Pensions Bill

– in the House of Lords at 3:08 pm on 24th July 2007.

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Votes in this debate

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

commons REASONS

[The page and line references are to Bill 61 as first printed for the Commons.]

Page 2, line 32, at end insert-

"(3A) With effect from the commencement of this section or 1st November 2007, whichever shall be earlier, the contributor may at any time up to state pension age, make voluntary (Class 3) contributions for any period of his or her working life, in respect of up to 9 years, whether consecutive or not, which for any reason shall not have satisfied the conditions for a Qualifying Year or Years, so that such year or years shall then be deemed to be a Qualifying Year or Years."

The Commons disagree to Lords Amendment No. 1 for the following Reason-

Because it would involve charges on public funds, and the Commons do not offer any further Reason, trusting that this reason may be deemed sufficient.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions) (also in the Department for Communities and Local Government)

My Lords, I beg to move Motion A, That the House do not insist on its Amendment No. 1 to which the Commons have disagreed for their reason numbered 1A.

I am grateful to my noble friend Lady Hollis for all the work she has done on this important issue and it is clear that she gained the support of noble Lords on all sides of this House, as evidenced by those who spoke so passionately on Report.

My noble friend's amendment was overturned in the other place for reasons of financial privilege. The amendment carries with it spending commitments, as I outlined on Report. Since then further legal advice is that the amendment, although not in a form which achieves the desired objective, can sit alongside the current arrangements so it properly expresses the policy intent.

As I said on Report, we understand, and are very sympathetic to, the objectives of the amendment, and hope that we can deliver its aim of helping women in this country if at all possible. The Government have always been clear about their desire to provide fairer outcomes for women and the measures in the Bill demonstrate that commitment.

My honourable friend the Minister of State, during consideration of the amendment in the other place, recognised the strength of feeling expressed by your Lordships and I, too, was left in no doubt of that. As he made clear, we are keen to find a solution that may bring more people further into the contributory system. However, this is a complicated issue, and it is important to explore the complexities and possible implications of the range of options, including the proposal in my noble friend's amendment.

There are, for example, options in relation to the number of years that could be purchased, the rate at which additional contributions could be paid, the treatment of individuals overseas and the interaction with the current system. Those have varying administrative, legal, cost, distributional and policy implications, and we need to ensure that we get any targeted solution right. I hope that my letter to my noble friend Lord McIntosh, which was copied to all noble Lords who spoke at Second Reading and placed in the Library, explained a little further the possible cost implications. We want to find a way to overcome these problems. We are keen that any solution should deliver a fair outcome for individuals who have experienced complex and fragmented lives, but at the same time we need to be mindful of how any changes would impact on people living overseas.

With that in mind, the Government will commit to looking at the range of options in the coming weeks, including the option to buy additional years as proposed in the amendment, and to provide an update at the Pre-Budget Report. In doing so, the Government will consider all the options in terms of the following principles: fairness, as any solution must help those most in need; affordability, as any solution must be affordable and sustainable; and simplicity, as any solution must be deliverable, simple to implement and understandable to those whom it would benefit. There is no difference between your Lordships' wishes to help women in this country and our wish, but we need to deal with the practical problems. I cannot make a commitment that we will achieve that outcome today, but we will use our best endeavours to deliver the principles of the noble Baroness's amendment.

We have listened very carefully to your Lordships' concerns, and we take them seriously. I understand that my noble friend Lady Hollis believes that our proposal is a useful basis on which to go forward; I thank her for that. I hope that your Lordships are of the same view. We also intend to seek the views of relevant stakeholders.

Moved, That the House do not insist on its Amendment 1 to which the Commons have disagreed for their reason numbered 1A.—(Lord McKenzie of Luton.)

Photo of Baroness O'Cathain Baroness O'Cathain Conservative

My Lords, I very much welcome the moral commitment made by the Minister. I particularly liked his three points, which came through in the long debate that we had; fairness, affordability and simplicity. Of course it is a complicated and complex issue; most things that are worth fighting for are. The principle of the amendment is essential if poorer women in particular are to have the security of being able to look forward to saving. I am sure that next year, when we consider the personal accounts Bill, we will be able to come back to this issue if we have to. I hope that we do not have to do so and that what happens in the next few months, with the great commitment of the Minister, will make that unnecessary. Meanwhile, let us hope that he will understand that, certainly from my point of view, this issue will not go away. I thank him.

Photo of Lord Lester of Herne Hill Lord Lester of Herne Hill Liberal Democrat

My Lords, I did not take part in the earlier debates on the Bill. Therefore, I apologise for saying anything, and I will be extremely brief. First, the noble Baroness, Lady Hollis, has done a great favour to everyone in tabling the important amendment, which deals with an ancient source of injustice, especially to women in this country. I wish I had been able to say that at Second Reading. Secondly, I am very pleased to note what has been said in the other place by the Minister and what has just been said by the Minister in this House.

Wearing my hat as an unpaid legal adviser, to draw a distinction between people in this country and people outside this country on the basis of a close connection with this country in deciding on whether the purchase of added years should be permitted would, in my view, be compatible with the European Convention on Human Rights and the Human Rights Act. There is the case of Carson, which is a decision by majority of the House of Lords, which is now before the European Court of Human Rights. I agree with what the majority said in that case about the rational basis for drawing a distinction effectively on the basis of whether one lives in this country and throws in one's lot in this country in order to get the benefit. There are wider problems about EU law but again those are not difficult, as one is drawing a distinction not between British and EU citizens but on the basis of residence in this country, which would apply equally to other EU citizens. I therefore believe that it will be possible for the Government to honour their obligation now, to give effect to the principles in the amendment of the noble Baroness, Lady Hollis, and I hope to see that come to pass soon.

Photo of Baroness Howe of Idlicote Baroness Howe of Idlicote Crossbench 3:15 pm, 24th July 2007

My Lords, we all noted in the Minister's language a genuine attempt both to take account of what was said and give it proper weight. I cannot say that I am entirely happy with the result; you would not expect me or many other noble Lords who took part in the debate to be absolutely overjoyed. However, I certainly recognise the attention that has been given to the issue. On the basis that the noble Baroness, Lady Hollis, will be around—nobody has greater expertise—I have every confidence that the maximum benefit will be extracted in the long run, and I hope in the very short run. I congratulate her sincerely on all she has achieved, and the Minister on what he has partially achieved so far.

Photo of Baroness Thomas of Winchester Baroness Thomas of Winchester Spokesperson in the Lords, Work & Pensions

My Lords, it came as no surprise to these Benches that the other place did not waive financial privilege for the amendment; obviously there is no point in this House insisting on it. As my honourable friend Danny Alexander said, the amendment would have tackled the great injustice faced by many women in their quest to get a full pension, even under the new system, particularly the cliff edge from 39 to 30 years. The issue of a practical solution to the problem of a broken pension contribution record, highlighted by the amendment, has certainly touched a chord with the British people, as the number of e-mails sent to the "Today" programme in response to an item about it showed.

It is obviously right for more research to be done by the department to make sure that any solution is targeted on those that it is designed to help. I hope that it will be possible for the matter to be brought up again, either in the next Pensions Bill when the department has done the research or, even better, by order under the 1992 Act. From these Benches, I congratulate the noble Baroness, Lady Hollis, on all her hard work. I hope that it will eventually bear much fruit.

Photo of Lord Mackay of Clashfern Lord Mackay of Clashfern Conservative

My Lords, I join those who have congratulated the noble Baroness, Lady Hollis, on securing this. So far as I can see, it is really about as far as we could reasonably be expected to go with the amendment. I believe that, in due course, the Government will be able to overcome the obstacles that appear at present. I am sure that those obstacles are just to test their ingenuity.

Photo of Lord Barnett Lord Barnett Labour

My Lords, I add my congratulations to my noble friend. Has the Minister's commitment been agreed with the Treasury? I say that with a little experience, a long time ago. It is important that the Treasury be committed to what he said, so I hope that he can give me that assurance.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Labour

My Lords, in the words of the noble Baroness, Lady O'Cathain, the statement repeated by my noble friend today—it was first offered by the Minister in the other place—to me represents a moral commitment or, to coin a phrase, a promise with menaces. We expect it to be delivered and I am confident that my noble friend will use his best endeavours so to do. I am very grateful for today's comments suggesting that there need be no immediate legal obstacles in the road that would stop the show. There are problems to be addressed and overcome, but nothing that should stop the ultimate success of the amendment, which will bring women in this country, who have often spent their lives in caring, into the contributory system in their own right, as we should all wish to see.

Therefore I should give some thanks. Thank you, first, to my noble friend, to Mr Mike O'Brien in the other place and to the civil servants supporting them, who have always been available to see one and were almost always open-minded when they did. That was greatly appreciated. To my certain knowledge, they have worked very hard indeed in negotiations with the Treasury, and this statement now represents the Government's position and not just that of the department. I very much appreciate that.

The second thank you is to the outside organisations, particularly Carers UK, Help the Aged, Age Concern and, above all, the Equal Opportunities Commission, which helped to form and organise the Women's Pensions Network. I suspect that many noble Lords will have been at the receiving ends of its missives, e-mails and, indeed, its appreciation and gratitude. It very much values all that has been done in this House.

