Schedule 1 - The Pensions Regulator

Pensions Bill – in a Public Bill Committee at 11:00 am on 9th March 2004.

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Photo of Malcolm Wicks Malcolm Wicks Minister for pensions, Department for Work and Pensions 11:00 am, 9th March 2004

I beg to move amendment No. 72, in

schedule 1, page 166, line 22, leave out sub-paragraph (4).

Photo of Mr Win Griffiths Mr Win Griffiths Labour, Bridgend

With this it will be convenient to discuss Government amendment No. 73.

Photo of Malcolm Wicks Malcolm Wicks Minister for pensions, Department for Work and Pensions

Amendment No. 72 is a technical amendment that removes a superfluous sub-paragraph. Paragraph 11(3) requires that at least one person on the appointments committee

''must be a person who is not a member of the Regulator.''

Sub-paragraph (4) allows that a person on the appointments committee

''may be a person who is not a member of the Regulator.''

Allowing on that committee people who are not members of the regulator is already achieved by sub-paragraph (3), so sub-paragraph (4) is unnecessary.

Amendment No. 73 is a similar technical amendment. It ensures that it is clear that where the

regulator delegates any functions to any member of staff or committee—save the determinations panel and the appointments committee—they are none the less exercised on behalf of the regulator.

Amendment agreed to.

Photo of Mr Win Griffiths Mr Win Griffiths Labour, Bridgend

Order. I have just learned that we have got the groupings in the wrong order.

Photo of Kevin Brennan Kevin Brennan Labour, Cardiff West

I beg to move amendment No. 172, in

schedule 1, page 168, line 14, leave out

'and any corresponding provisions in force in Northern Ireland'.

Photo of Mr Win Griffiths Mr Win Griffiths Labour, Bridgend

With this it will be convenient to discuss the following:

Amendment No. 173, in

schedule 1, page 168, line 34, leave out from 'function' to 'or' in line 36.

Amendment No. 174, in

schedule 1, page 169, line 17, leave out

'or any corresponding provision in force in Northern Ireland'.

Amendment No. 175, in

schedule 1, page 169, line 20, leave out

'or any corresponding provision in force in Northern Ireland'.

Amendment No. 176, in

schedule 1, page 173, line 38, leave out from 'Act' to end of line 39.

Amendment No. 177, in

schedule 1, page 174, line 1, leave out

'or any corresponding provision in force in Northern Ireland'.

Amendment No. 178, in

schedule 1, page 174, line 4, leave out

'or any corresponding provision in force in Northern Ireland'.

Amendment No. 160, in

clause 4, page 2, line 21, leave out from 'Act' to 'and' in line 22.

Amendment No. 161, in

clause 9, page 4, line 36, leave out from

'or in any corresponding provision in force in Northern Ireland'.

Amendment No. 162, in

clause 34, page 21, line 12, leave out from sub-paragraph (iii).

Amendment No. 163, in

clause 34, page 21, line 27, leave out from '(c.49)' to end of line 32.

Amendment No. 164, in

clause 52, page 33, line 24, leave out

'or any corresponding provision in force in Northern Ireland'.

Amendment No. 165, in

clause 52, page 34, line 6, leave out

'or any corresponding provision in force in Northern Ireland'.

Amendment No. 166, in

clause 76, page 49, line 17, leave out

'or any provision in force in Northern Ireland corresponding to this Act'.

Amendment No. 179, in

schedule 4, page 181, line 37, leave out

'or any corresponding provision in force in Northern Ireland'.

Amendment No. 180, in

schedule 4, page 182, line 16, leave out from first 'function' to end of line 17.

Amendment No. 181, in

schedule 5, page 191, line 10, leave out

'or any provisions in force in Northern Ireland corresponding to this Act'.

Amendment No. 167, in

clause 87, page 54, line 28, leave out from 'Fund)' to end of line 29.

Amendment No. 168, in

clause 156, page 98, line 2, leave out

'or any corresponding provision in force in Northern Ireland'.

Amendment No. 169, in

clause 156, page 98, line 18, leave out

'or any corresponding provision in force in Northern Ireland'.

Amendment No. 170, in

clause 170, page 108, line 15, leave out

'and any corresponding provisions in force in Northern Ireland'.

