, if the noble Lord were to pursue this matter he could unintentionally do more harm than good. Issues as to whether or not we should have the de minimis rule for very small sums would be removed from the possibilities. As a result, one would end up with potentially more serious losers than gainers. I can understand the noble Lord's frustration. I urge him not to go after this issue. What we propose allows us to deliver the contours of a scheme that I hope will become apparent once we can make it possible.

Photo of Lord Skelmersdale Lord Skelmersdale Shadow Minister, Economic Affairs, Deputy Chief Whip, Whips, Shadow Minister, Health

My Lords, of course all these areas have to have times. They will be prescribed, as the noble Baroness said. I believe she said that this clause is littered with regulations. At least they are all affirmative so we can have another go at them. That said, the noble Baroness gave me the impression that she was protesting just a fraction too much. I knew exactly what the amendments did, but I explained in my opening words, I hope, that I wanted to find out when. To that there came no answer. These were all probing amendments. The probe has been extremely unsatisfactory, but it is not an occasion for seeking the opinion of the House. If I thought it were, I certainly would. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Baroness Turner of Camden Baroness Turner of Camden Labour

moved Amendment No. 270:

Page 235, line 32, after "assets" insert "because of an insolvency event in relation to one or more of the participating employers or otherwise"

Photo of Baroness Turner of Camden Baroness Turner of Camden Labour

My Lords, in moving this amendment I shall speak also to Amendment No. 272 which is grouped with it. The first amendment deals with the insolvent winding up scheme where the assets are insufficient to meet the liabilities of the scheme. The clause, as drafted, neither rules in nor rules out the situation where the scheme winds up insolvently, but the employer itself is still solvent. His is the usual intended outcome of a Bradstock compromise. We had talked about Bradstock earlier in connection with an earlier section of the Bill where the trustees agree to take less than full payment of the debt properly due from the participating employers so that the employer or employers do not go bust, but as a consequence of the compromise the pension scheme's liabilities are not met in full.

The Bill as drafted requires the employer to meet prescribed requirements. This gives the Government the opportunity to include the Bradstock cases or to exclude them by statutory instrument. The purpose of the amendment is to provide explicitly that solvent employer/ insolvent schemes are within the FAS.

Amendment No. 272 deals with very much the same sort of issue except that it deals with a situation where the wind up has already been completed. With that difference the issue is exactly the same. I beg to move.

Photo of Lord Skelmersdale Lord Skelmersdale Shadow Minister, Economic Affairs, Deputy Chief Whip, Whips, Shadow Minister, Health

My Lords, I accept that clearly one cannot have a government compensation scheme which picks up the pieces of solvent employers. That is turning the argument the other way round to the one which the noble Baroness, Lady Turner, produced.

So far I agree, but why the words "or otherwise"? It seems to have been added for some strange reason. Perhaps the noble Baroness can tell me when she winds up her argument.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions)

My Lords, I am glad to see that the noble Lord's stiletto is wielded in a fine sweep on the Benches opposite.

Amendments Nos. 270 and 272 relate to FAS treatment of multi-employer schemes. The amendments are worded identically. Amendment No. 270 applies to the part of the clause which defines qualifying members who are members of schemes at a prescribed date. Amendment No. 272 applies to the part of the clause which defines qualifying members who ceased to be members of schemes, either because that scheme no longer exists or because the member has taken a cash equivalent transfer value.

These amendments, as the noble Lord identified, would force the FAS to offer assistance to members of multi-employer defined benefit occupational pension schemes that have lost accrued rights in the event of their winding up, where one or more of the participating employers are insolvent. It is also worth noting, however, that due to the qualification "or otherwise" at the end of the amendments, the actual effect of these amendments may be that the FAS would have to offer assistance to members of all schemes whose entitlement is unlikely to be satisfied in full irrespective of solvency status. The noble Lord was right to home in on that because they are the danger words.

As I will make clear as we move through the clause, it is still to be decided whether members of schemes that are connected to solvent employers will be eligible for assistance from the FAS. While we believe that solvent employers should support their schemes and provide the benefits that members were expecting, issues of employer solvency remain under consideration. One of the issues which we are considering is that the treatment of multi-employer schemes where participating employers are solvent or possibly where one is insolvent and others are solvent.

It may be helpful if I give some information on this. There are a number of different types of multi-employer schemes and there are different relationships between employers that may participate in these schemes. For example, multi-employer schemes may be set up by large groups of associated employers which belong to the same group of companies or they may be set up by separate employers within the same industry. In these schemes there may be no association between participating companies.