Thirdly, if it is not impertinent, I thank your Lordships. It was amazing to sit here and watch how the debate took fire. It went right around the House, with contributions, support and votes almost equally judged around the Back Benches, including distinguished Back-Benchers, in a way that many of us could not have dreamed of when we started this battle a year or two ago. I am very grateful to the 179 noble Lords who supported the amendment in their speeches and votes. To the 86 noble Lords who felt that they could not support the amendment, I would at least like to place on record my appreciation of their generosity and tolerance to someone from their own side who, none the less, sought to challenge government policy. Among those 86 is a Peer whose wife has chastised him roundly for his vote. Another Peer's two daughters have angrily criticised the position he adopted on the day. I do not doubt that, as the noble Baroness, Lady O'Cathain, said, if we revisited this issue, we could count on even greater support on the government Benches from those who realise that this is not just a House of Lords issue, but a family issue, a women's issue and a citizens' issue.

Therefore, if it is not impertinent, I thank noble Lords most sincerely on behalf of all the women whose interests we have in mind on this. We have gone a very long way. I am comfortable with my noble friend's statement. I am confident that the Government will deliver. It would be right to say that we all expect no less. Therefore, I suggest that we accept my noble friend's recommendations.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions) (also in the Department for Communities and Local Government)

My Lords, I thank my noble friend Lady Hollis for the way she has worked with us to reach what I think is a sensible solution that provides the basis of a move forward, and I thank all other noble Lords who have spoken in this short debate. It is clear that the sentiment of the House has not shifted from that which it expressed on Report and I, for one, hope that we can get a solution, because I would rather not go through that debate again. In response to my noble friend Lord Barnett: yes, this has been agreed with the Treasury. Clearly, policy relating to national insurance contributions is a matter for the Treasury and it has vetted the statement I gave earlier.

The Government have been clear about their commitment to provide fairer outcomes for women. As I said previously, many measures in the Bill show that. I hope noble Lords will agree that we have shown sympathy for the objective of my noble friend's amendment during debates in both Houses. The objective of fairer outcomes was never a sticking point here, rather the means by which to reach that objective. This is a complex issue and I am sure noble Lords will agree that it is sensible to explore all the possible implications of the options open to us before drawing conclusions. I particularly thank the noble Lord, Lord Lester, for his contribution and will specifically draw his comments to the attention of officials.

The Government are committed to looking at all the options, getting the views of stakeholders—for example, the EOC—and coming up with a solution. This has to be fair, practical, affordable and easily understood, while meeting the principles inherent in my noble friend's original amendment, which is to help women living here to achieve a full basic state pension. I cannot pre-empt what the outcome will be but I hope that the update provided in the Pre-Budget Report will provide an outcome with which we can all be satisfied.

On Question, Motion agreed to.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions) (also in the Department for Communities and Local Government)

moved Motion B:

Insert the following new Clause-

"Minimum retirement income

(1) The amount of the minimum retirement income in respect of each tax year shall be set by the Chancellor of the Exchequer by order at the level of the standard minimum guarantee prescribed under section 2 of the State Pension Credit Act 2002 (c. 16).

(2) Before making an order under subsection (1), the Chancellor of the Exchequer shall consult such persons as he considers appropriate.

(3) An order under this section (other than the order that applies to the first tax year during which this section is in force) must be made on or before 31st January of the tax year before the tax year to which the order applies."

The Commons disagree to Lords Amendments Nos. 12, 13, 14 and 73 for the following reason-

Because they would alter provisions relating to taxation, and the Commons do not offer any further reason, trusting that this reason may be deemed sufficient.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions) (also in the Department for Communities and Local Government)

My Lords, I beg to move that the House do not insist on its Amendments Nos. 12, 13, 14 and 73, to which the Commons have disagreed for their reasons numbered 12A, 13A, 14A and 73A.

I begin by respectfully reminding noble Lords that, as Amendments Nos. 12 to 14 and 73 would alter provisions relating to taxation, they fall outside the scope of this House. Specifically, the amendments would reduce tax revenues. The retirement income fund, set out in Clauses 12 to 14, would enable individuals to shelter large tax-privileged pension funds until death and then pass them on to heirs. It could also allow large discretionary lump-sum withdrawals where the tax relief given would be likely to exceed the tax recouped when the lump sum was taken out. Additional funds—largely from existing savings vehicles—would be likely to be recycled into pension savings to take advantage of the scheme. By allowing value protection on an annuity at any age, Lords Amendment No. 73 would provide the potential for tax relief on pension savings to be used to provide tax-advantaged capital on death during any stage of retirement and not a retirement income.

However, even if the other place had been willing to waive its privileges relating to taxation, the Government would still fundamentally oppose Amendments Nos. 12 to 14 and 73 because they cut across several of the fundamental principles of government pensions policy. Tax relief on pensions saving, which amounted to more than £16 billion in 2006-07, is given to encourage people to save for retirement. As part of the "deal", tax-privileged pension savings must be turned into a retirement income by the age of 75. Reflecting retirement patterns, there is little pressure on the age limit of 75: only 5 per cent annuitise after the age of 70 and most people do it before that. As working longer is key to meeting the pensions challenge, the Government continue to keep this under review.

Your Lordships will recall that, under an RIF, a pension fund could remain invested for life. Annual withdrawals between minimum and maximum limits would be permitted, depending on a member's other income, life expectancy and a defined minimum retirement income. We have consistently stated that the RIF violates this deal behind pensions tax relief. Depending on other income sources, an RIF could allow someone either to extract large lump sums of tax-advantaged pensions savings for any purpose or to choose not to draw any income so that he or she could pass the fund on at death. Both violate the policy reason for giving tax relief.

We have consistently been clear that, for the vast majority, an annuity is the best way to secure a retirement income. The RIF is silent on tax treatment on death, and I fear that it is designed solely to allow pension funds to be passed on to heirs. No one should contribute to a pension with the aim of being able to pass on funds where more than half may consist of tax relief.

Amendment No. 73 would abolish the current age limit of 75 for value-protected annuities. This would allow an open-ended return of capital throughout all stages of retirement, which would tend to benefit those more interested in using their pension fund for inheritance planning rather than a retirement income. I therefore urge that this House does not insist on its amendments.

Moved, That the House do not insist on its Amendments Nos. 12, 13, 14 and 73 to which the Commons have disagreed for their reasons numbered 12A, 13A, 14A and 73A.—(Lord McKenzie of Luton.)

Photo of Lord Hunt of Wirral Lord Hunt of Wirral Conservative 3:30 pm, 24th July 2007

My Lords, I am surprised at what the Minister has just said. There is a paradox. He said that the amendments are faulty in that they are silent on the tax treatment of the fund, yet the Government have decided that the amendments are in breach of privilege because they deal with taxation. The amendments are either silent or they are not. Even more important, the amendments have been the subject of legitimate discussion on several previous occasions. For instance, on 15 November 2004, your Lordships' House defeated the Government on the question of the maximum age for annuities. Then, on 17 November 2004, there was a further government defeat on the amendment tabled by my noble friend Lord Higgins to raise the age to 85.

It is curious that suddenly privilege is invoked. The Minister owes us some further explanation. It may be that someone somewhere decided to protest about other amendments on the basis of privilege and to extend the protest to this group, failing to realise that the House has debated these subjects on many previous occasions. I think that the noble Baroness, Lady Hollis, responded in 2004. We are owed a further explanation.

When I looked at the Official Report of the other place to see whether I could be persuaded by the arguments that had been used against these amendments, I discovered that no one had even discussed them because of the operation of a timetable Motion. I have not changed my mind, because no one in the other place tried to change it

The Minister has once again put forward the case as he sees it. He is always very articulate, particularly about this terrible phenomenon of tax avoidance—being able to build up funds and avoid tax. I do not think that the Government have any right to tell pensioners what to do with their pension pot beyond what effect it can have on their eligibility for various benefits. The tax incentives that the Government give to encourage responsible savings in no way transfer the ownership of this money to the Government.

In opposing the amendments on the previous occasion, the Minister claimed that the point of pension tax incentives is to provide an income in retirement "and nothing else". If this is so, why does he feel that it is his Government's responsibility to involve themselves in how that income is spent? He described the minimal flexibility that is allowed—the possibility of taking up to 25 per cent of the pension as a lump sum—as a generous concession on the part of the Government. That is ridiculous. What possible business of the Government can it be if a pensioner decides to blow 30 per cent, 50 per cent or any amount of their pension pot, as long as they do not throw themselves on to benefits by so doing?

This patronising and paternalistic attitude taken by the Government can be further seen by the noble Lord's words when talking about the alternative secure pension regime that the Government allowed for those with a religious objection to annuities. He described people as "piling in" and trying to abuse the arrangements. Why do the Government consider it abuse when a person attempts to use a legal and profitable mechanism for investing his or her money? After all, the Government created this opportunity for people. What is wrong with them taking that opportunity?

The Minister said in response to these amendments the first time round, and has repeated it a few moments ago, that to spend a pension pot on things other than an annuity was an improper use of tax-privileged savings. Can he explain the difference between spending your savings and spending the proceeds of an annuity? The only principled difference between my amendments and the current arrangements is the mechanism by which care is taken to stop pensioners falling on to benefits. That must surely be the only legitimate reason for the Government to intervene.

This issue will not go away. I can only hope that when we table these amendments again, the Government will be in a more receptive mood.

