New Clause 39 - Contribution notices where avoidance of employer debt

Pensions Bill – in a Public Bill Committee at 10:30 am on 27th April 2004.

Alert me about debates like this

'(1) This section applies in relation to an occupational pension scheme other than—

(a) a money purchase scheme, or

(b) a prescribed scheme or a scheme of a prescribed description.

(2) The Regulator may issue a notice to a person stating that the person is under a liability to pay the sum specified in the notice (a ''contribution notice'')—

(a) to the trustees or managers of the scheme, or

(b) where the Board of the Pension Protection Fund has assumed responsibility for the scheme under Chapter 3 of Part 2 (pension protection), to the Board.

(3) The Regulator may issue a contribution notice to a person only if—

(a) the Regulator is of the opinion that the person was a party to an act or a deliberate failure to act which falls within subsection (4),

(b) the person was at any time in the relevant period—

(i) the employer in relation to the scheme, or

(ii) a person connected with, or an associate of, the employer, and

(c) the Regulator is of the opinion that it is reasonable to impose liability on the person to pay the sum specified in the notice.

(4) An act or a failure to act falls within this subsection if—

(a) the Regulator is of the opinion that the main purpose or one of the main purposes of the act or failure was—

(i) to prevent the recovery of the whole or any part of a debt which was, or might become, due from the employer in relation to the scheme under section 75 of the Pensions Act 1995 (c.26) (deficiencies in the scheme assets), or

(ii) otherwise than in good faith, to prevent such a debt becoming due or to reduce the amount of such a debt which was or would otherwise become due, and

(b) it is an act which occurred, or a failure to act which first occurred, on or after 11th June 2003.

(5) For the purposes of subsection (3)—

(a) the parties to an act or a deliberate failure include those persons who knowingly assist in the act or failure, and

(b) ''the relevant period'' means the period which—

(i) begins with the time when the act falling within subsection (4) occurs or the failure to act falling within that subsection first occurs, and

(ii) ends with the issuing of the contribution notice.

(6) The Regulator, when deciding for the purposes of subsection (3)(c) whether it is reasonable to impose liability on a particular person to pay the sum specified in the notice, must have regard to such matters as the Regulator considers relevant including, where relevant, the following matters—

(a) the degree of involvement of the person in the act or failure to act which falls within subsection (4),

(b) the relationship which the person has or has had with the employer (including, where the employer is a company, whether the person has or has had control of the employer within the meaning of section 435(10) of the Insolvency Act 1986 (c. 45)),

(c) any connection or involvement which the person has or has had with the scheme,

(d) if the act or failure to act was a notifiable event for the purposes of section 44 (duty to notify the Regulator of certain events), any failure by the person to comply with any obligation imposed on the person by subsection (1) of that section to give the Regulator notice of the event,

(e) the financial circumstances of the person, and

(f) such other matters as may be prescribed.

(7) In subsection (6)(b) ''company'' has the meaning given by section 735(1) of the Companies Act 1985 (c. 6).

(8) For the purposes of this section references to a debt due under section 75 of the Pensions Act 1995 (c. 26) include a contingent debt under that section.

(9) Accordingly, in the case of such a contingent debt, the reference in subsection (4)(a)(ii) to preventing a debt becoming due is to be read as including a reference to preventing the occurrence of any of the events specified in section 75(4B)(a) or (b) of that Act upon which the debt is contingent.

(10) For the purposes of this section—

(a) section 249 of the Insolvency Act 1986 (c. 45) (connected persons) applies as it applies for the purposes of any provision of the first Group of Parts of that Act,

(b) section 435 of that Act (associated persons) applies as it applies for the purposes of that Act, and

(c) section 74 of the Bankruptcy (Scotland) Act 1985 (c. 66) (associated persons) applies as it applies for the purposes of that Act.'.—[Malcolm Wicks.]

Brought up, and read the First time.

Photo of Mr Win Griffiths Mr Win Griffiths Labour, Bridgend

With this it will be convenient to discuss the following: Government new clause 40—The sum specified in a section [Contribution notices where avoidance of employer debt] contribution notice.

Government new clause 41—Content and effect of a section [Contribution notices where avoidance of employer debt] contribution notice.

Government new clause 42—Section [Contribution notices where avoidance of employer debt] contribution notice: relationship with employer debt.

