Amendment No. 136 was tabled in the same spirit that informed some of our earlier debates around pay-as-you-earn: trying to simplify things for employers, and making the administration of personal accounts as small a burden as possible for employers.
I fully accept that the pensions regulator will need access to information about personal account schemes that are set up by employers up and down the country. The purpose of this amendment is to determine whether there is a less burdensome way for employers to get that information to the pensions regulator. The assumption underlying the amendment is that there is, or could be, an information gateway between Her Majesty’s Customs and Revenue and the regulator. Can the Minister confirm that?
The Minister for Pensions Reform (Mr. Mike O'Brien) indicated assent.
The Minister is helpfully nodding at me, so I will assume that that is the case or that it could easily be the case, although I do not wish to pre-empt anything that he might say when he replies.
Putting that to one side for a moment, the Minister may well be aware that Sir David Varney conducted a review into integrated government in late 2006. The proposal that information could be routed through HMRC to the pensions regulator was exactly the type of recommendation that he had in mind when he wrote that report. The amendment would make life a lot easier.
We should not lose sight of the extra regulatory burden, in terms of both cost and time, that will be put on employers, especially smaller ones. We all agree that this is something that should be done and that the cost is worth while for the result that we all hope to see: many millions more people with a decent pension income in retirement. It is important, however, that we do not inflict any unnecessary burdens on the economy, which is set for a slightly more problematic year.
That is the purpose behind this amendment, which arises from a recommendation made by the Institute of Chartered Accountants in England and Wales. The institute’s members audit employers up and down the country and are very familiar with processes of transferring information. They are also well aware of the needs of employers and businesses. I hope that what I am proposing—even if not in the exact form of words used in amendment No. 136—will find favour with the Minister.
I support the comments made by the hon. Member for South-West Bedfordshire about the inclusion of HMRC. We all want to ensure that information is collected and made available as simply and straightforwardly as possible without being a burden to employers, especially small employers.
I want to speak primarily to amendment No. 88, which has been suggested by the TUC. I hope that it will find favour with the Government. It would ensure that all pension schemes were properly registered with the pensions regulator. Although the vast majority of employers will run excellent schemes that benefit their employees, it is a sad fact—as we have seen in relation to people with second pensions—that there has been some mis-selling and people have lost out. A very tiny proportion of employers might seek to have a scheme that does not meet the best objectives of the Bill. All we are asking is that each scheme is properly registered with the regulator.
There will obviously have to be a change to the way in which the regulator operates. I know there has been some discussion about whether the regulator or HMRC should have that role. The Government have taken the view that it should be the pensions regulator, and that body will need beefing up and to change. The amendment just seeks to ensure that registration is one of the first things to happen to a scheme. Therefore, the compliance mechanism that the pensions regulator will introduce would ensure that all employers, not just the best ones, would meet the standards that we expect.
May I confirm to the hon. Member for South-West Bedfordshire that I have the agreement of HMRC and its Ministers to share the required information, particularly on the numbers of people who are employers? To carry out the exercise, we will need to know who are employers and who has a pension scheme. As a result, we will know who has not registered as having a pension scheme and whether they are an employer who has not registered. That is a crucial piece of information.
This will work by the employer registering with the regulator on the internet to say that they have a pension scheme and what it is. That should be a fairly straightforward way of giving the information. They will not need to register with HMRC, just with the regulator. Most of them will be able to do it on the internet, but if they do not have that facility, other facilities will be available. They will be able to ensure that the information is provided. HMRC will be able to say who is registered as an employer and we can then compare the data. That sort of information exchange can be carried out fairly straightforwardly.
I very much appreciated the straightforward way in which the hon. Gentleman spoke to amendment No. 136. The amendment would make HMRC responsible for collecting the information from employers, while the responsibility for delivering the rest of the compliance regime would rest with the pensions regulator. Involving two bodies in the compliance regime would result in not reduced costs, but increased costs and additional IT system requirements, because the two organisations would need to be equipped to work with employers on different aspects of the compliance regime. It could also result in an increased burden for employers, who might have to deal with both HMRC and the pensions regulator in relation to the new duties. We would rather keep the obligation on employers to deal with HMRC as they have always done, while dealing with the pensions regulator in relation to the new duties. Employers would know that on pensions they were to deal with the pensions regulator. That is fairly straightforward.