Photo of Lord Skelmersdale Lord Skelmersdale Shadow Minister, Work & Pensions

My Lords, my noble friend may be surprised that another place's reaction to his amendment is to plead privilege. For my part, I am far from pleased that the guillotine Motion meant that that House did not discuss the arguments at all. What price the Prime Minister's pledge to give Parliament more say and control over the Executive? Instead, we got a knee-jerk reaction of privilege.

My noble friend made a principled point that the Government should not be telling people what to do with their money above and beyond how that impacts on the taxpayer. This is doubly true when one considers what a bad bargain buying an annuity can be. The Government's own Young review, the interim findings of which will be the subject of the debate to come in a few moments, clearly pointed out what a waste of resources buying an annuity can be. That the Government are forcing people to spend their retirement money—and it is still their money—in such an unprofitable manner is simply shocking. That they seem completely unashamed that they are doing so is no less than appalling.

As we made clear in Committee, these amendments are a point of principle; my noble friend has just reiterated that. The issue that we were voting on is not how the tax provisions should be amended in response to retirement income funds as the Minister, and Ministers in another place, would like to make it. As the privilege reason makes clear, that is a matter for another place to decide on. These amendments did not presume to touch on it, as the Minister noted previously. I gently suggest that he occasionally read his own speeches, as I tend to read his. Instead, these amendments were an attempt to restart a debate that the Government promised but then failed to deliver. Where is the review on compulsory annuitisation that was promised by Mr Wicks in another place on 16 November 2004, at Hansard col. 1223, with "particular care and urgency"? We have not had it.

The Minister claimed that there was a point of principle behind his objection to the lifting of annuity requirements, but I am unable to find it in his response in Committee. All I can see is a statement where he claims that the retirement income funds do not provide a secure income for retirement, but there is unfortunately little more explanation than that. He should take this opportunity, as my noble friend has requested, to set out his principled objections more clearly. Indeed, the Government have already conceded the principle. The exemption for the Plymouth Brethren shows that there are less restrictive ways to guarantee a retirement income, and I assume that the Government were satisfied that alternatively assured pension schemes did not waste taxpayers' money, since the Government themselves invented them. Can the Minister please explain why what was considered appropriate in that case is not now considered suitable for the population at large?

Photo of Lord Oakeshott of Seagrove Bay Lord Oakeshott of Seagrove Bay Spokesperson in the Lords, Treasury, Spokesperson in the Lords, Work & Pensions

My Lords, I have considerable sympathy for the points made, particularly by the noble Lord, Lord Hunt, about the procedure for dealing with these amendments. I will go into more detail on the invoking of privilege on the financial assistance scheme when we come to those amendments, but I agree with the noble Lord on this. It is particularly unfortunate when there has been no debate in another place. That really makes a farce of democracy.

On the substance of the amendments, as noble Lords will know from our previous debates, we on these Benches feel that the Conservative amendments are unnecessarily complicated. Simplicity is the key to sound pension arrangements. Like the noble Lord, Lord Skelmersdale, we still await the promised review. I remember it being promised in the light of the Turner report—I had detailed negotiations with Mr Wicks at that time—on the simple question of whether the age of compulsory annuitisation should be substantially raised, which is our preferred option. As the Minister said, we are trying to encourage people to work longer. Given how much longer people are working and the substantial increase in life expectancy and healthy life expectancy, we on these Benches believe that that age should be raised substantially and we expect and demand an answer on what has happened to the review.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions) (also in the Department for Communities and Local Government)

My Lords, I shall start by dealing with the issue of Commons privilege. I am advised that the constitutional position is that the House of Lords accepts the Commons' financial privilege and does not challenge it. That extends to not querying the Commons' decisions to rely on financial privilege. I must adhere to that advice.

The noble Lord, Lord Hunt, said that I said that the RIF was silent on certain tax issues. That is right, but this is to do with tax planning. We have to look at this in totality. The whole regime for pensions and any changes to the existing regime must encompass changes to the tax regime. Indeed, when this amendment was moved on Report, some noble Lords spoke about it giving an opportunity to accumulate a fund that could be passed on on death. There is no doubt that the intent of some of the people who supported the proposition related to getting a better tax deal than under the current arrangements.

The noble Lord asked what this has to do with the Government. It has a lot to do with the Government. If the Government set down, because they have a democratic mandate to do so, a tax regime that encourages and incentivises pensions savings, there is a set of rules to subscribe to. I touched on those rules and I am happy to repeat that, within the parameters of lifetime allowance and annual allowances, there is tax deduction on the way in and tax-free build-up of funds within the scheme, but there comes a time when that has to be converted into an annuity, which is taxable on the way out. That is the regime that the Government have set down; we are entirely entitled to say that it is the regime under which we operate. I hope that my remarks touched on the added tax benefit that the 25 per cent tax-free withdrawal gives the pensions savings regime, because part of the fund comes out in a way that is not taxable.

The noble Lord, Lord Skelmersdale, said that the Young report stated that buying an annuity is a bad bargain. That is an unjustified reading of the report. It stated that you could do better by taking the funds in a range of schemes in aggregate than by annuitising on an individual basis. In the 2006 report, there was a review of the annuities market—the biggest review that has ever taken place—and it concluded that annuities are fairly priced. There was substantial work to justify that.

Photo of Lord Skelmersdale Lord Skelmersdale Shadow Minister, Work & Pensions

My Lords, is it not true that the Young report is, at least in part, about the globalisation of schemes and the purchasing of bulk annuities, which would be considerably cheaper than, if you like, drip-feeding? This amendment is about drip-feeding. They cannot be compared.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions) (also in the Department for Communities and Local Government)

My Lords, the noble Lord is right in identifying part of what the Young report said, but the point about the RIF proposals is that they would work only for people who have significant pension pots because the investment risk—the longevity risk—is with the fund, which needs to be a certain size to sustain it and to afford the sort of advice that it needs to deal with the asset management issues that flow from that. In a sense, that is consistent with the Young review.

The noble Lord pressed me, as did the noble Lord, Lord Oakeshott, about what had happened to the promise in 2004. I regret that I do not have a specific answer on that, but I will write to both noble Lords on the matter.

I am conscious that this issue will recur in your Lordships' House and elsewhere from time to time, but I urge the House to support the proposition that I have advanced.

On Question, Motion agreed to.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions) (also in the Department for Communities and Local Government) 3:45 pm, 24th July 2007

moved Motion. C:

Insert the following new Clause-

"Financial assistance scheme: scheme manager

(1) The Financial Assistance Scheme Regulations 2005 (S.I. 2005/1986) are amended as follows.

(2) In regulation 5(1) for "Secretary of State" substitute "Board of the Pension Protection Fund ("the Board")".

(3) In regulation 5(2)(a) omit the words from "Secretary of State" to the end of that paragraph and insert "the Board".

(4) In regulation 5, sub-paragraph (2)(b) is omitted."

The Commons disagree to Lords Amendment No. 15 for the following Reason-

Because it is inappropriate to replace the Secretary of State as the manager of the Financial Assistance Scheme with the Board of the Pension Protection Fund.

The Commons disagree to Lords Amendments Nos. 16, 17, 18, 23 and 24 for the following Reason-

Because they would involve charges on public funds, and the Commons do not offer any further Reason, trusting that this reason may be deemed sufficient.

The Commons disagree to Lords Amendments Nos. 19, 20 and 21 for the following Reason-

Because they make provision connected with that made by Lords Amendments Nos. 17 and 18, to which the Commons have disagreed.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions) (also in the Department for Communities and Local Government)

My Lords, I beg to move Motion C, that this House do not insist on its Amendments Nos.15 to 21, 23 and 24, to which the Commons have disagreed for their reasons Nos. 15A to 21A, 23A and 24A.

A great deal has happened since this House amended the Pensions Bill to reflect concerns about the generosity and efficiency of the financial assistance scheme. We have a new Prime Minister, a new Secretary of State for Work and Pensions and a new Minister of State for Pensions Reform. We still have the same old Lords' Minister, who has not yet been churned out of office. And we have the interim findings of the Young review into assets remaining in failed pension schemes.

As a consequence of those findings, the Minister of State for Pensions Reform announced on 17 July that the Government will match the extra value available from scheme funds that the review identifies. Our goal is to move towards 90 per cent of expected core pension for all qualifying members. This is a potential commitment of some £225 million in addition to the £1.9 billion already promised, in net present value terms, to FAS.

The work done by the Young review so far is impressive, especially as it was completed by the review team in such a short time. The interim findings demonstrate that a better outcome is possible for scheme members. By approaching the winding-up process differently, we can make more effective use of the monies remaining in schemes. I hope that noble Lords will join me in welcoming the findings and the Government's subsequent commitment. That commitment to move towards 90 per cent is in addition to the extension to FAS already announced, thus making all members of schemes eligible regardless of how far from retirement age they are, raising the cap, scrapping the de minimis, helping schemes where there has been a compromise agreement, and raising the level at which we pay initial payments from the time the Bill receives Royal Assent.

I was also pleased, though not surprised, that the review's interim findings have confirmed what the Government have been telling the Opposition for some time—that other non-tax sources are unlikely to play a significant role in any solution.

I can also announce today that we have decided to accept the review's recommendation that we should not enforce a cut-off date for employer insolvency.

On the 27 February 2007, the Minister of State for Pensions Reform announced that he would extend to 31 August 2007 the date by which an employer of a scheme in wind-up had to experience an insolvency event for that scheme to qualify for FAS. I can confirm today that we will not now enforce that date. We will consult on whether there should be a cut-off date and bring forward regulations in due course.