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

We now come to two separate but important clusters of new clauses. I hope that they will be supported by the Committee, because they are a crucial component of what we are trying to do. They address the issue of so-called moral hazard in relation to the new pension protection. I am afraid, Mr. Griffiths, that I may need to spend a while on such a complex matter.

Mitigating the risks of moral hazard is one of the biggest challenges that we face in introducing the PPF. It is a challenge that we must address if we are to safeguard the integrity and sustainability of the fund and avoid placing an unfair burden on responsible levy payers. Indeed, I stress that that is very much in the interests of the vast majority of decent employers when it comes to occupational pensions.

A number of forms of moral hazard need to be addressed. The Bill already includes measures designed to protect the PPF against actions taken by schemes to increase the benefits that could be payable by the fund in the form of the admissible rules and the ''recent discretionary increases'' provisions of schedule 7. Imposing a cap on the compensation payable to those under normal pension age also avoids any potential perverse incentives for key decision makers to allow companies to go into insolvency. Furthermore, clauses 115 and 116 include provisions designed to guard against manipulation of schemes to gain eligibility for the PPF.

The new clauses are designed to protect the PPF and scheme members from another moral hazard—the risk posed by unscrupulous employers who might seek to use company structures and business transactions as a cover for side-stepping their pension obligations in the form of the debt due from the employer under section 75 of the Pensions Act 1995.

The section 75 debt would fall on the person who counts as the employer for the purposes of the pension scheme and section 75, particularly when an employer was part of a company group. There are a number of ways in which such a group could ensure that, before the scheme was wound up or the sponsoring employer became insolvent and a section 75 debt was triggered, the company that was the legal employer was put in a position in which it could not afford to pay the debt.

Even if the rest of the company group was fully solvent, the trustees could not recover the debt from any other companies in the group, and the scheme members would be left in what might be a very badly funded scheme. The risk largely relates to schemes in which a number of companies, often with a group structure, participate and pool their liabilities together in a multi-employer scheme, but it could also affect single employer schemes.

The actions taken by company groups might include withdrawing funding for the employer company, selling off its assets, paying a large dividend to strip out any assets in the company or transferring the employees to another company such as a service company, which would then become the employer and which would never have traded or have had any assets to speak of.

Such actions could occur just before the winding up of the scheme or the insolvency of the sponsoring employer, or well in advance, with a view to disguising the purpose of those actions. Alternatively, with or without the collusion of the scheme trustees, the employer could take action artificially to increase the assets of the scheme at the time at which the debt was to be calculated, so that the debt to be paid was lower. That could include persuading the trustees to buy an asset and place a higher value on it, for the purposes of the debt calculation, than it was really worth, such as a piece of land with promised development opportunities that turned out not to exist. Such an action could also include using an asset such as a derivative, designed to increase massively in value in the short term and later to fall.

We want to do as much as possible to encourage employers to provide good-quality pensions for their employees and we welcome the ongoing contribution to the pensions partnership that employers in this country make, but we know from the experience of the Pension Benefit Guaranty Corporation in the United States and, regrettably, from cases that have come to light in this country that we cannot assume that all employers take their pension promise to their employees seriously.

We are not naive to the fact that the advent of the PPF could be seen to provide an even greater incentive for unscrupulous employers to dump their pension liabilities, under the assumption that the PPF would pick up the tab.

New clauses 39 to 42 will therefore give the pensions regulator the power to require that a contribution should be made to a pension scheme when there is an act of deliberate failure, a main purpose of which is to prevent the recovery of the whole or part of the section 75 debt. The new clauses will be operated and enforced by the pensions regulator, in the context of meeting its objectives, to reduce calls on the PPF and to protect the benefits of scheme members.

It is envisaged that the regulator will work closely with the PPF, probably through a joint early-warning team, in operating the functions that will be so crucial in protecting the PPF from abuse. The powers will be

reserved to the determinations panel and exercised by standard procedure, and will be subject to the powers to vary and revoke contained in clause 75.

The powers will need to be exercisable by the regulator, as the very nature of the actions that they are designed to capture is such that manipulation may occur some time before the PPF would normally get involved in a scheme as a result of an employer insolvency. Moreover, the pensions regulator will have the intelligence and expertise, as a result of its day-to-day work monitoring pension schemes, to deal proactively with the risks of moral hazard.

When the regulator identifies that an act or a failure to act has taken place with a view to avoiding a section 75 liability, the new clauses will allow it to require a person or company involved in that action to pay a contribution into the scheme. The contribution required will replace the section 75 debt, which could otherwise have been recovered from the legal employer. The maximum contribution that the regulator can require will be calculated by reference to the section 75 debt that might otherwise have been recoverable from the employer had it been triggered at the time of the act concerned.