Amendment No. 171, in

clause 233, page 156, line 35, leave out paragraph (e).

Amendment No. 3, in

clause 246, page 162, line 46, after 'England', insert 'Northern Ireland'.

Amendment No. 4, in

clause 246, page 163, line 1, leave out from beginning to end of line 22.

Photo of Kevin Brennan Kevin Brennan Labour, Cardiff West

The amendments have been tabled by my hon. Friend the Member for North-East Derbyshire (Mr. Barnes) because of his concern that the Bill refers specifically to England, Scotland and Wales but not to Northern Ireland. I move the amendment on behalf of my hon. Friend to hear the Government's explanation as to why the Bill is set out in that way and does not apply in full to Northern Ireland.

Photo of Malcolm Wicks Malcolm Wicks Minister for pensions, Department for Work and Pensions

Despite my initial confusion I was grateful for the rest, Mr. Griffiths, but here we go again. My hon. Friend, on behalf of a colleague, has raised an important point about how the Bill relates to Northern Ireland. It might help if I set out the constitutional situation as it applies in Northern Ireland because, in essence, that is what the Bill follows.

Social security and pensions are transferred matters under the Northern Ireland Act 1998. Northern Ireland has its own body of social security and pensions law. If the Northern Ireland Assembly were not suspended, provision in relation to Northern Ireland would be a matter for the Northern Ireland Executive and the Assembly. While the Assembly is suspended, provision for Northern Ireland is by way of Order in Council under the Northern Ireland Act 2000. The intention is that an Order in Council will replicate the provisions of the Pensions Bill for Northern Ireland. That will maintain the long-standing policy of parity in that area, but at the same time maintain the integrity of the separate Northern Ireland body of law.

Clause 247 sets out the detail of how the Order in Council is introduced. In the event of a return to devolved government, provisions for Northern Ireland will be a matter for the Assembly. In line with established practice in the pensions field, some of the provisions of the Bill extend directly to Northern Ireland. That includes, for example, those relating to the establishment of the pensions regulator, which will operate throughout the United Kingdom. The same is true of the pension protection fund, OPRA and the Pensions Compensation Board. Those bodies are established on a UK-wide basis, but their functions are bestowed by Westminster for Great Britain, and by Northern Ireland legislation in the Province. I understand the reason for tabling the amendment but, in the light of my explanation, I hope that my hon. Friend will withdraw it.

Photo of Kevin Brennan Kevin Brennan Labour, Cardiff West

I thank my hon. Friend for that explanation, which has helped to clarify the point. Therefore, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment made: No. 73, in

schedule 1, page 169, line 3, leave out 'such of the Regulator's' and insert

', on behalf of the Regulator, such of its'.—[Malcolm Wicks.]

Photo of Malcolm Wicks Malcolm Wicks Minister for pensions, Department for Work and Pensions

I beg to move amendment No. 74, in

schedule 1, page 169, line 35, after 'power' insert 'by direction'.

Photo of Mr Win Griffiths Mr Win Griffiths Labour, Bridgend

With this it will be convenient to discuss Government amendments Nos. 75 and 76, 82, 46, 53 and 54, 91 to 93, 95, 97 and 98 and 100.

Photo of Malcolm Wicks Malcolm Wicks Minister for pensions, Department for Work and Pensions

The amendments ensure that it is clear in the Bill how the regulator should exercise the powers conferred on it by other pensions legislation, and that those powers should be exercisable by the normal or special procedure. The Pensions Act 1995 provides that powers can be exercised in three ways: by order, by direction, or by notice in writing. The amendments follow that same style.

The first set of amendments correct drafting errors and ensure that the regulator's powers will be exercised by direction. Amendments Nos. 53, 75 and 91 apply to the granting of an extension of the period under section 99(4) of the Pension Schemes Act 1993, within which the trustees or managers of a scheme are to carry out certain duties. Amendments Nos. 54, 76 and 92 apply to extending the period for compliance with a transfer notice under section 101J(2) of the 1993 Act. Amendments Nos. 46, 74, 82 and 100 concern refusing to register a scheme as a stakeholder scheme, or removing it from the register in accordance with section 2(3) of the Welfare Reform and Pensions Act 99.