The other place has asked us to reconsider the bulk of the amendments made to the Bill on the financial assistance scheme on the grounds of financial privilege. The noble Lord, Lord Turnbull, warned us in Committee that the proposals to fund higher levels of assistance by using unclaimed assets were straying into dangerous territory. He has been proved right.

Notwithstanding the fact that the Young review has determined that the non-tax sources of funding that it looked at are not suitable, the proposals to guarantee the lifeboat fund and on-account payments by trustees rely on taxpayers' money being made available to plug the gaps that would inevitably occur in such uncosted and untested bodies.

Amendments Nos. 16 and 24, bringing in schemes with solvent employers and paying PPF levels of benefit, represent obvious calls on the public purse, perhaps running into hundreds of millions of pounds. It would be fiscally irresponsible to insist on them.

The other place disagrees with Lords Amendment No. 15 on the grounds that it is inappropriate to replace as FAS scheme manager the Secretary of State for Work and Pensions with the board of the PPF. That would be inappropriate at this time, and without substantial preparatory work.

Last year's review of FAS administration, which enjoyed input from the PPF, was well received. It concluded that, although lessons could be learned from the PPF's approach to proactive data gathering, there would be significant constraints on its ability to manage FAS operations. The issues involved in FAS are complex and outside the experience of the PPF. The Government would not want PPF operations to be hampered by having to come to terms with an unfamiliar system, with its own unique difficulties and challenges, especially in PPF's early years of operation.

I acknowledge the criticisms that have been made of FAS, but I emphasise once again the professionalism and commitment of the staff, who are working with schemes that may have inadequate records and where members may have long since abandoned hope of seeing anything of their pension. To quote Andrew Gaspar of Pitmans Trustees:

"The FAS is doing its best in fairly trying circumstances. People there are trying to get the job done while the press is continually on their back. I am not sure they are at fault".

He is the independent trustee of a scheme where we have received data for all 52 members and assessed them for annual payments from the FAS.

I do not rule out wanting to look again at the issue, especially if the Young review identifies different approaches to funding, but I do not think that it is sensible to pre-empt those findings or to cause disruption and distraction to FAS operations at this time.

The Government have given a commitment to raise the levels of assistance towards 90 per cent if, as we believe will be the case, the Young review is able to get better value from funds remaining in schemes. The Young review is also gathering information on schemes with solvent employers to allow us to make a considered decision on to how they should be treated. We must wait for the review's final report, which we have asked to be brought forward to November, before committing to any additional spending.

Let us not lose sight of the fact that we will, from Royal Assent, be able to pay more money to more people immediately as a result of raising initial payments. I urge Your Lordships not to stand in the way of getting that help to people now.

Moved, That this House do not insist on its Amendments Nos. 15 to 21, 23 and 24, to which the Commons have disagreed for their reasons Nos. 15A to 21A, 23A and 24A.—(Lord McKenzie of Luton.)

Photo of Lord Skelmersdale Lord Skelmersdale Shadow Minister, Work & Pensions

My Lords, the Minister has sketched out the background to the problem and I am extremely grateful to him for that. I am also glad that the cut-off date is to be extended. The amendments that we moved originally would have set up a fund taking any unclaimed assets identified by the public assets register, with the exception of those in banks and building societies, which have already been allocated by the Government to another public good—that of assisting children and charities—as their unprecedented Statement on future legislation told us.

I rather wonder whether the Minister has been reading the same Young report as I got from the Printed Paper Office yesterday. On page 5, it clearly states:

"the Review team believe it should still conduct some further investigation of the complex legal and operational issues raised by unclaimed assets, involving Government and industry as required".

The story of unclaimed assets is by no means dead. It may become dead at the end of the day, but as of this moment it is not.

When the lifeboat fund is being set up, the Government will kick-start it with a loan in exactly the same way that the previous Conservative Government treated the collapsed pension schemes of the late Robert Maxwell's commercial venture.

When the Bill returned to the Commons last week, the Government said—I paraphrase—"No way", and the great clunking fist came down, manifesting itself in the Commons reason of privilege to all but one of the group of amendments, which we will discuss shortly. It is with great regret that I tell your Lordships that, despite what the Minister rather surprisingly said in his preamble, we must accept the reason produced by another place.

Shortly before your Lordships' activities in Committee, the Government rather sold the pass by setting up the Young committee to look at whether the assets of the failed schemes could be better used once they came under the remit of the FAS. Indeed, we have just had a little exchange about the results of that. In its interim report at the end of last week, it decided that they could but that the final report would flesh out exactly how much might be available and by what means. Ministers immediately announced that they would produce matching funds. This is yet another ratcheting up of government money for the FAS—something of which I of course approve. However, I note with a certain amount of irony that one of the Government's objections to the lifeboat scheme was that it was uncosted. So, too, is the matching money that the Government have promised. What is sauce for the goose should be sauce for the gander. The expression "the pot calling the kettle black" rather springs to mind.

We have not even been given a clear idea of how the Government intend to calculate the savings to which the Young review might lead. Do they perhaps intend to backdate any savings to the start of the FAS? The history of the FAS is shabby, to say the least. It was originally set up to quell a Back-Bench rebellion in another place, and was given the least amount of money—£400 million—that the Government felt they could get away with. To spread this evenly, they decided that they could not afford to pay the 90 per cent of expected pensions, which was the amount that would be paid to members of pension schemes that came under the PPF; so they invented what they called the core pension, with a de minimis limit. There is no lump-sum initial payment, no indexation and no widow's rights. No one gets anything before the age of 65 and, even then, only after a protracted checking process that can leave people whose funds are still in wind-up with nothing at all. The number of people so far granted any sort of pension under this scheme is just under 1,500. The Minister may have an update on that figure.

The Government realised that £400 million was nothing like enough, especially as they had committed themselves to paying 80 per cent of the core pension. Subsequently, £8 billion in total was eventually prised out of the Treasury's greedy maw, although this sum is to last the entire lifetime of the FAS, which could be 50 or 60 years. Will even that be enough? They now believe that the Young review will push the amount closer to 90 per cent. When talking about this, as the Minister did just now, they conveniently leave out the word "core", knowing full well that 90 per cent of the core pension is not even 65 per cent of the expected pension. Nevertheless, what is currently on offer is a minute extension to the amount that these pensioners will get, but not today or even this year. What is on offer is jam yesterday, jam perhaps tomorrow, but never jam today, and, thanks to that great clunking fist, regretfully your Lordships can do nothing about it. I promise this, however; the Government may have won a battle, but the war will go on until the 125,000 pensioners get what they deserve.

Photo of Lord Oakeshott of Seagrove Bay Lord Oakeshott of Seagrove Bay Spokesperson in the Lords, Treasury, Spokesperson in the Lords, Work & Pensions

My Lords, I welcome the Minister's acceptance of the Young review's recommendation not to enforce a cut-off date for solvent schemes. However, does he accept the Young review's key conclusion on page 29 that,

"the current FAS scheme is not the best way of ensuring good value, as there is a complicated process and benefit structure, considerable duplication of administration, insufficient risk pooling etc"?

Even the Government's own review comes to that damning conclusion.

One hundred and twenty-five thousand members of failed pension schemes have been robbed twice; first when their funds collapsed, and now by a government ruse to block House of Lords amendments to the Pensions Bill today. Almost all Bills where the House of Commons and the House of Lords disagree involve some public expenditure, but the Government suddenly decided that they were losing the argument in Parliament and the country on justice for the robbed pensioners, so they forced through, by a 3:2 vote over Opposition protests in a reasons committee, to,

"disagree to Lords Amendments ... Because they would alter provisions relating to taxation, and the Commons do not offer any further Reason, trusting that this reason may be deemed sufficient".

In a Written Answer from the noble Lord, Lord McKenzie, the Government have admitted that it would cost only £19 million a year over the next five years or £25 million a year over the next 10 years to give robbed pensioners the benefits that they would receive from the Pension Protection Fund. With the Minister's remarks about making extra value and matching forward, clearly those figures will be even less if further money is made available. I do not know whether the Minister can update and say how much less even than £19 million a year over five years or £25 million a year over 10 years it would now cost from where the Government have got to to pay the benefits we are asking for. Even the £19 million a year or £25 million a year are, frankly, small change compared to the major spending commitments in this Bill. The pension pots of the current Cabinet total more than £25 million.

This House does not seek to challenge the other place on financial privilege, but there is no fundamental breach of Commons financial privilege involved in the blocked Lords amendments. The Pensions Bill already has a hugely wide money resolution which sets no upper limit on the public expenditure it entails. There is no need to pass a supplementary resolution to cover any expenditure incurred by Lords amendments.

Parliament as a whole deserves a proper explanation of the reason why the Government—in a straight party vote in a committee chaired by a Minister, not some independent non-partisan ruling by the House of Commons, as people might think—have suddenly decided to pull up the drawbridge on debate now. Members of this House and the 125,000 robbed pensioners outside want to know why this decision does not have to be openly, properly and publicly debated and defended on the Floor of the House of Commons. Stifling debate by a majority of one vote in a committee of five people sitting behind closed doors is democracy in the dark. Britain deserves better from our Parliament.