Photo of Adam Price Adam Price Spokesperson (Economy and Taxation; Education & Skills; Miner's Compensation; Regeneration; Trade & Industry)

I apologise for interrupting the Minister's flow, but can he explain why, when we have debated the principle of retrospection in the context of Allied Steel and Wire and other pension funds, this measure will have retrospective effect?

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

May I hang on to that important point and deal with it at the end of my speech?

New clause 39 provides that the regulator can require contributions to be paid by an employer and those connected to or associated with the employer, including members of the same company group, controlling shareholders, directors and the owners of unincorporated businesses, where they are party to the act, or deliberate failure to act, in question, which can include knowingly assisting in such an act or failure.

The regulator must also be of the opinion that it is reasonable to impose that liability on that person. Subsection (6) sets out a series of factors to which the regulator should have regard, where relevant, in considering whether it is reasonable to impose liability on a particular person, such as the role of the person concerned in the act or deliberate failure, how closely connected he or she is to the legal employer and to the pension scheme, and the person's financial circumstances.

If the act also constitutes a notifiable event under clause 44, any failure to notify can also be taken into account. That provides a further incentive to notify such events promptly. The regulator can decide to impose liability for a contribution notice on more than one person and can allocate proportions of the contribution against different persons, or decide that the contribution liability shall be joint and several, so that it can claim the whole amount against any one person if it wishes.

New clause 41 also provides that the contribution is a debt due to the trustees or managers of the scheme, but that the regulator may enforce the debt on their behalf. It also deals with the PPF becoming involved with the scheme during an assessment period, in which case it will take over enforcement from the trustees or regulator. New clause 42 deals with there being an outstanding debt due under section 75 of the 1995 Act from the legal employer at the same time as an outstanding contribution notice. The regulator will have power to prevent the trustees from recovering that debt at the same time as the contribution liability where it is not sensible for both to happen.

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

The Minister saying that the powers may be invoked where the PPF becomes involved in a scheme has slightly surprised me. Perhaps it should not have done, as that implies that the employer has become insolvent. That being the case, where does the priority of reclaiming the money from the insolvent employer rank? Does it go to the top and make first claim on any money that the employer has? Does it trump other debts that the employer might leave, having become insolvent?

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

I had better seek advice on that and come back to the hon. Gentleman. The powers are designed to be flexible. Employers have access to expensive legal advice, and unscrupulous employers might find ways to circumvent the provisions. The regulator must be able to adapt to deal with that if the provisions are to be workable and if they are to represent a real deterrent. The key test is therefore the purpose behind actions or failures to act. If the regulator is satisfied that the main purpose is to reduce, avoid or prevent recovery of the debt due under section 75 of the 1995 Act, it can issue a contribution notice.

We are also aware of cases in which employers might already have taken action aimed at dumping liabilities on the PPF, despite the clear warning given by my right hon. Friend the Secretary of State during the debate following the announcement of our proposals to implement the PPF:

''We will have to introduce protection against engineering designed to circumvent the intent of our proposals.''—[Official Report, 11 June 2003; Vol. 406, c. 696.]

The new clauses are thus designed to guard against such manipulation and will apply to actions taken after 11 June 2003 when the proposal to introduce the PPF was announced. So, in answer to the hon. Gentleman's point, as those of us from north London would say, we are not going to let the crooks get away with it. That is why the new clauses must be retrospective. It would be totally wrong if, after announcing something in Parliament, we gave people a clear run of some months to circumvent the will of Parliament.

I am sure that hon. Members appreciate how important it is that the regulator has the right tools to enable it properly to protect the PPF from abuse. That is why I am asking them to accept our proposals.

On the hon. Gentleman's point about the ranking of reclaiming the money, I am advised that the debt will usually be claimed against a different company if the employer is insolvent. For example, a company and a pension scheme might be in difficulty because of actions taken or not taken by others, and we might claim against the parent company in that circumstance, so it will not be a priority debt in the normal sense.

With regard to the pension rights of working people, the possibility of pension dumping is a new guise for the unacceptable face of capitalism. It is in the interests of good employers that we are on to the small minority of bad employers over pension dumping. The provisions will be supported by most employers and trade unions. It is intolerable to think that people might get away from their obligations under the new legislation. The Government will not tolerate that and will prevent such abuse.

