Schedule 1 - The Pensions Regulator

Pensions Bill – in a Public Bill Committee at 2:30 pm on 9th March 2004.

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Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne 2:30 pm, 9th March 2004

I beg to move amendment No. 122, in

schedule 1, page 173, line 27, leave out subparagraph (1).

The amendment makes such obvious good sense that I hardly need to speak in its favour. However, as I tabled more than 500 amendments to a previous Bill and only one was eventually accepted by the Minister, perhaps the odds are against me today. The amendment would remove paragraph 35(1) of the schedule, which is obviously a blanket exclusion provision. It makes it clear that neither the regulator nor any person who works for the regulator can be held liable for damages caused to a third party

''in the exercise or purported exercise of the functions''

under the Bill. ''Purported'' is a wonderful lawyer's word. I am sure that that goes down well with the Treasury, but there is ample scope, even by inadvertence, for massive damage to be caused to third parties by the provision.

I shall cite one example. I refer to page 3 of the fact sheet, which the hon. Member for Northavon (Mr. Webb) did not have to go the trouble of printing out, although some of us did print out the regulatory impact assessment. It states:

''The Pensions Regulator will only share information with other bodies where it is permitted to do so by legislation.''

It is true that provisions in the Bill to which we shall refer in more detail at an appropriate time set out with some clarity the circumstances in which information on, say, particular registers can be disclosed to other people and when it cannot be disclosed. The notes that the Minister helpfully provided state boldly:

''Disclosure of restricted information is an offence.''

That is also true. It is set out in the Bill. No matter how well run the regulator is, there will always be the possibility of errors

''in the exercise or purported exercise of the functions of the Regulator''.

We can envisage situations in which people suffer considerable harm because the information has reached the public domain or people who would not usually be entitled to receive it. I am pressing the Minister to explain the reasoning behind such a blanket exclusion. Does he not accept the principle that, when the regulator makes a mistake—honest or otherwise—and damages are caused to a person, which in our legal system must be proved, there should be some recourse?

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

I am following the hon. Gentleman's reasoning with sympathy, but his amendment would remove only paragraph 35(1) of the schedule. Curiously, he did not want the whole of paragraph 35, which is entitled ''Exemption from liability in damages'', to be removed. Why does he want to remove only a particular part of it?

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne

I must say that that was well spotted by the hon. Gentleman. The omission was pure idleness on my part. I wish to make it clear that, in leading for the official Opposition in Committee, I am not trying to win prizes for draftsmanship. The Government are the people with the clever draftsmen—they may be slow, but they are clever. If any of my points of principle are accepted—as I hope some of them will be—and if Ministers say, ''We accept the principle, we will take the proposals away and draft them properly'', I shall be happy to seek to withdraw amendments.

I apologise profusely to the hon. Gentleman for not following through the logic in paragraph 35. This is a probing amendment, and I have set out with total honesty what I am trying to achieve. I look forward to hearing the Minister's defence of the provision.

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

Good afternoon, Mr. Griffiths.

May I apologise to the hon. Member for Northavon and other Committee members if they have had difficulty in getting copies of the regulatory impact assessment? I am told that copies will be available in the Vote Office tomorrow, and there will be a supply on the Table in Committee on Thursday. If anyone would like a copy of the assessment for bedtime reading, however, I can make copies available urgently.

This amendment would remove the regulator's exemption from liability for damages, as we have heard. We are not acting without precedent in

introducing the provision. The Occupational Pensions Regulatory Authority enjoys a similar immunity from damages, and the Bill seeks to replicate that arrangement while ensuring that the regulator will be liable for any contravention of the European convention on human rights or for acts of bad faith.

As we managed to proceed in a spirit of consensus this morning, I shall not labour my point. When we follow the precedent of OPRA, which was established by the Pensions Act 1995, we follow an Act of Parliament that predated the Labour Administration. I do not know to what extent Conservative colleagues objected to the exemption when that legislation was introduced. Labour did not invent the exemption. Indeed, I am advised that the exemption from damages is narrower than that contained in the 1995 Act, which provided a blanket exemption, although that is not a comfort blanket for the hon. Member for Eastbourne. The exemption is now rather more limited.

Without the protection that we are suggesting, the regulator would be liable for damages arising from its staff members' actions or failures to act. That is why I am asking the hon. Gentleman to withdraw the amendment. We believe that its effect would be to prevent the regulator from achieving its objectives, and particularly the objective of protecting members' benefits.

The exemption may raise eyebrows—it has raised one or two already—and questions may be asked about its necessity. Let me try to explain. Let us say, for example, that the regulator receives information from a scheme auditor that a particular trustee is about to remove scheme funds for his own purpose. If the regulator reasonably believes that to be the case, it should act via the special procedure to appoint a trustee with exclusive powers to take control of the scheme's bank account and ensure that funds cannot be removed.

Paragraph 35(5)(a) provides for damages where the regulator has acted in bad faith. Damages are also available when the regulator has contravened the Human Rights Act 1998. I am sure that hon. Members will agree that it would be foolish to provide the regulator with powers to protect members' benefits, but then, when it thought it suitable, to prevent members from exercising them in extreme cases. That is the balance that we seek on behalf of scheme members. I understand that that may raise concerns. I emphasise that we are following the precedent of the 1995 Act, and I therefore ask the hon. Gentleman to withdraw his amendment.

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne

I am grateful to the Minister, but I do not accept his point about precedent.

As has been mentioned, the new regulator will have significantly wider functions and powers than OPRA, and it is therefore all the more likely that, even in good faith, it will cause damages to third parties. I take his point about the bad faith exception. As he rightly says, it would not matter if the Government tried to exclude the European convention on human rights and its

effects. It would still kick in in appropriate cases, and there is the possibility of significant damages being paid under the human rights exception. Why should British citizens have to bring cases under that provision when they might also have a straightforward civil action for damages because of a mistake made by the regulator—some information placed in the public domain contrary to the Act—in the absence of bad faith?

The Minister has conceded that there will be circumstances that are beyond either the drafting or the Government's control in which such damages could be payable. I do not think that he dealt with the point, but I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 1, as amended, agreed to.