The Minister said that we have a new Prime Minister, a new Secretary of State and a new Pensions Minister, but we have the same old spin on the FAS and the same old refusal to pay robbed pensioners their PPF benefits. We have this constant cheating with talking about core benefits whereas what the Government are proposing is more like 65 per cent of what people would be entitled to under the Pension Protection Fund. It is high time that they stopped spinning and started facing up to the demand for justice in the country.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions) (also in the Department for Communities and Local Government) 4:00 pm, 24th July 2007

My Lords, financial privilege has been raised again. I dealt with the position in relation to that when we discussed the previous amendment; that is, the Lords accepts those judgments of the Commons and the reasons given. It is also not right to say that the use of financial privilege has stopped debate on this issue. What have we just been doing? It would be perfectly in order for someone to move an amendment in lieu of the amendment that came forward so long as it did not impair the financial privilege of the other place. There was the opportunity to do that. We have not been stifling debate on this issue. Our exchanges have been reflective of the strength of feeling on this issue expressed in both Houses during the passage of the Bill.

The Government have always been sympathetic to those who have lost their pensions. Given this sympathy, we have always sought a satisfactory solution for those who suffered. We have had to balance this desire with the responsibility to ensure that any solution is fair on the taxpayer. The contributions of noble Lords and Members in the other place have helped us clarify where we might strike this balance.

We have moved forward. An amendment introduced by the Government during Report stage in the other place will guarantee that all 125,000 people affected will receive at least 80 per cent of their expected core pension. Let me make it clear: I believe that we have always used that term. If I have not in my earlier presentation, I reiterate it now. It is to do with core pension, which I accept is not the same as what would otherwise have been a full pension entitlement. That is of course subject to the cap. Indeed, with immediate effect from Royal Assent to the Bill, hundreds of people will be eligible for increased initial payments while their scheme is in wind-up.

During the other place's consideration of amendments originally tabled in this House, my honourable friend the Minister of State for Pensions Reform gave a further commitment: we will use the assets that we expect to be identified in the Young review, together with a matched contribution from the Government, to raise the levels of assistance towards 90 per cent of expected core pensions. The noble Lord, Lord Skelmersdale, said that that was an uncosted commitment, and we chided the Opposition for their position, as that was not a fair analysis. Our pledge to match the extra value available from scheme funds as a consequence of the assets review is not an uncosted commitment. The Government will match funds to get to 90 per cent, up to a maximum, we estimate, of £225 million in net present value terms. The lifeboat amendment promised PPF-level benefits. That is a £640 million commitment without any real evidence for where that money might be found. We will be working with trustees in order to maximise the assets in their schemes to make a real, not a possible, difference to the assistance level for members.

The noble Lords, Lord Skelmersdale and Lord Oakeshott, asked whether we accepted the recommendations of the Young review that we could do better out of the assets of those schemes. That comes from the interim work that he has done, although we will have to await the final report. He believes that by a variety of mechanisms we can do better, and the amendment we are coming to next will illustrate the Government's support for the position he has taken.

There are tangible commitments that will make a difference to the lives of thousands of those who have suffered. Both the noble Lord, Lord Skelmersdale, and the noble Lord, Lord Oakeshott, quoted the figure of 125,000 people. That is right, but it should be borne in mind that most of those have not reached pension age. To date, about 10,000 people have reached the age of 65 and are eligible. We are currently paying 1,367 people, 246 of them in annual payments and 1,111 in initial payments. A further 67 members will be paid once personal details are confirmed. Gross expenditure on payments to date is £5.28 million. One hundred and two schemes have completed notification, 867 schemes have completed qualification, 682 schemes have qualified and 288 schemes have provided data on their members that have been assessed.

I am sure that this issue, like the other amendment we have just discussed, will not go away, but I hope in the circumstances that the House will accept the Motion I have put to it.

On Question, Motion agreed to.

Insert the following new Clause-

"Purchase of annuities

The Secretary of State shall, as soon as is reasonably practicable, by regulations require the trustees of qualifying schemes as defined by the Financial Assistance Scheme Regulations 2005 (S.I. 2005/1986) which have not yet completed winding-up to desist from purchasing (except where, on or before 18th April 2007, they have entered into a binding contractual commitment so to do) or making binding commitments to purchase annuities on behalf of scheme members, for a period of nine months from 18th April 2007."

The Commons disagree to Lords Amendment No. 22 for the following Reason-

Because the Commons consider that the prohibition on the purchase of annuities may have undesirable effects.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions) (also in the Department for Communities and Local Government)

My Lords, I beg to move Motion D, That the House do not insist on its Amendment No. 22, to which the Commons have disagreed for their Reason 22A.

The other place disagreed with the amendment because, as drafted, it would have undesirable effects. The Government have great sympathy with the spirit behind the amendment, and we have decided to improve FAS benefits to members by matching the extra value produced as a result of funds remaining in schemes. We have written to trustees to urge them to consider carefully whether purchasing annuities, thereby depleting scheme funds, is in the best interests of all their members.

The Government accept that there are good reasons why, in order to ensure the greatest possible benefit for the greatest number of people, they may need to take powers to prevent annuitisation by FAS-qualifying schemes. However, the amendment would have made annuitisation unlawful from 18 April. Some trustees will be in the middle of negotiations, or already have proceeded to purchase annuities since then. For that reason, it would not be reasonable to halt annuity purchase without some notice.

Once the regulations introduced by Amendment No. 22 are made, the trustees who have purchased annuities believing that they are properly carrying out their fiduciary duty to members, could be held to have acted unlawfully. That would not be a fair position to put trustees in.

I would like to take this opportunity to anticipate and welcome Amendment No. 22B tabled by the noble Lord, Lord Skelmersdale, which achieves the aims of Amendment No. 22 without the drawbacks I have already outlined. It strikes a pragmatic approach by putting a hold on annuitisation for the benefit of all members of qualifying pension schemes who hope to see the extra funds generated by the assets within their schemes matched by the Government, while allowing trustees to purchase annuities with the permission of the scheme manager where it would be appropriate for them to do so.

Clearly, the Government will need to consider carefully what those circumstances might be and how the scheme manager will exercise his discretion. I am grateful that the noble Lord's amendment allows us a period of grace to think about this and consult with trustees before we bring forward regulations. We will do that as soon as is reasonably practicable. I beg to move.

Moved, That the House do not insist on its Amendment No. 22, to which the Commons have disagreed for their Reason 22A.—(Lord McKenzie of Luton.)

Photo of Lord Skelmersdale Lord Skelmersdale Shadow Minister, Work & Pensions

rose to move, as an amendment to Motion D, Motion D1, at end insert, "but do propose the following amendments in lieu thereof—

Insert the following new Clause-

"Temporary restriction on purchase of annuities

(1) The Secretary of State must by regulations make provision for securing that, during the period of 9 months beginning with the date on which the regulations come into force, the trustees of relevant pension schemes are prohibited from purchasing, or agreeing to purchase, annuities on behalf of qualifying members, unless-

(a) before that date they have entered into a binding commitment to purchase the annuities, or(b) the purchase of the annuities is approved in pursuance of subsection (2).

(2) The regulations must make provision-

(a) for enabling the trustees of a relevant pension scheme to apply to the scheme manager for approval of the purchase of annuities on behalf of qualifying members;(b) for authorising the scheme manager to approve the purchase of any such annuities if the scheme manager thinks it appropriate to do so.

(3) For the purposes of this section an occupational pension scheme is a "relevant pension scheme" at any time during the period mentioned in subsection (1) if at that time the scheme is a qualifying pension scheme which has not been fully wound up.

(4) Regulations under this section-

(a) must be made as soon as is reasonably practicable after the passing of this Act;(b) may make such consequential, incidental, supplemental or transitional provision as the Secretary of State considers appropriate.

(5) A statutory instrument containing regulations under this section is subject to annulment in pursuance of a resolution of either House of Parliament.

(6) In this section "occupational pension scheme", "qualifying member", "qualifying pension scheme" and "scheme manager" have the same meanings as in section 286 of the Pensions Act 2004 (c. 35)."

Page 26, line 36, at end insert "and section (Temporary restriction on purchase of annuities)"

Page 27, line 10, at end insert "and section (Temporary restriction on purchase of annuities)""

Photo of Lord Skelmersdale Lord Skelmersdale Shadow Minister, Work & Pensions

My Lords, I put down Amendment No. 75 in Committee as a means of keeping the Government to their promise of discovering whether better use could be made of the residual assets of pension schemes coming into the FAS. Ministers have already set up the Review of Scheme Assets led by Andrew Young, of which we have had some discussion over the past hour or so. That published its interim findings, very conveniently, late last week. The review gave strong indication that scheme by scheme annuitisation, the approach on which the current financial assistance scheme is predicated, does not offer the best use of assets and that there are a number of potential alternatives that should be able to secure better value for money and therefore increased assistance levels.

I know that the Government have written to scheme trustees—indeed, the Minister just said so—in the light of last week's announcement that they believe the Young review is on the right track, emphasising for them the key role that trustees have to play in helping to ensure that assistance levels can be increased beyond the current 80 per cent level of core pensions. The amendment makes explicit the sort of behaviour needed from responsible trustees to achieve that, giving the Government powers to enforce such behaviour in the best interests of the majority of those who have lost their pensions and who can now expect help from the financial assistance scheme.

The amendment requires the Secretary of State to make regulations suspending the purchase of annuities by trustees of pension schemes that have qualified for the FAS and which are still winding up for a period of nine months from the date the regulations come into force. That would give sufficient time for the Young review to complete its work and for the Government to make significant progress towards implementing its recommendations and securing better outcomes for scheme members, as long as the Government lay the regulations promptly. I hope that the Minister will be able to say how promptly he anticipates being able to lay them.