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne 10:45 am, 27th April 2004

Let me say straight away that we take the view that these are important provisions. They are badged as moral hazard provisions, but they are really designed to deal with perverse incentives, and technically could be called anti-avoidance provisions. They are necessary, and we do not argue with the need for them.

As the Minister said, the provisions arise from the debt that crystallises under section 75 of the Pension Act 1995, where there is a shortfall between the scheme's assets and liabilities. That amount is treated as debt due from the employer to the scheme trustees or managers. It was always the case that in setting up the PPF, and certainly from looking at the American experience, we had to be alive to the problems of moral hazard or anti-avoidance provisions.

The Minister has made the point that moral hazard comes in different shapes and sizes. There is the company that feels able to take more liberties with the way it runs its scheme with regard to the riskiness of its investments and so on, bearing it in mind that a safety net exists in the shape of the PPF. However, as we have consistently made clear, people should not run away with the idea that the PPF is a complete safety net or guarantee. I was rather disturbed the other day to see the suggestion on a BBC website that it is a guarantee of 100 and 90 per cent. respectively. We know that it is nothing of the sort. The benefits payable might be significantly less than those that were to be paid in due course.

There are also more subtle versions of moral hazard. One thing flagged up by Steve Kandarian when I met him in America and when he gave his excellent lecture at Imperial college last Thursday was the perverse incentives for wage bargaining. Unions might bargain with management in, say, a steel mill or one of those smokestack industries that typically dominate the finances of the PBGC, and rather than offer cash it is much easier for the employer to offer generous pension benefits knowing that the company will not have to find the money for a long time and, depending on the company's health, may not have to find it at all when

the PBGC is waiting out there if things go wrong. There is certainly a strong feeling on the part of the PBGC that some negotiations and their outcomes have been structured in such a way as to increase the moral hazard for the PBGC. The Government are right to be alive to that.

The Minister has kindly taken us through many of the points that have arisen. We Opposition Members think it risible to put forward as the main justification for introducing a cap on compensation the argument that a cap will deter key decision makers from mucking things up as regards the pension scheme. We all know that the reason for the cap is to reduce the money paid out by the PPF—nothing more, nothing less—and it is convoluted reasoning to say that that is why the Government are introducing it.

The Minister made the point that none of the provisions is new; they have all been flagged up, not only by the Secretary of State, but through comparisons with the situation in America. I am sure that lessons have been learned from what the Americans have had to say. The Minister quite rightly set out a situation in which a company group has a variety of different companies and one is singled out as being deprived or starved of assets. That may well be the one responsible for a particular pension fund.

The hon. Member for Northavon will be delighted to see that the powers in the proposal are reserved to no less a body than the determinations panel, which makes a welcome reappearance. I was rather worried that we might have lost sight of it, but here is our old friend, which will have a crucial role to play in these matters.

It is envisaged in the explanatory notes that the regulator and the PPF will work closely together, particularly on the concept of a joint early-warning team—something that the Americans seem to have developed successfully, judging from our discussions in Washington. They have done a lot of work in recent years to build up an effective early-warning scheme.

I am not sure that the Minister will want to go as far as Mr. Kandarian, one of whose innovations was to announce to the markets the 10 most underfunded schemes. There is an element of self-fulfilling prophecy to some of what we are talking about, but if we are to have such a set-up it is important that it is not only responsive to what happens, but out there trying to identify problems in advance.

In response to an intervention by the hon. Member for East Carmarthen and Dinefwr (Adam Price), the Minister discussed the question of retrospectivity. The hon. Member for East Carmarthen and Dinefwr got a bit excited about whether the provision is a loophole through which the 60,000 people who have already lost out on their pensions can somehow march, but sadly the measure relates only to the anti-avoidance stuff and dates back to the Secretary of State's statement to the House in June last year.

Photo of Adam Price Adam Price Spokesperson (Economy and Taxation; Education & Skills; Miner's Compensation; Regeneration; Trade & Industry)

That proves that when it suits their purpose—of course, we support the motivation behind the new clause—Governments do, on occasion, act retrospectively. They could do so in this case, and in the case of the ASW workers, too.

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne

The hon. Gentleman makes a good point. Governments, particularly ones with as large a majority as the current one, can do almost anything they want. After all, only a few weeks ago the Orwellian line was that unclaimed assets belong to someone and therefore cannot be touched, but suddenly they can be pillaged ruthlessly by the Chancellor to prop up the failing national lottery, and can be given to charities. We will no doubt return to that at much greater length on Report.