On the one hand, in structure, multi-employment schemes may be sectionalised or non-sectionalised. If they are sectionalised different sections of the scheme apply to different employers or groups of employers. On the other hand, in non-sectionalised schemes assets and liabilities are shared across the employers within that scheme. Thus the structure of these schemes and the relationship between participating employers is diverse. So while the amendments are helpful in highlighting the special circumstances of the schemes, given their complexity, it is obvious that one cannot simply use the FAS to make a blanket statement as to how we will approach their treatment.

For example, while the responsibility for providing pension benefits in a sectionalised scheme might rest with a single employer, that responsibility is held by all employers when the scheme is not sectionalised. In that type of multi-employer scheme, all participating employers have in effect made a promise to fund the scheme.

Added to that, irrespective of the structure of the particular scheme, there may be groups of connected companies participating within a scheme that are able and willing to provide the pension benefits that members expect. It would obviously not be prudent to provide all members of those schemes with assistance on the basis of the insolvency of one of those connected schemes.

I could go on, but I hope that I have said enough to my noble friend. While we take on board those issues, they are extremely complex. We do not want a situation where other employers in an associated group could pick up the pension liabilities but choose not to because we have let them off, and it then comes to FAS. That would mean that there would be less resources for other people who fall under FAS where there is no opportunity to share that responsibility.

With that explanation, I hope that my noble friend will accept that we are considering those issues and will withdraw the amendment.

Photo of Earl Ferrers Earl Ferrers Conservative

My Lords, I hesitate to join this rather cosy party, but in the past 10 minutes the noble Baroness has used the term "FAS" 13 times. I am sure that almost everyone knows what FAS is, but not all of us. It would be helpful if the noble Baroness would be kind enough to talk not in acronyms but in English so that we can understand what she is saying.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions)

My Lords, perhaps the noble Earl, Lord Ferrers, may forgive me, but I cannot resist this: I just wonder whether the noble Earl has voted previously. If so, he has voted on amendments that refer to FAS. I am sure that he would not have voted for something that he does not understand. FAS stands for the financial assistance scheme, which we have been discussing for the past two or three hours in respect of the various amendments associated with it on which Members of your Lordships' House have expressed a view.

Photo of Earl Ferrers Earl Ferrers Conservative

My Lords, I am deeply grateful to the noble Baroness. She need not worry too much because I did not vote on that. But I am grateful to her for at least explaining what she was talking about for those of us who did not understand.

Photo of Baroness Turner of Camden Baroness Turner of Camden Labour

My Lords, I thank my noble friend for that detailed explanation, which I shall study with some interest in Hansard. The noble Lord, Lord Skelmersdale, raised the matter of the inclusion of the word "otherwise". This is a case where I can blame the lawyers. A draft was proposed to me by the union's lawyers who worked with the union on wording. Since I assumed that they would know more about the matter than me, I repeated their wording. But I should have looked at it more carefully, as the noble Lord, Lord Skelmersdale, clearly did.

We were talking about a number of employers participating in a scheme, part of which may be sectionalised. I accept that that can be a very complicated matter. But I fear that there may be quite a number of such schemes around currently where employers have merged and bring their own schemes into an overall scheme, and so on. That could provide some problems for the future. My noble friend the Minister has acknowledged that and has said that it is receiving consideration. On that basis, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 271 to 273 not moved.]

Photo of Lord Skelmersdale Lord Skelmersdale Shadow Minister, Economic Affairs, Deputy Chief Whip, Whips, Shadow Minister, Health

My Lords, I shall ask a question to which I suspect the answer will be, "I have not the slightest idea": I am quoting what I think that the Minister is about to say. Quite simply, which schemes will not qualify? Under Clause 284(2), a

"qualifying pension scheme . . . is not . . . a scheme of a prescribed description".

In other words, what will not qualify?

I was more than a little surprised—in fact, I was horrified—to hear the noble Baroness say that there might be a case for having a solvent employer with an underfunded scheme eligible for the FAS. That is what I understood her to say in part of her response to the noble Baroness, Lady Turner.

However, I suspect that I will not get a reasonable answer, but I shall still move the amendment. I beg to move.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions)

My Lords, I hope that I will be able to help the noble Lord. The amendment would extend the potential range of schemes that could qualify for inclusion in the FAS to any occupational pension scheme that is not a money purchase scheme. The purpose of the clause is to ensure that schemes that qualify for the FAS would have similar characteristics to those that will be eligible for the PPF. That is still our intention.

Although the PPF has not yet set out precisely which schemes or descriptions of schemes will not be eligible, it can be expected that this will include those types of scheme that will be excluded from the new scheme specific funding regime, which was formerly the MFR (minimum funding requirement). On the assumption of a read across—therefore, who would be excluded—that is because those schemes already have an existing framework that provides a high level of security. One example of that is schemes where there are fewer than two members, where the sole member might be expected to monitor the funding level of their scheme.