However, I recognise that there will be circumstances in which it might be appropriate for trustees to seek to annuitise. That is why the amendment gives the FAS scheme manager discretion to allow annuities to be purchased in some—I expect rare—instances. For example, that could be where a scheme is only lightly under-funded and therefore members are unlikely to benefit from the FAS overall.

Although Ministers in the other place did not like our original amendment as drafted, I detect from the Minister's words that they have seen the force of my argument that while the review completes its work there should indeed be a temporary bar on trustees from annuitising their assets in most cases. I beg to move.

Moved, as an amendment to Motion D, Motion D1, at end insert, "but do propose Amendments Nos. 22B to 22D in lieu thereof".—(Lord Skelmersdale.)

Photo of Lord Oakeshott of Seagrove Bay Lord Oakeshott of Seagrove Bay Spokesperson in the Lords, Treasury, Spokesperson in the Lords, Work & Pensions 4:15 pm, 24th July 2007

My Lords, we on these Benches welcome and support Motion D1. I have said a few harsh words to the Minister already and I shall chide him a little on the last Motion but, on this one, we welcome the spirit of compromise. I particularly welcome the pragmatic way in which the Minister has discussed this issue with the noble Lord, Lord Skelmersdale and me. This is the House of Lords at its best, if I may say so. We have ended up with a sensible and realistic solution, though obviously backed up to some extent—to use the words of the noble Baroness, Lady Hollis—by a certain amount of menace. We welcome this outcome.

It is clear from being repeated at various places in the Young review that instant annuitisation, or the rush to annuitise, is not on balance likely to be in the interests of most schemes or most scheme members. Halting the current annuitisation process will or should offer greater value for money. Indeed, it must make a lot of sense to think about having annuities purchased at the level of the entire FAS population. That makes the case even more strongly that we should probably roll the whole thing into a PPF-type arrangement. But that is for another discussion.

Reading the Young review, I am concerned at how many schemes have annuitised already or are in the process of doing so. The Association of British Insurers has written to me and no doubt to others, making the point—with which I have much sympathy—that there is probably not much in the unclaimed assets argument. On the ABI's positive ideas on improving the use of the FAS existing assets to improve better value for money, one thing that leading insurers could do is not to rush to enforce provisional arrangements when people are in the process of buying annuities. It is wise to stand back and take this window of review, and I hope that the ABI, whose two main members provide these annuities, will look at this very carefully. Even if people are well down the track of buying annuities, if they could put them on hold, that would be likely to be in the interests of members of those schemes.

Having said all that, I welcome the Government's movement on this and the amendment moved by the noble Lord, Lord Skelmersdale, and look forward to seeing it passed.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions) (also in the Department for Communities and Local Government)

My Lords, a question was posed about the speed of regulations. I assure the noble Lord that we would obviously seek to do it as quickly as we possibly could. I reiterate our support for the amendment.

Photo of Lord Skelmersdale Lord Skelmersdale Shadow Minister, Work & Pensions

My Lords, I am very pleased that the Government have seen the logic of my argument—that a little delay in annuitising individual scheme members' pots is the right thing to do in the wake of the Young report's interim findings. I must say that it is a pleasure to do business with a Minister who fights for the feelings of the overwhelming majority of your Lordships.

On Question, Motion D1 agreed to.

On Question, Motion D, as amended, agreed to.

Insert the following new Clause-

"Post-legislative scrutiny

Four years after the passing of this Act the Secretary of State shall arrange for post-legislative scrutiny of this Act to check on its operation and may arrange subsequent scrutiny."

The Commons disagree to Lords Amendment No. 28 for the following Reason-

Because the Commons consider that imposing an obligation on the Secretary of State to arrange for post-legislative scrutiny is unnecessary.

Insert the following new Clause-

"Review of operation of Act

(1) The Secretary of State must, before the end of 2017, prepare a report on the operation of the provisions of this Act.

(2) The Secretary of State may prepare subsequent reports on the operation of the provisions of this Act.

(3) The Secretary of State must lay a copy of any report prepared under this section before Parliament."

Page 26, line 38, at end insert-

"( ) But section (Review of operation of Act) extends to Northern Ireland in accordance with subsection (1) only as respects the provisions of this Act extending there."

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions) (also in the Department for Communities and Local Government)

My Lords, I beg to move Motion E, That the House do not insist on its Amendment No. 28, to which the Commons have disagreed for their Reason 28A, but do propose Amendments Nos. 28B and 28C in lieu thereof.

Before getting into the detail of the argument, I emphasise to the House that this is the one remaining issue that we have left unresolved, and it would be really good if we could reach consensus on it this afternoon rather than have to send it back to another place and expect its return. In that spirit, I reassure the House that the Government strongly agree with the principle of post-legislative scrutiny. However, the other place has decided that imposing an obligation on the Secretary of State to arrange for post-legislative scrutiny, as the amendment proposed by the noble Lord, Lord Fowler, would do, is unnecessary. I shall now set out what the Government propose in its place.

We made clear in earlier debate the very extensive programme of post-legislative activity that the Department for Work and Pensions will undertake to keep pension reform issues under review, and of course departmental Select Committees, independent think tanks, ad hoc commissions and external organisations all have their part to play in the scrutiny and review of how the law is working. But, quite separately, we are considering across government the case for a more formal process of post-legislative scrutiny.

I can assure the House that the Government, led by the leaders of the two Houses, are giving close and continuing attention to this issue and will certainly be responding to the Law Commission report. I hope, from the tone of the remarks of the noble Lord, Lord Fowler, when winding up the debate last time, that I had not inadvertently given the impression in some way that the commission's report was being left to gather dust. That is absolutely not the case, although I accept that it has taken longer than we had hoped. It is important, however, that the response to the commission is properly considered. The noble Lord's amendment places a duty on the Secretary of State to undertake post-legislative scrutiny, and since we as yet have no shared understanding or legal definition of what formal post-legislative scrutiny might entail, neither the Secretary of State nor anyone else could be absolutely certain whether what has been done would comply with that duty.

In moving the amendment at Third Reading, the noble Lord, Lord Fowler, called for post-legislative scrutiny to be undertaken by a parliamentary committee. It is for Parliament to decide to constitute such a committee and it is not within the Secretary of State's power or remit to do so. However, Parliament has already constituted the Work and Pensions Select Committee which is appointed to scrutinise the policy, legislation, expenditure and operations of the DWP. In addition, the Social Security Advisory Committee has a statutory remit to advise the Secretary of State on matters related to social security and to consider draft regulations. So any further scrutiny by another parliamentary committee would need to give careful consideration to ensure that efforts were not duplicated.

Our second concern relates to the timing proposed in the noble Lord's amendment. There is a package of reform measures which will come into effect over the next five years or so. In our view, it would be premature to carry out post-legislative scrutiny before the reform measures had been implemented or had time to bed-in. For example, the reforms to the basic state pension take effect for people reaching state pension age in April 2010. Reviewing the Act in four years, in 2011, would provide very little time to gauge whether the reforms have been properly implemented.

In the debate at Third Reading, the noble Lord offered us a cautionary tale in the form of the 1986 Act and the subsequent failure to ensure that the measures on inherited SERPS, which did not come into effect for a further 14 years, were properly implemented. I can assure the House that a great deal of activity is already under way to prepare for the implementation of the measures in this Bill from 2010 onwards. However, I accept that there might be concern about the implementation, for example, of the changes to the state pension age which do not come into effect until 2024 because of the time delay.

Notwithstanding the assurances that we have already given about our intention to keep the reforms under review, we accept that it would provide greater reassurance if this commitment were placed on a statutory footing. The amendment that I propose in lieu of the noble Lord's amendment would require the Secretary of State to review the operation of the Act and present a report to Parliament. That will provide Parliament with the opportunity to consider and debate any such report and, to all intents and purposes, effectively provides post-legislative scrutiny. The timetable I propose, for a review to have taken place by the end of 2017, would allow such a review to take place after most of the provisions have had sufficient time to bed-in. It will also enable us to review the state of readiness for implementing the state pension age changes from 2024 and take any remedial action that may appear necessary.

As I said, the measures in this Bill take effect in stages. For example, the changes to the contribution conditions which will be of significant benefit to women come into effect for those reaching state pension age in or after 2010. But the flat rating of the state second pension will not take effect until 2012. We have also made clear our aim to restore the link between the basic state pension and earnings in 2012, subject to affordability and the fiscal position. The state pension age changes, on the other hand, do not come into effect until 2024. We therefore think it sensible to conduct a review at the mid-point when the first of these changes have had a chance to bed down and we can at the same time ensure that we have a robust delivery plan in place for the later stages.

I should point out that the amendment includes the flexibility to carry out the review earlier than 2017 if it seems appropriate. The House will recall that 2012 is also when personal accounts go live. We have already said in our response to the Select Committee that we will undertake a review of aspects of the personal accounts arrangements in 2017, so although the scope of the review of the operation of this Act will be limited to the setting up of the delivery authority, the timetable will allow for these issues to be looked at in parallel. This amendment does not, of course, mean that we should not examine the effectiveness of our policies before 2017. For example, the data on the number of women who have benefited from the reforms to the basic state pension will be available by mid-2011 and the personal accounts delivery authority will be required to publish annual reports on its activities throughout its lifetime. However, I suggest with great respect that the requirement to review at the four-year point is surely too early given that some of these provisions simply would not have come into effect by that time.