There is a lovely line in the explanatory notes that I must share with the Committee:

''Opra is aware of possible cases where, in spite of the Secretary of State's warning''— the temerity of these people!—

''it appears that some employers may have already taken action aimed at dumping liabilities on the PPF''.

Absolutely! That is spot on. We have said throughout Committee that there are any number of stories about schemes that are just staggering on, waiting for the PPF to set up shop. That is why we have had so much to say about how the levy will be calculated in the early stages and about the financial health of the PPF in its early years. Therefore, I think that the Government are, perhaps belatedly, right to be taking that problem seriously. We see that there is the power for the regulator to require a contribution where there is

''an act or a deliberate failure to act''.

The Minister might be able to help me on this, but I am not quite sure what rights of challenge there are to those contribution notices. I have a vague recollection that when we dealt with contribution notices there were rights of challenge against one being made, so that an employer can justify what has happened on perfectly legitimate grounds, or against a decision not to have one. I have a feeling that something in the Bill already deals with that.

Things such as stripping assets, large dividends, withdrawing funding and transferring employees have been mentioned. There are any number of dodges that could produce the same result; the question of derivatives was also touched on. What is important is that no one sees the PPF as simply a device for sorting out other problems rather than the simple problem of people's pensions being jeopardised by a company going out of business. There is a great imperative behind the provisions and we will discuss the next group of new clauses in more detail, touching on a different aspect of moral hazard.

If people can use those loopholes, that could render worthless much of what we are trying to do in the legislation. I hope that the provisions are exhaustive. I am sure that the Government have taken the most effective and expensive advice available to ensure that they are, because one can be sure that companies will take the most expensive advice available to try to find a way round them. Time will tell, but that matter might have to be revisited in due course.

Do the Government envisage that there might be a basis for revisiting those matters urgently if a loophole opens up that has not been dealt with? How do they think that such a situation might be worked out? As sure as eggs are eggs, somebody, somewhere, will come

up with a way of getting round even those anti-avoidance provisions. Broadly speaking, however, and subject to some of the detail, which we have had limited time to absorb, we support those anti-avoidance measures.

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

Like the hon. Gentleman, I do not think that any of us objects to attempts to ensure that the PPF is not abused by companies reordering their affairs artificially to increase a pension fund deficit and put the money elsewhere. Therefore, we also welcome these new clauses in principle.

I have a few general questions that are partly prompted by the hon. Gentleman's concluding comments on whether we would close a new loophole that popped up. It is difficult not to notice that this group and the next contain 12 proposals to deal with moral hazard, which were written at the last minute, in addition to what was already in the Bill. I want to ask the Minister a strategic question: what is the judgment as between a case-by-case approach of, ''Oh, we have thought of another loophole, so we will shut it,'' and a general anti-moral hazard clause? In other words, what is the thinking? One cannot pre-empt or guess every new tactic that might be adopted. There might be ways to exploit the system that are not yet possible but which will become so—for example, new financial instruments or new corporate structures that cannot be anticipated at this point.

One question, which I guess occurs with anti-avoidance material generally, is, why is there not just one clause that says that the regulator can issue a contribution notice to any company that has artificially restructured its affairs to minimise its burden and maximise that on the PPF? Why are there 12 proposals in addition to the bits that are in the Bill already, rather than a general power? I am sure that there is a good reason for that, but I do not know what it is and I would be grateful if I found out. That raises the issues that were properly referred to by the hon. Member for Eastbourne: one cannot second-guess everything and there is always bound to be another way around. So, why not have a general anti-avoidance power?

The answer to this might be in the detail of the new clauses, but I could not spot it. Therefore, my second question is, can the contribution notice, and the payment that will be required, trigger an insolvency event? If a company that is fairly close to the wire is mucking about with its finances to put the burden on the PPF, but the motivation is the fact that it will go to the wall if it does not do something and it can limp on for a while by taking such action, could the contribution notice tip it over the edge? Would the regulator consider such things? Will there be any limits in that respect? I will be interested to hear the Minister's reply. I almost called him the Secretary of State—that was obviously a moment of prophecy.

The hon. Member for Eastbourne has referred to the fact that the Occupational Pensions Regulatory Authority already provides early warning of such activities. The Committee would very much like to

hear a lot more about that from the Minister. The briefing with which we have helpfully been provided contains the throw-away comment:

''Opra is aware of possible cases where . . . some employers may have already taken action aimed at dumping liabilities on the PPF''.