In practice, most employers running pension schemes should have to do very little other than to inform the regulator that they have a self-certified pension scheme. That would be one that takes them outside the requirement for registration for personal accounts, or one involving an alternative kind of pension scheme. The system should be fairly straightforward for the employer.
I understand that amendment No. 88 has been sponsored by the TUC. While we all have a great deal of respect for the TUC, I think that here it is just clarifying the requirement that every employer must register their qualifying pension scheme with the regulator. We intend that in any event, but we would rather achieve it through regulations, and have the obligations set out for employers in regulations. That would be the better way of dealing with this.
Given the reassurance that we intend to have a fairly easy way for employers to register their pension scheme with the regulator, I hope that that the hon. Member for South-West Bedfordshire will withdraw the amendment.
It was never our intention that there should be two bodies with which employers had to deal in respect of personal accounts. The Minister has given the Committee an assurance on the sharing of information between the two bodies, and I am satisfied that that will reduce the burden on employers. I beg to ask to ask leave to withdraw the amendment.
As we are dealing with clause 9, I think that it would be apposite to ask the Minister to say a little about the provision of resources for the pensions regulator. Obviously, the body will have to deal with a vastly increased number of pension schemes and will be responsible for a very different landscape. How will the pensions regulator be geared up to deal with that, and how will it be financed and resourced?
We took the view that the pensions regulator—TPR—was the best organisation to carry out this work. It has a very good reputation with the pensions industry and is broadly supported. However, it does a different job from the one that we are now asking it to do, so the hon. Gentleman is right to press me on how it will carry out its duties.
We are in discussions with TPR about the new budget that it will require. It has been allocated the role relatively recently, and it is scoping what it will need. The way in which it will develop its procedures will be, to some extent, dependent on the outcome of the Bill. Assuming it passes broadly intact, the regulator will be in a position to look at what extra facilities and staff it needs. Then, during the course of this year and probably into next year, we will be doing detailed work on its budget. The straight answer is that some of this is still to be decided.
We are, however, very conscious that we are asking TPR to carry out a different role. It has an excellent reputation for what it currently does, and we expect that to carry over to the new work. The role will not be highly burdensome. It is not anticipated that TPR will interfere with the work of employers or cause lots of regulatory problems for them. There will be a simple model whereby TPR will deal with specific complaints and cases in which it is clear that someone is registered as an employer with HMRC, but not with TPR. TPR will then aim to find out whether that was an oversight by the employer, who will be asked to register. No penalty for late registration is envisaged. If the employer still failed to register, they would be given reminders, and then some of the penalties would be brought into effect.
In terms of the organisation of TPR, we will need a basic structure to get the information and an administrative structure to ensure that contact with employers can be established in cases in which people are not registered as having a scheme. We also need to be able to take action, if that should become necessary. I am sorry that I cannot give much more detail, but the hon. Gentleman will understand that we are still in the business of trying to establish the scope of the work that TPR will do.
I am grateful for the Minister’s comments. It is important that the Bill goes through, and then we can work towards setting up the system. He spoke about problems with non-compliance, and clearly the regulator has a very different role now from the one that it will have. We might be dealing with a whole battery of different types of employers who have not previously had contact with the pensions regulator. Has he considered what additional powers the regulator might need to carry out that particular function?
TPR will need new powers, some of which are flagged up in the Bill. The detail of the administrative steps that TPR will be able to take to deal with recalcitrant employers will be developed, in regulations, in due course. We will have opportunities later in our proceedings to consider some of the issues.
The aim is to ensure that TPR is satisfied that it will have sufficient powers to carry out its duties and to deal with recalcitrant employers who simply refuse to register or to provide a pension scheme. It should have access to the appropriate penalties, or be able to bring into effect procedures that will result in those penalties. Hopefully, employers will see that there is a fairly straightforward system under which we know who the employers are and who is registered, and we then identify those who have failed to register, tell them that they need to do so, and, if they do not, draw up sanctions to deal with that. The regime is fairly straightforward but, as the hon. Gentleman says, we will need to put in place the capacity for the administrative steps and penalties that will be necessary for those who fail to comply.
Before we move on, may bring some reassurance and relief to the Government Whip? I have inquired about the size of quorums. Although seven is appropriate for a full-sized Public Bill Committee, the quorum can also be a third of the members of a Committee. I have done my arithmetic again and, for this Committee, I must be able to see six Members. I think that I have been able to afford some consolation and relief to the Government Whip.