For completeness I should add that the amendment to Clause 28, Amendment No. 28C, is purely consequential. Clause 28 defines the extent of measures in this Bill; this amendment would ensure that any review of the operation of this Act takes account of those provisions in so far as they relate to Northern Ireland.

As I have said, we have no objections to the noble Lord's amendment in principle. Indeed, it is eminently sensible and consistent with the principle of good administration that we ensure that the measures enshrined in the Bill are followed through. I hope that he will accept that the amendments I propose in lieu of his own substantially address this concern. I urge the House not to allow this legislation to linger longer. There is much in it that we need to get under way as quickly as possible. I beg to move.

Moved, That the House do not insist on its Amendment No. 28 to which the Commons have disagreed for their reason numbered 28A, but do propose Amendments Nos. 28B and 28C in lieu thereof.—(Lord McKenzie of Luton.)

Photo of Lord Fowler Lord Fowler Conservative

My Lords, I beg to move, as an amendment to Motion E, Motion E1, leave out from "House" to end and insert "do insist on its Amendment No. 28.—(Lord Fowler.)

I welcome the tone of some of the Minister's remarks this evening, which are substantially different from what we have heard at previous stages of the Bill, particularly what he said about the principle of post-legislative scrutiny and seeking to put a duty in the Bill. Step by step we are getting to the position that we would like to get to but we have not yet arrived there.

I am not very impressed with the so-called compromise being offered by the Government on when their form of post-legislative scrutiny should take place. Many advocate scrutiny after three years. I have proposed four years, but with the addition that the Secretary of State can carry out a further scrutiny at any stage later on, which I think meets many of the points that the Minister put. The Government propose their form of post-legislative scrutiny not in 2012 or 2015 but 10 years hence by the end of 2017. Frankly, it puts a whole new time-scale on the plea, "Make me good but not yet". Even then it sounds as though it will be only half good because I suspect that the review being offered is the Secretary of State's own review and not that of a Select Committee. However, I may be wrong on that. I am afraid that, as regards the timing, the offer is impossible to accept. I suspect that that does not come as a vast surprise to him, the Government or to the department.

I also do not accept the argument that we are now running out of time. The forthcoming business of the House of Lords is not a state secret; it is set out in the programme of Forthcoming Business, and for Wednesday 25 July and Thursday 26 July it is set down that consideration of Commons Amendments may be scheduled. I stand ready to respond to whatever new proposals the Government wish to make.

I will be brief, as I have rehearsed my argument at earlier stages of the Bill. In essence, it is that some of the worst mistakes take place not because legislation is badly drafted, but because it is wrongly implemented. In other words, pre-legislative scrutiny may be important, but checking the legislation after it is passed to see that it is being implemented properly is also essential. We are not concerned with repeating the arguments used during the passage of the Bill, but in checking the outcome. That process of checking what happens after the Bill becomes an Act is supported, among others, by the Hansard Society, the Law Commission and by the House of Lords Constitution Committee. It has also been strongly endorsed by a number of influential individuals. One said:

"Parliament and government have a common interest in strengthening post-legislative scrutiny. From the Government's point of view, it could help to ensure that the Government's aims are delivered in practice and that the considerable resources devoted to legislation are committed to good effect".—[Hansard, 6/6/05; col. 769.]

That was the noble Baroness, Lady Amos, when she was Leader of the House.

Another former Minister said that she advocated post-legislative review,

"in order to illuminate and see what lessons can be learnt for the future handling of the legislative process".

That was Margaret Beckett, former Foreign Secretary and at one stage deputy leader of the party opposite. Perhaps the most interesting intervention was by a current member of the Cabinet, who said:

"In principle I think this is a very fruitful avenue for us to explore together because there is no point in passing legislation if it is not having the desired impact or it is having a different impact".

That was Peter Hain, the Secretary of State in charge of this legislation, who is now resisting the amendment.

The trouble is that, when it comes to it, Ministers are in favour of post-legislative scrutiny in principle but not when it comes to their own Bills. It reminds me of the position with departmental Select Committees when they were set up by my noble friend some years ago. All Ministers thought that in general it was a good idea, as long as it did not apply to their department. In post-legislative scrutiny, they do not want to run the risk that it may be pointed out that their plans are not working out. I suggest that that is wrong and that the earlier the intervention the better, from the point of view of the public and the taxpayer.

Pensions are a prime example. At an earlier stage, as the Minister said, I gave an example of legislation of my own, the Social Security Act 1986, which reduced and changed the amount of SERPS that widows or widowers could inherit. My then Minister of State, John Major, promised a major publicity campaign. We both left the department in 1987, there was no publicity campaign, and the department published the wrong advice in a leaflet. A Select Committee carrying out post-legislative scrutiny would have picked that up, and it may well have picked up the fact that the department was giving the wrong advice about the security of final salary occupational pension schemes, about which we were talking earlier, which led to the adverse finding against the Government in March 2006 by the Parliamentary Ombudsman. As the noble Baroness, Lady Hollis, fairly pointed out in our debate on 11 July, post-legislative scrutiny could have helped in avoiding the failure of stakeholder pensions and one of the unforeseen consequences of pension credit; bringing more and more people into means testing.

Potentially, the amendment could prevent error and avoid costly mistakes. What is the Government's case? Up to now, it has been that the amendment is unnecessary. I am glad to say that they are now moving from their position that they do not need any advice. Now their position is that four years for post-legislative scrutiny is too early; for example, they say that the earnings uprating of pensions will come into effect only in 2012. However, the Bill is about much more than that. It is 65 pages long, with 70 pages of Explanatory Notes. To give but one example, the workings of the Personal Accounts Delivery Authority may be important for the success of widening pension ownership. Even the statement about the earnings uprating coming into effect in 2012 is not quite true; as the Minister said, the Government's White Paper states:

"Our objective, subject to affordability and the fiscal position, is to do this in 2012, but in any event by the end of the Parliament at the latest. We will make a statement on the precise date at the beginning of the next Parliament".

Therefore, it could come in in 2015, and post-legislative scrutiny might want to point out the cost of that delay in extra pension credit. More generally, it might want to take into account any events of importance affecting pensions over the previous four years, which is the average length of a whole Parliament, after all.

The Government's case ignores the point that my amendment explicitly gives the power to the Secretary of State to have further scrutiny. We should remember that a second Pensions Bill is behind this one; I doubt very much that all the unseen problems will be dealt with in one round of scrutiny.

In a sense, my next point is even more crucial than all my others. Some in the House may have their reservations about my amendment; the Minister clearly does. I hope that not all noble Lords share them; certainly, that was not the case in earlier debates. The amendment was originally carried by 141 votes to 138. It then went to the House of Commons. Any of your Lordships who wanted to check the argument used there for rejecting the amendment would be sadly disappointed. It was never debated. Ministers were never questioned. The guillotine came down before any Member of the House of Commons had the opportunity to say a single word. That is utterly destructive of the parliamentary process. The Minister says that the other place has decided, but it has decided without debate, questioning or words being uttered.

The new Prime Minister talks of restoring the authority of Parliament. I agree. The kind of parliamentary scrutiny by a Select Committee or some other parliamentary committee implicit in my amendment would certainly help that process. Equally, I am sure that guillotining Bills so that the Commons simply does not have the opportunity of even debating the amendments of this House is against the interests of anyone who believes in the effective working of Parliament. For both those reasons, I ask the House to support my amendment.

Moved, as an amendment to Motion E, Motion E1, leave out from "House" to end and insert "do insist on its Amendment No. 28".—(Lord Fowler.)

Photo of Lord Norton of Louth Lord Norton of Louth Conservative 4:30 pm, 24th July 2007

My Lords, I support my noble friend in pursuing his original amendment. The Government have only themselves to blame for the fact that the Motion is before us. Had they responded to and acted on the Law Commission's report on post-legislative scrutiny, there would be no need to pursue the case for such scrutiny on an ad hoc basis.

The Law Commission published its report in October last year. The Government are committed to providing a detailed response to all commission reports as soon as is practical and, as the former DCA website states:

"In any event, the relevant department will provide at least an interim response to the Commission within six months of publication of each report".

Nine months on, we are still waiting. At Third Reading, the Minister said:

"We are consulting across government before we respond formally to the commission's proposals in the coming months".—[Hansard, 11/7/07; col. 1418.]

The Minister's reply was the same as that given to justify the delay in responding to the report of the Merits of Statutory Instruments Committee on the management of secondary legislation. That report was published in March last year and the Government's response was debated in this House at the end of November. The justification for the delay—consultation across government—meant that it was proving difficult to gain agreement from departments because, I suspect, officials realised that the recommendations, if implemented, smacked too much of hard work and there was a lack of leadership from the top.

The result was a response that came from the bottom up, rather than from the top down. The noble Lord, Lord McKenzie, would be well advised to read in that debate the concluding comments of his noble friend Lord Filkin, chairman of the Merits Committee. I very much hope that we will not see a repetition with a late and meagre response on this occasion. The delay is far from encouraging. There is movement within Parliament, primarily through the Liaison Committee in the other place, but not much, apparently, within government.