Perhaps the Minister cannot name names, but can he give us some idea of the scale of the problem? Are we talking about the odd company or lots of companies? Small companies or big companies? Thousands, millions or hundreds of millions of pounds? For a throw-away comment, it is quite important, and I think that the Committee would like to have as much as possible on the record about the scale of the problem, at which we have hinted throughout our proceedings.

I have one final, slightly anoraky, question. No matter many how times I read the title of new clause 39, I cannot work out the grammar. The title is:

''Contribution notices where avoidance of employer debt'', and one feels that there should be more words after it or in it. Perhaps it is just my problem, but I have never been good at the passive voice. The titles of clauses are amendable, and although we did not get round to tabling an amendment, will the Minister take another look at the grammar of the title? It makes no sense to me.

That said, we are content with the general content of the new clauses. We simply wonder why there is no general anti-avoidance strategy and no general clause. Why are we trying to think up ways of tackling the issue now? The fact that the new clauses have been tabled so late in the day suggests less that the problem has only just dawned on the Department than that it knows that it has the luxury of being able quickly—or, perhaps, slowly—to scribble down a new clause and stick it in the Bill before the ink is dry. Once the Bill receives Royal Assent, that luxury will not be available, so should we include a general provision rather than try to second-guess all the specific examples?

Photo of Malcolm Wicks Malcolm Wicks Minister for pensions, Department for Work and Pensions 11:00 am, 27th April 2004

This has been a useful discussion of our important proposals. I take the point made by the hon. Member for Eastbourne that we can use what terms we like, including moral hazard, but anti-avoidance is an important one. Incidentally, although we do not want to revisit this whole issue now, the cap on the amount of pension that a scheme member can receive is part of our moral hazard and anti-avoidance strategy. If a few top executives had pension rights of more than £100,000 a year and thought that they could get that out of the PPF, that might well influence their judgments about the company's future. The present measure is part of our armoury, and I want to defend the proposal that we discussed previously.

On wage bargaining risk, any benefit improvements within the three years prior to insolvency are not covered by the PPF. We discussed that before, and it is part of our thinking about moral hazard.

The hon. Gentleman again talked about experiences in the United States. Those are rich experiences, which have helped us to develop our thinking. The structure of company law in the United States is different from that here, but we have learned a number of key lessons from the experience of the Pension Benefit Guaranty Corporation. Company restructuring is a key risk area in terms of moral hazard; that is one lesson that we learned from the United States—although we perhaps did not need to do so, because the point is self-evident anyway. However hard we try, we will not be able to foresee every possible abuse. Some companies will seek to get round our provision, so it must be flexible and adaptable in operation. The regulator and the PPF must have access to a high-quality, knowledgeable early-warning team with access to the best available intelligence. We have borne all those lessons in mind in developing our proposals.

The hon. Gentleman asked about what one might almost call rights of appeal to his old friend the determinations panel, which is also close to the heart of my ministerial colleague. Reserving the decision to the determinations panel means that all directly affected parties may make representations and that there may be an appeal to the independent pensions regulator tribunal if necessary.

It is always important to question how we stay ahead of the game. We must not fall behind when it comes to the unscrupulous and no doubt very expensive advice that some bad companies might receive. We have deliberately framed the powers broadly, in the hope that they will be adaptable to different circumstances. A number of critical details are in the form of regulations and can therefore be revised. The regulator will take a proactive approach to spotting new abuses.

I must admit that the Fabian in me finds himself rather attracted to the idea of a general power, but I am advised by my cooler, more diplomatic colleagues in the Department that a regulator cannot be all-powerful, because of considerations under the European convention on human rights. I make no promises, but I would like to reflect on the idea. I think that a similarly interesting debate is going on about taxation.

The question whether one could push a company over the edge by requiring contributions from it is important. I am advised that, in requiring contributions, the regulator has to take account of certain factors including the financial circumstances of the company. We should not forget that we are talking about, as it were, another company in the group. The regulator has to have regard to the financial circumstances. It would be unlikely to impose a debt where that would force a company into insolvency. That would hardly make sense.

When it comes to the use of English and grammar, I do not know what to say. I should look at that matter. We like to speak the Queen's English in a proper manner, so if it ain't right we will look at it.

Question put and agreed to.

Clause read a Second time, and added to the Bill.