Clause 10 - The Determinations Panel

Pensions Bill – in a Public Bill Committee at 3:45 pm on 9th March 2004.

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Question proposed, That the clause stand part of the Bill.

Photo of Mr Chris Pond Mr Chris Pond Parliamentary Under-Secretary, Department for Work and Pensions

Clause 10 provides that the regulator must establish a determinations panel. The panel's duty will be to exercise on behalf of the regulator the ''reserved regulatory functions'' set out in schedule 2. The decision whether to exercise any of those regulatory functions will also be reserved to the panel.

The determinations panel must consist of a chairman and at least six other members. The

chairman of the panel will be chosen by a special committee convened for that purpose and will be chaired by a non-executive member of the regulator. The remaining panel members will be appointed by the panel's chairman. None of the panel's members may be a member of the board or the staff of either the regulator or the pension protection fund, as spelled out in clause 10(5)(b). Those provisions will further ensure that the determinations panel is effectively independent from other parts of the regulator. In that way, the establishment of a determinations panel will mean that regulatory decision making will be kept separate from the setting of strategy and other functions of the board. It also separates the decision makers from investigatory staff. It therefore provides a degree of independence in the regulator's decision-making processes.

In itself, the existence of the determinations panel does not make the regulator's processes fully compliant with the Human Rights Act 1998. That comes from the right to refer any of the regulator's determinations to the pensions regulator tribunal, which we shall come to later. However, the panel's separation from the members and staff of the regulator enhances the impartiality of decision making. That is particularly important when it is decided that a regulatory function must be exercised immediately in order to protect members of a scheme.

The creation of the determinations panel will not only enable best use of the regulator's resources but ensure that the regulator remains efficient and accountable. It will also provide a comfortable degree of objectivity whenever evidence suggests that action should be taken against those with responsibilities for pension schemes.

Photo of Steve Webb Steve Webb Shadow Secretary of State for Work and Pensions

When I first saw this provision, I admit that I was bewildered that there is another bit of this organisation and that the people who work on it, and who do what regulators do, cannot be the staff of the regulator. I am slightly enlightened by the Minister's explanation, but only slightly.

We could draw an analogy with the law. If the argument were that we do not want the police, the prosecution service and the court all being the same organisation, I would be able to see where the Government were coming from. However, given that there is a right of appeal anyway to someone who is independent, why is there a Chinese wall within the regulator? There are people who investigate problems with pension schemes, but the person who decides whether something must be done is not employed by the regulator. Who are they employed by? Who is paying these people's wages? We know that these people cannot be regulator staff. To whom are they accountable? If they are accountable to the regulator, where has the independence gone? There is an ability to make an independent appeal against independent people anyway. The Minister may say yes, but there is a good Conservative precedent. That does not wash with me. Such a statement would not reassure me. Before we allow the clause to stand part of the Bill, I hope that the Minister can hold our collective hand a little bit longer, because I am not with him yet.

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne

I am not sure that I can match the hon. Gentleman for sustained scepticism, but let me chime in on some of his points. I was also struck by the provision. I have a series of questions to ask the Under-Secretary. Initially, the clause is a new entity. It does not build on anything, nor does it develop or slightly change something that was in the 1995 legislation. It is within, outwith or slightly separate from the new regulator. Clearly, the need for a separate sub-organisation has never been felt under OPRA, even though we have been living with the consequences of the human rights legislation for a few years. What is the purpose behind the provision? Is it just another layer of potentially expensive bureaucracy or will it serve a purpose?

Initially I turned, as one does in the early stages of the discussion of a Bill in Committee, to the explanatory notes but, with respect to the officials who drafted it, all that the notes do is to explain the Bill in English. I assumed that the clause was a way to demonstrate with some assurance that, as a country, we had complied with the requirements of the human rights legislation. The Under-Secretary was clear and open in his remarks that it was not sufficient in itself to have a determinations panel. What will it be for? As he said, we have the tribunal and the ombudsman. It seems that the tribunal gets us home in respect of human rights legislation.

Why do we need another layer of decision making? I apologise for paraphrasing but, as the hon. Member for Northavon said, the regulator itself is meant to be separate and impartial when undertaking such an important job. It is meant to look at matters from an independent perspective and take decisions about what action should take place. Other safeguards are built into the Bill, but the clause is gold plating gone mad, especially as it will not deliver a result along the lines of a challenge under the human rights legislation.

How will the panel operate? Again, I shall take up what the hon. Member for Northavon said. Will it have its own office? Will it be physically separate from the rest of the regulator? Will it have its own support staff? Will there be Chinese walls within the organisation? We know what it will not be. We know who will not serve on it. All those who are ineligible to do so are set out under subsection (5). It cannot be anyone who is a member of the regulator or any of the staff of the regulator. Members of the panel must be people who are nothing to do with the regulator. The same goes for the pension protection fund, the board of the fund and the staff of the board.

What sort of people will be members of the panel? During my everyday life, I have not come across a determinations panel. Will it be made up of lawyers, laymen, the great and the good or cronies of leading members of the Government? Will they be ex-flatmates of the Prime Minister? What qualifications will they have to have to be members of the determinations panel? Will the panel be a high-profile and prestigious body of which people will be clamouring to become members? How will it operate? [Hon. Members: ''Is that an application?''] Who knows what the future will bring? How will it operate? It sounds as though its members will be extremely well paid and its work will

not be overly onerous. Will the Under-Secretary give me answers to at least some of my questions? Within the estimates of extra cost, how much is the determinations panel likely to cost, with all its support staff, and do we really need it in what is already a fairly complicated structure?

Photo of Mr Chris Pond Mr Chris Pond Parliamentary Under-Secretary, Department for Work and Pensions

I am sure that people will be clamouring to become members of the determinations panel. As I explained, the chairman of the panel will be appointed by the regulator, and the chairman will nominate the other members of the panel. The purpose is not to meet the requirements of the Human Rights Act 1998. We are not pretending; we have been very open about the fact that the provisions will not do that. However, we are providing a degree of separation between the investigatory powers and the decision-making powers of the regulator. The purpose of the determinations panel is to ensure that the procedures are fair.

Of course, the determinations panel will have the opportunity, when looking at schemes, to make decisions about various issues, dealt with under schedule 2, that I suspect we shall consider in a moment, such as whether fines should be imposed and whether questions should be raised about improvement notices for particular schemes. Those are the sorts of issues that the determinations panel will be concerned with.

The panel's set-up mirrors that of the FSA's regulatory decisions committee, which, as hon. Members are no doubt aware, was discussed at length during the consideration of the Financial Services and Markets Act 2000. As I said, the measures provide a degree of separation that is desirable under human rights legislation, although we are not pretending that they fulfil the requirements of that legislation. The panel means that the regulator can take decisions quickly; it will be light on its feet. Whenever those decisions impact on other rights, the determinations panel will make an independent and impartial decision.

Members of the panel are highly likely to be legal and pensions experts, as the hon. Member for Eastbourne suggested. That means that considerable expertise will be available to the regulator, which can be used in an independent way, in separation from the role of the regulator. When we come to schedule 2, some other details about the structure of the determinations panel might be discussed. Perhaps we can address those issues when we come to that part of our deliberations.

Question put, That the clause stand part of the Bill:—

The Committee divided: Ayes 13, Noes 1.

Division number 1 Adults Abused in Childhood — Clause 10 - The Determinations Panel

Aye: 13 MPs

No: 1 MP

Ayes: A-Z by last name

Nos: A-Z by last name

Question put and agreed to.

Clause 10 ordered to stand part of the Bill.