Clause 100 - Duty to assume

Pensions Bill – in a Public Bill Committee at 3:15 pm on 25th March 2004.

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

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

It might be useful if I described, albeit briefly, the purpose of the clause. It provides the PPF with the power to assume responsibility for certain schemes where there has not been an insolvency event as defined by clause 95—for example, public sector schemes without a Crown guarantee and schemes with employers based overseas and subject to foreign insolvency proceedings. We are totally committed to providing protection for the members of such eligible schemes who will be liable to pay the PPF levy. We need to ensure that the legislation provides for eligible schemes whose sponsoring employers cannot meet the insolvency events test to enable them to benefit from PPF compensation. The clause makes provisions to protect their members, because we recognise that such schemes may also face risk in future.

Photo of George Osborne George Osborne Shadow Minister (Treasury)

The Minister mentioned in passing public sector schemes that did not have a Crown guarantee. Could he give the Committee some examples of such schemes? Presumably they will be paying the levy.

Photo of George Osborne George Osborne Shadow Minister (Treasury)

Given that they are public sector schemes, what would be the burden and will the costs of the levy be borne by the taxpayer?

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

We are talking about prime examples of all non-departmental public bodies whose employers are not members of the civil service pension scheme. They will pay the levy and will be able to benefit from the PPF in such adverse circumstances.

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

May I give some examples? I am talking about—[Interruption.] I did not hear that. No doubt the hon. Member for Eastbourne could stand up and say that. In giving examples, I do not want to frighten workers in those bodies by saying that they are on the verge of bankruptcy. Examples would include, inter alia, the Arts Council, the British Tourist Authority and the Medical Research Council.

Several hon. Members rose—

Photo of Mr James Cran Mr James Cran Conservative, Beverley and Holderness

Let us take a decision. Who are you giving way to, Mr. Wicks?

Photo of George Osborne George Osborne Shadow Minister (Treasury) 3:30 pm, 25th March 2004

There may be quite a large number of such bodies. We want to provide their scheme members with protection—I am not suggesting that we do not. However, I am not sure whether the Minister dealt with the second part of my intervention. Will the cost be borne by the taxpayer, presumably because most of these bodies receive grants from Whitehall Departments, or by the levies and charges on some of those bodies? Is there any idea of cost? I am not sure that I saw anything in the regulatory impact assessment about the ultimate cost to the taxpayer of what could be a significant bill if all the non-departmental public bodies were not paying this levy.

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

From memory, after the initial year with the flat-rate levy, we are talking about £20 on average per scheme member. That is a general PPF estimate, without taking account of the risk-based levy. The amount of money would be of that order; I am not saying that it is insignificant, but it would not represent a significant burden on those bodies.

I think that the hon. Gentleman is trying to persuade me to say that, given that many such bodies are funded by the Exchequer, there is an implication for the taxpayer. Yes, there is such an implication. However, it is for the bodies to determine how they would afford the levy, which would give them important protection.

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne

I have had a slightly surreal thought, which the Minister may be able to confirm. Presumably, the PPF staff's pension fund might well be included among those of the non-departmental public bodies.

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

No, because those staff will be counted as civil servants. They will be in final salary schemes, but counted as civil servants. I recognise the hon. Gentleman's line of questioning, but it seems to me that the Arts Council could arrange some glorious spectacular of modern ballet and rock music to pay the levy.

Photo of George Osborne George Osborne Shadow Minister (Treasury)

I was not planning to speak on the clause. We are being asked to agree to something, but the Minister has given no clear indication of the scale of the impact that it would have on the Exchequer. We do not know whether this will cost the taxpayer a million pounds, or more. The Minister said in a jokey way that the Arts Council could organise a rock ballet to pay for it.

All the bodies will be faced with additional cost. All that I ask of the Minister is that he should give some idea that the Government know the cost that they are imposing on themselves, or rather on the non-departmental bodies that they work with. Perhaps he would write to me and other Committee members about that. What will be the cost to all the bodies paying the levy that fall within the broad ambit of the public sector? That seems a perfectly reasonable

question. I am not against the levy, and I am not trying to be critical. I would just like to know the facts—what the burden on the taxpayer will be.

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

It will be up to the bodies for which we are legislating to determine the nature of the levy for these institutions; my guess would be that for many of them, the risk-based element would be nothing or very low. We are not talking about a large sum of money. There are not large numbers of such organisations with large staff memberships. However, if I can help the hon. Gentleman with some arithmetic on the matter, I will do so by letter, and I will copy that to other Committee members.

I am slightly confused about whether we should take seriously the big spender assumptions of the Opposition in terms of retrospection, or their minute concern about the arithmetic as it affects the bodies. Which is it to be?

Photo of George Osborne George Osborne Shadow Minister (Treasury)

The Minister has attempted to taunt us all day by asking, ''Where is the money coming from?'' It is perfectly reasonable in discussing this clause to ask where the money is coming from and how much money will be involved.

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

I have said that I will send the hon. Gentleman the best estimates that I can get. As a polite response, perhaps he and his colleagues would write to me about how they propose to fund their ideas—that would be a good quid pro quo, as we say in Croydon.

Question put and agreed to.

Clause 100 ordered to stand part of the Bill.