Amendment No. 95 will ensure that the regulator's power will be exercised by order when the regulator is exercising its power to vest property in trustees and is removing or appointing trustees under section 9 of the 1995 Act. Amendment No. 97 will ensure that the regulator's power will be exercised by order when the regulator is exercising its power to vest property in

trustees and is disqualifying trustees under section 30 of the 1995 Act.

Amendment No. 93 provides that the regulator must exercise the power to require a person to pay a penalty for contravening regulations made under section 168(4) of the 1993 Act by a notice in writing. Amendment No. 98 will allow regulations to be made, so that applications under section 69 of the 1995 Act, which deals with applications to modify the scheme for specific purposes that are made by ''competent persons'' to the regulator, can be dealt with by standard procedure as set out in clause 70. There are inherent safeguards built into that procedure.

It is important to show by what method powers should be exercised, as any power exercised by order overrides any scheme rules if it is in conflict with them by virtue of clause 230. Therefore, orders are used in the case of a power that may affect scheme rules, such as vesting property in appropriate trustees, winding up a scheme or appointing a trustee.

Photo of George Osborne George Osborne Shadow Minister (Treasury)

May I begin, as this is the first time that I have spoken in this Committee, by saying what a pleasure it is to serve under you, Mr. Griffiths? I hope that I will have only a minor part in the Committee; I am merely the understudy to my hon. Friend the Member for Eastbourne. However, I thought that I should say something to justify the time that I have spent here this morning.

I thought that it would be fair to make the following general observation. The Minister is moving various amendments, all of which seem perfectly reasonable; we do not have a problem with them. However, they raise the question of why they are being moved now. The Government have had a long time to prepare the legislation. That preparation has been one of the most drawn-out processes that I have been aware of under this Government. The Green Paper was published in December 2002 and the White Paper was published last June. The issues have been discussed for the last three or four years. It seems strange that the Government have managed both to make it a long drawn-out process and to produce a rushed job; that is quite a feat.

Why did the Government not get the Bill right when they first produced it, especially given that they have had so much time to prepare it, and why do they have to introduce the amendments now?

Photo of Malcolm Wicks Malcolm Wicks Minister for pensions, Department for Work and Pensions

The explanation has two parts. The first relates to the sheer complexity of the measures, and the need to relate the proposals to other legislation. The speech to which I have just treated the Committee illustrates that complexity. We are dealing with other areas of law relating to insolvency, and they are equally complex. Also, we are ambitious in our proposals; the new regulator is an ambitious project. The pension protection fund, as an innovation and a new institution, is even more ambitious. There is nothing like it in this country, and it is high time that there was. The hon. Gentleman raises a perfectly fair point, as we shall be subjecting colleagues to a range of Government amendments.

The second part of the explanation is that if all other things were equal we would have approached the legislation in a more timely manner. If all other things were equal, we might have published a draft Bill, or have taken more time on working on the fine print of the Bill, so that we would not be subject to the amendments. I sincerely apologise to the Committee for the fact that we are discussing a Bill—I had better not describe it as a work in progress—that needs substantial amendments. I genuinely apologise for that; the Committee will be detained, and that is not what I would have wanted.

I used the phrase, ''if all other things were equal''. All other things are not equal. Industry, our work forces and our communities demand the pension protection fund tomorrow, not in April 2005. I do not meet anyone who says, ''Take more time; let us have the protection in 2006 or 2007.'' The big debate is about whether the legislation could be retrospective; we do not feel that it could be. We are considering the arguments about workers who have already been disbenefited.

There is a great thirst for social justice out there. In particular, we should end the scandal—and it is a scandal—in which workers who have contributed to pension schemes all their working life can suddenly find that the company goes bust, despite their hard work and their reasonable expectation of a decent retirement with a decent occupational pension. Their hopes go bust along with the company. I have talked to workers affected; sadly, sometimes their health and family life are affected too.

Although I apologise for the amendments, I do not apologise for the fact that we are bringing forward a measure that needs amendment but that we have every opportunity of putting into operational practice by spring next year. If we delayed for a year, we might have had a more perfect text to present to the Committee. That would have made our lives easier, but by dealing with the matter now, we stand to make the lives of British people and workers easier from April next year.

