Clause 130 - Administration of compensation

Pensions Bill – in a Public Bill Committee at 4:45 pm on 30th March 2004.

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

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne

I have some questions and requests for clarification. It is difficult to comment on subsections (1) and (2) because they both refer to future regulations, and we have given up on hoping to see any draft regulations. None the less, I want to raise some issues relating to subsection (2)(a). Is it not a blinding statement of the obvious? Why would one need regulations to prescribe

''the manner in which and time when compensation is to be paid''?

I presume that, as far as possible, periodic compensation would be paid as if it were the pension being replaced. I presume that it would be paid once a month. I do not like to think of two houses, one with nice shiny paintwork and a new car outside, and the other with weeds growing up the side of the building, because one received payments quarterly and the other did not. I am slightly curious as to why the manner and timing needs to be spelt out in regulations, but no doubt we will be enlightened.

Paragraph (b) makes eminent sense. Paragraph (c) is interesting. Does it give individuals the option of saying that they do not want periodic compensation, and just want a lump sum? Is it a variant of the state pension lump sum provision that we have already debated? What kind of ''circumstances and manner'' do the Government anticipate would allow the liability to be discharged? Could the board decide to dispose of a troublesome claimant by paying them a lump sum? Perhaps we could be told.

I have no particular point to make about paragraph (d). Paragraph (e) refers to

''dispensing with strict proof of their title''.

Is that wise, and on what basis would it occur? Would it mirror what happens already in schemes that are ongoing, or would it be a new departure? How would it work?

Next to paragraph (f) I have written ''Tax credits?''. We are all aware of the horrors of some of the Department for Work and Pensions IT schemes, and we are also aware of the debacle with the Treasury and tax credits. Through this paragraph, are the Government recognising in advance that there will be errors in the payment of compensation? Are we already envisaging failures in IT and computer systems, and the recovery of amounts of compensation? In retrospect, I would have been tempted to table an amendment to leave out paragraph (f), because it sounds as if the Department is already working on the basis that problems will arise.

Paragraph (g) mentions

''specifying the circumstances in which payment of compensation can be suspended.''

Is that on an individual basis, or are we talking about a group of people? What circumstances have Ministers in mind? We should bear in mind that we are not talking about the power under paragraph 30 of

schedule 7, which we have debated fairly exhaustively. We seem to be talking about a separate power, which would allow payment to be suspended. Ministers ought to set out the circumstances that they have in mind, even if the draft regulations are not available.

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

I am happy to try to clarify things. The hon. Gentleman listed the different elements of the regulations under subsection (2) according to their position in the alphabet—

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne

That is the way that they are written in the Bill.

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

I am not criticising the hon. Gentleman; I am simply saying that for the benefit of other members of the Committee, who may not necessarily have the clause in front of them. I will explain where the different elements stand.

Paragraph (a), which relates to the method and timing of payment, has been included because we want the flexibility for PPF to administer compensation in the most efficient way. Like all the regulations, they will be essential in ensuring that the PPF can deal with the practical elements of the task of paying compensation.

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne 5:00 pm, 30th March 2004

Does that mean that the Minister envisages that PPF pensioners—those people in the house with the unmown lawn and the very old car—might receive their compensation payments less frequently than they would have received their pension payments?

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

The assumption is that we will try to replicate the arrangements that already exist. If there are circumstances in which pension scheme members feel that the payment is made using inappropriate method and timing, they have the opportunity to appeal against the way in which that is done. There is no intention to create disadvantage for any individual in the PPF.

The hon. Gentleman said that he was happy with

''calculating the amounts of compensation payable''

in subsection (2)(b) because it was straightforward. I should explain that the reference to lump sum payments in paragraph (c) concerns trivial commutation—situations in which very small sums are involved and it is therefore more sensible for them to be paid as a lump sum, rather than over a period.

I believe that the hon. Gentleman was also happy with subsection (2)(d), and that he had no concerns about subsection (2)(e).

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

I shall return to that in a moment; I may have to ask the hon. Gentleman to repeat his concern. Subsection (2)(f) deals with the recovery of overpayments. It mainly concerns administration during the assessment period. We must ensure that when the board has taken over a scheme, the amount that is paid to individual members of the scheme is appropriate according to entitlements measured against the PPF levels of compensation. Levy payers will want to be assured that the board is administering

the correct amount of compensation in an efficient manner. That part of subsection (2) will ensure that the board does so.

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne

The Under-Secretary has just described the exact opposite of what the subsection says, because paragraph (e) refers to dispensing with strict proof of someone's title, which was the point that I raised. With regard to the recovery of compensation, my concern was—

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne

My concern was about the IT problems.

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

The subsection is not concerned with that or with the payment of tax credits, nor is it to do with the board getting anything wrong. It will ensure that the payments that people receive are properly aligned with the PPF level of compensation once they have been transferred from individual schemes into the PPF. It is merely a matter of adjustment rather than of general overpayments.

The hon. Gentleman was concerned about payments when a beneficiary dies. Paragraph (e) will ensure that the board administers such payments fairly and that the system will not be abused. Paragraph (g) concerns the suspension of payments and relates to fraud, which we will discuss later.

Question put and agreed to.

Clause 130 ordered to stand part of the Bill.