In my second example, the FAS would also, by this amendment, be forced to help schemes that have not been tax approved. Those are generally established for highly paid employees, such as senior executives, and supplement the benefits that they will receive from approved schemes. The noble Lord asked who would be excluded. I have given two examples, which I hope he will think is enough.

Photo of Lord Skelmersdale Lord Skelmersdale Shadow Minister, Economic Affairs, Deputy Chief Whip, Whips, Shadow Minister, Health

My Lords, things are improving just marginally. However, in answer to two successive amendments, I suggest that the noble Baroness has said rather different things. Just now, she said to the noble Baroness, Lady Turner, that the Government were considering whether solvent employers with underfunded schemes would be covered by the FAS. She is now saying that the PPF rules will almost invariably apply. The point about the PPF is that we are talking about employers who have gone broke with underfunded schemes.

The noble Baroness cannot have it both ways. Clearly, I shall have to read today's debate in Hansard even more carefully than usual and decide whether to sort this problem out at Third Reading. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions)

My Lords, in speaking to Amendment No. 275, I shall speak also to Amendments Nos. 277 and 281, which apply to Clause 284. Amendments Nos. 275 and 277 would allow regulations to set a time limit within which schemes and members of fully wound-up schemes are required to notify FAS of their existence in order to be assessed to see if assistance may be provided in respect of those schemes.

It is important that the FAS is aware of all schemes in respect of which assistance may be provided within a reasonable time period. Otherwise, it would have to make contingency arrangements to meet an unknown number of possible future claims. That could have an adverse effect on budgeting arrangements and administrative costs.

It is quite common for such time limits to be set when claims are made for compensation or assistance that is not of an ongoing basis. We did that in the review of pensions mis-selling and the miners' compensation scheme, which were administered by the DTI. Unlike those two examples, the FAS will provide assistance rather than compensation. Therefore, it has greater justification for managing a limited budget through imposing a scheme notification period.

The details that would need to be provided as a result of the amendment would be minimal and merely relate to the scheme's existence. As part of the current data collection exercise, many schemes have already provided those details to the DWP. It is not our intention to require schemes to do them twice over, but we need to do it in that way.

Amendment No. 281 would allow, if required, regulations to set up procedures in connection with reviews and appeals against determinations made in relation to the FAS, and in connection with the investigation of complaints of maladministration against the scheme. It would also allow a body to be established, or for a person to be appointed, specifically for this purpose.

Noble Lords will be aware that we are still developing the details of the financial assistance scheme. This amendment would enable us to determine and put in place review and appeal arrangements which are congruent with Article 6 of the European Convention on Human Rights.

I hope that I have described in sufficient detail what these amendments seek to do and I ask noble Lords to support them. They are of course benign. I beg to move.

Photo of Lord Higgins Lord Higgins Shadow Minister, Economic Affairs

My Lords, I am most grateful to the noble Baroness for that explanation. I understand that one of the amendments is concerned with appeals and so forth, and one with the collection of data. Is it not rather strange that these amendments are being introduced at this stage in the proceedings? There were opportunities earlier in Grand Committee to bring forward this kind of amendment. I am not sure why they have turned up at such a late stage. Perhaps the noble Baroness could let us know the reason.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions)

My Lords, I do not have an easy answer. In terms of the appeals procedures, I suspect that that may have been due to an oversight. On the collection of data, I think that we realised after further scrutiny that we had not provided for a time limit in a way that does not apply to the PPF. This is one issue where we will not have an exact parallel and therefore we needed to take specific powers.

On Question, amendment agreed to.

Photo of Lord Skelmersdale Lord Skelmersdale Shadow Minister, Economic Affairs, Deputy Chief Whip, Whips, Shadow Minister, Health

My Lords, before we move on, given that we are so close to the witching hour of a quarter to seven when we are supposed to take the next Statement, would it not be sensible for us to break now?

Photo of Lord Grocott Lord Grocott Chief Whip (House of Lords), HM Household, Captain of the Honourable Corps of Gentlemen-at-Arms (HM Household) (Chief Whip, House of Lords)

My Lords, I have a sense of the meeting although I was not in my place. I think that we are all agreed that we should take the second Statement now.

I beg to move that further consideration on Report be now adjourned. In moving the Motion I should remind the House that we shall return to consider the Pensions Bill no earlier than 8 p.m., although of course it may be later than that.

Perhaps I may remind the House of what I said earlier. We shall move from the Statement straight to the Motion tabled in the name of the noble Lord, Lord Lester. Since we cannot predict exactly how long these two pieces of business will take, I move that the House should not return to further consideration on Report any earlier than 8 p.m.

Moved accordingly, and, on Question, Motion agreed to.