Photo of George Osborne George Osborne Shadow Minister (Treasury)

What the Minister says about the pension protection fund is perfectly reasonable. There is huge demand from the constituents of Government and Opposition Members to introduce that. It is a new institution and we are starting from scratch; the Minister is absolutely right.

However, at the moment we are not discussing that, but the pensions regulator. The idea of having such a regulator has been around for a considerable time. The Pickering report first proposed it in 2002. The Davis report, the Government's own quinquennial report, was also published in 2002. I do not want to detain the Committee; I simply want to make the point that the amendments are about a proposal that has been discussed in draft for a long time and that the valid points that the Minister makes about the pension protection fund do not apply to the first part of the Bill.

Photo of Malcolm Wicks Malcolm Wicks Minister for pensions, Department for Work and Pensions

I shall explain briefly. We have been working on the Bill as a whole. The concept of the pension protection fund came later to the agenda

than the concept of a regulator. There are cross-over points between the roles of the regulator and those of the pension protection fund. Again, I apologise for the inconvenience; no doubt I will express that sorrow on more than one occasion. However, that is the explanation that I can offer.

Photo of Kevin Brennan Kevin Brennan Labour, Cardiff West

I do not think that the Minister will have to express his sorrow on more than one occasion. The hon. Member for Tatton (Mr. Osborne) has made it clear that he perfectly understands the necessity for Government amendments to the pension protection fund. When we reach that stage of the Bill, the Minister will not have to apologise any further.

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne

I was not intending to contribute on this point. However, it is important and we might as well deal with it now. The Occupational Pensions Regulatory Authority was set up under 1995 Act; it was established on 1 April 1996, but it only became operational on 6 April 1997. One cannot say that that era was more leisurely than ours. There were probably good reasons for that delay. Setting up a regulator from scratch is quite complicated. This is the first question—has the Minister reflected on whether, having taken a long time to produce the Bill, the Government are trying to do everything in too much of a hurry? The second point is about compensation, which he mentioned. The then Government bought themselves time by working out a pragmatic way of dealing with the immediate problems of Maxwell pensioners who faced destitution, so that the big issues could be examined more carefully in a longer time scale.

Amendment agreed to.

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne

I beg to move amendment No. 121, in

schedule 1, page 172, line 25, leave out paragraph 30.

The amendment deals with a small point but one on which I should be grateful for the Minister's help. I can understand the need to provide that the validity of any of the regulator's proceedings will not be affected by a vacancy among its members. Vacancies will occur

for whatever reason—death, serious illness or someone's removal along the lines that we discussed a few minutes ago. However, how can it be right to legislate for the validity of proceedings when there has been a defect, as covered in paragraph 30(b) and (c),

''in the appointment of any member of the Regulator or of any of its committees, or . . . in the appointment of the Chief Executive''?

Does that not provide something of a blank cheque and potentially prejudice the rights of those who are subject to proceedings that would be invalid but for the paragraph? It is a small but important point.

Photo of Malcolm Wicks Malcolm Wicks Minister for pensions, Department for Work and Pensions

The amendment would withdraw a provision relating to the validity of the regulator's proceedings. The paragraph in question states that the validity of proceedings is not to be affected by vacancies on the board of the regulator or its committees or by any defect in the appointment of members of the regulator or of the chief executive. The provision replicates paragraph 15 of schedule 1 to the 1995 Act, which has operated successfully for the Occupational Pensions Regulatory Authority. It is a standard legal safeguard to ensure that the regulator can continue to protect against members' interests, even if, for example, a member dies or a particular appointment had a technical defect.

With that explanation, I ask the hon. Gentleman to withdraw the amendment.

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne

I am grateful for that explanation, but leaving aside the vacancy point, which I conceded at the outset, I am still concerned that the provision may encourage sloppiness on the part of the regulator. I am also concerned about how people may be affected by defects, which the paragraph says are all right. I will not pursue the amendment to a vote, but I still have concerns. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Further consideration adjourned.—[Margaret Moran.]

Adjourned accordingly at twenty-four minutes past Eleven o'clock till this day at half-past Two o'clock.