The noble Lord, Lord McKenzie, said at Third Reading that accepting the need for post-legislative scrutiny of this Bill might pre-empt some of the Law Commission's recommendations. That does not follow. The Motion is not prescriptive in terms of form, which I regard as a strength not, as the Minister does, a sign of weakness. There are precedents for providing for post-legislative review in specific cases, as shown in appendices to the Law Commission report. In any event, as my noble friend pointed out, the case is now conceded by the Minister's own amendment.

The principle embodied in my noble friend's Motion is important. The Government, as the Minister indicated, now accept the principle. During the Committee stage of the Legislative and Regulatory Reform Bill, the noble Lord, Lord Bassam, declared:

"We ... believe that all departments should keep their legislation under review".—[Hansard, 10/7/06; col. 494.]

However, the Government have yet to deliver a mechanism for such review. The Minister's amendment accepts now the case for review in respect of the Bill, but the delay until 2017 is essentially a long-grass provision. The chances of it being undertaken earlier are, I suspect, slim.

The response in the other place to the amendment passed by this House can be challenged on two grounds. First, as my noble friend said, the amendment was not debated. Secondly, the reason given for the rejection is at odds with the Minister's amendment. The Commons reason is that post-legislative scrutiny is unnecessary. The Minister's amendment provides for post-legislative scrutiny—albeit at a point too far in the future. The Government thus concede that the reason given by the Commons is flawed. The case for post-legislative scrutiny is compelling and I trust that by pursuing this Motion we will spur the Government not only to accept the case for it on this Bill but to respond positively to the Law Commission's report. I support my noble friend's Motion.

Photo of Lord Oakeshott of Seagrove Bay Lord Oakeshott of Seagrove Bay Spokesperson in the Lords, Treasury, Spokesperson in the Lords, Work & Pensions

My Lords, I am delighted to support my sea-view neighbour, the noble Lord, Lord Fowler. I was invigorated by a bracing dip in Seagrove Bay this morning before I came here and I feel particularly vigorous on his behalf.

I have received a letter from the honourable Mr Justice Etherton, the chairman of the Law Commission, following my speech in support of the amendment of the noble Lord, Lord Fowler, at Third Reading. The letter states that,

"consultation has been taking place across Government and considerable effort is being made to secure agreement on how to implement our recommendations ... Although there has been no formal response by the Government to our report, we have been fully aware for some considerable time that the recommendations have been well received ... and that the Government has been and still is actively considering the most appropriate method of implementing them".

In government, I was a special adviser to the Home Secretary, many years ago. I know the code. I know when nothing is happening. The noble Lord, Lord Norton, has already told us the timescale.

I should say to the chairman of the Law Commission and the Government that achieving consensus is not simply, or even mainly, a matter of interdepartmental negotiation within government, as the letter seems to imply. It is high time that the Government gave their official and considered response to the Law Commission's report on post-legislative scrutiny, so that Parliament, opposition parties and informed and interested opinion outside can debate, consider and build on it a genuine and lasting consensus. You do not do that behind closed doors with the long grass growing.

The noble Lord, Lord McKenzie, also kindly sent me a letter on similar lines to that of the Law Commission. I wonder whether they are written by the same person. He said that,

"the Law Commission's report has been the subject of close and continuing consideration ... the issues ... are complex ... It is important that we get the response right if we are to draw the maximum benefit ... I cannot be specific at this stage as to when final decisions will be taken, but I accept that the response has taken longer to prepare than we would have wished. The chairman of the Law Commission ... was updated with the state of play at a meeting in May".

That will not have been a very long meeting.

When will the Government give their response? Can the noble Lord assure us that it will not take four more years? If he can, there is no earthly reason why he should not accept the amendment of the noble Lord, Lord Fowler, today because, if this Government are still in office, they will be able to put this Bill, when enacted, through whatever their preferred form of post-legislative scrutiny might be. If he cannot give us that assurance, he should simply curl up in shame.

Photo of Lord Skelmersdale Lord Skelmersdale Shadow Minister, Work & Pensions 4:45 pm, 24th July 2007

My Lords, amusing as that speech was, perhaps it is now time to return from the general to the particular with the amendment of my noble friend Lord Fowler. I am glad that he intends to insist on that amendment. The amendment in lieu offered by the Government is not in any way adequate to achieve the sort of scrutiny that was set out, and it would reduce the concept to what I can only describe as a mere fig leaf.

The whole intention of post-legislative scrutiny is to catch problems before or shortly after they arise. By ensuring higher-level scrutiny of the provisions in the Bill as they are rolled out, the Government's assurances and commitments to Parliament can be checked against the guidance that is given. That is doubly important, as this Government have drastically reduced the amount of detail in Bills and are in the habit of assuring your Lordships that a promise on the Floor of the House is the same as putting it in the Bill—not that the Minister has done that today. With this amendment, as has been said, such promises would carry more weight and do more to hold Ministers to account.

Much in the Bill would benefit from independent post-legislative scrutiny. Not only would it confirm the Government's assurances that their new plans are enough to make the amendment of the noble Baroness, Lady Hollis, on women's pensions unnecessary but it would also provide valuable scrutiny of the initial stages of the Personal Accounts Delivery Authority and, of course, it would allow the Government's promise that the FAS is poised to start handing out money to be validated.

I therefore hope that the Minister will appreciate the feeling in this House that it is time that the Government came forward with some serious proposals for post-legislative scrutiny, rather than just talking around the subject. This Bill is an excellent place to start and I hope that noble Lords will continue to support my noble friend today.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions) (also in the Department for Communities and Local Government)

My Lords, I suspect that it will not be fruitful to prolong this discussion endlessly but I want to take the opportunity to make a few points. I emphasise that the issue of post-legislative scrutiny does not divide us. We agree that it is appropriate and confirm that we would want it for legislation—in particular, for this Bill.

The noble Lord, Lord Fowler, said that some say that the timescale should be three years but that he has moved to four. It depends what time you switch the clock on for those timeframes. There is a difference between a date from Royal Assent and a date from when the provisions in the legislation take effect. When one thinks about it, 2017 is simply one year on from when some of the key provisions in the Bill will kick in.

The amendment in lieu concerns an obligation on the Secretary of State. Nothing prevents Select Committees from doing their work in the interim and, quite properly, that should not be under the direction of the Secretary of State. The noble Lord himself said that there was a lot to scrutinise and look at in relation to the delivery authority. That is absolutely right, but a second Bill will be introduced in the next Session and there will be ample opportunity to look at that in considerable detail as the legislation is put in place.

Both the noble Lords, Lord Norton of Louth and Lord Oakeshott, pressed me on the issue of the Law Commission report. I do not think that I can go further than what has been put in writing. I thought that it was rather a good letter.

The Government are looking at this seriously. I know that it is always possible to chide the Government and say, "Why didn't you do it last month or the month before?" but these issues are not altogether straightforward. There is an intent to move them along as quickly as we can, but I cannot give a commitment on timing. It is a pity that we will divide on this, because in the scheme of things the difference is narrow. The timeframe may be a few years from the date when some of the key provisions in the Bill kick in.

I emphasise that there is nothing to prevent a Select Committee, Joint Committee or whatever from discussing post-legislative scrutiny. That is a matter for Parliament, not the Secretary of State, which will have its will in accordance with whatever is constituted. Nothing in the amendment of the noble Lord, Lord Fowler, or my amendment in lieu changes Parliament's ability to do that. I do not see the substantive difference that the debate has suggested. I shall leave it to the noble Lord to test the opinion of the House.

Photo of Lord Fowler Lord Fowler Conservative

My Lords, I thank the Minister for his reply, although at some stages he made my case even stronger. The fact that a second Bill is coming makes the case for post-legislative scrutiny stronger rather than weaker. I thank the noble Lords, Lord Norton, Lord Oakeshott and Lord Skelmersdale. The noble Lord, Lord Norton, is absolutely correct. At one stage—this is even in the paper that we have in front of us—the Government were saying that the amendment was unnecessary. That is what the Commons said. Now, we are hearing, "Curiously, secretly and privately we agree with the principle of post-legislative scrutiny".

Noble Lords:

Oh!

Photo of Lord Fowler Lord Fowler Conservative

My Lords, I heard the Minister's reply and leave it for the Government to sort that out. The idea of having post-legislative scrutiny of this Bill by the end of 2017 is unacceptable. The noble Lord, Lord Oakeshott, is right that we have the opportunity of taking a decision now after years of prevarication. This is not about a few months; post-legislative scrutiny was the subject of my maiden speech when I came into the House in 2001.

What was fascinating about the Minister's reply is the point that he did not mention from beginning to end. When we passed the amendment and put it to the Commons, it was not debated in any way, shape or form. The Minister was not questioned; no one could give their views or say anything about it. I cannot believe that anyone in this House or in the House of Commons could regard that as an acceptable or desirable way of doing business. The amendment would allow the House of Commons to consider the issue for the first time. The Minister said that the Commons has now decided; it may have done so, but not on the basis of any argument. We are saying to the Commons, "For the first time, you have the opportunity to debate and question this". On the constitutional side, the Government's position is entirely indefensible. The only sensible and fair way forward is to test the opinion of the House.

On Question, Whether the said Motion (No. E1) shall be agreed to?

Their Lordships divided: Contents, 186; Not-Contents, 143.

Division number 1 Private Parking: Ports and Trading Estates — Pensions Bill

Aye: 184 Members of the House of Lords

No: 141 Members of the House of Lords

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

Resolved in the affirmative, and Motion E1 agreed to accordingly.

Motion E, as amended, agreed to.