Requirement to keep records

I beg to move Amendment No. 149, in Clause 40, page 17, line 18, at end insert—

‘(1A) Records required in accordance with subsection (1) may be kept in any reasonable manner.’.

I return to a point I have made several times; the Bill is going to apply to a vast range of hugely diverse employers, from sandwich bars, hairdressers and small builders at one end of the scale to the ICIs, Vodafones and Shells of the corporate world at the other. Clause 40(1)(a) stipulates a form and a manner to be prescribed in which records should be kept. I merely seek reassurance that the Government will not be overly prescriptive. Most employers, probably, are reasonably computerised these days, but certainly not all. Some may prefer to have manual records or to keep their records in a multiplicity of ways. The point is that they need to be efficient, there needs to be some kind of audit trail, and they need to be complete. That is what we should seek, rather than being overly prescriptive as to how employers in a huge range of businesses they keep their records. If the Minister can reassure me regarding that, I will no doubt be happy to withdraw the amendment.

In terms of the discussion we have had about compliance and how we expect the system to operate, the requirement to keep records is a reasonable one. I think it important that we do get assurance. We hear from employers all the time about the burden that the legislation we pass places on them, and Ministers always talk about cutting down on red tape. Often, when new Laws are being put in place, that principle is forgotten and we get carried away with ourselves. I know this Clause says that the details will be laid out in regulations, but it would be helpful if the Minister explained what minimum he expects, and what additional burden he expects it to place on a wide range of employers for whom, at the moment, a very simple PAYE system may be the extent of their employee record keeping.

I think we are agreed, given what is being compiled here by way of pension records, that the keeping of records is a very important part of those arrangements, and we must have appropriate measures in place to ensure that employers are compliant with that. However, as we have said before and as I will say also on this Clause, we are not setting out in any way to be unnecessarily burdensome to employers, hence the regulations will be designed to satisfy both objectives. We intend to set out in the regulations which records should be kept, the form or forms in which they should be kept and the period for which they should be kept. I think that, as it sets out the basic requirements, that guidance will be welcomed by employers. We can agree that it will be simpler and more efficient for both employers and the regulator if the minimum essential records are kept in a uniform manner. That will make it straightforward for employers to respond to the regulator’s requests for information.

This discussion reminds me of a conversation that I had just a few days ago with someone who sought to obtain some records from an employer. Inevitably, that was in different circumstances, because this measure has not been enacted yet. It transpired that that person’s employer had died and the widow had thrown all the records, including their training record, in the bin. Will the Minister comment on what might happen in such circumstances under these regulations?

If the hon. Lady takes a look at Clause 40(1)(b), she will see that there is a requirement in the Bill for employers to retain records. There is an expectation that they will retain them for up to six years. I hope that that will satisfy her on that point.

Will the sad and lonely widow be prosecuted because she put all the records in the bin?

I draw attention again to paragraph (b). Regulations will be made requiring any person

“to preserve those records for such period, not exceeding 6 years, as may be prescribed”.

That is already a legal requirement in respect of many other bits of information. I think that there is a requirement on us as individuals to retain information for tax purposes for up to that length of time. It is essential to have those requirements in place, because it is important to have the means to hand to deal with any dispute that may arise over records that are kept.

The important point about records relating to contributions to pension schemes of this type is that the scheme will also hold the records, presumably the whole way through. There need not be a burdensome duty on employers to retain the records for ever, but retaining them for a reasonable time is sensible. The point about the Clause is to what extent the Government take powers to demand that employers maintain the records. As the clause says, it is for up to six years. Employers will obviously need to be aware, and will be informed by the education process that we will have to go into when this measure is introduced, of the importance of retaining the records. As I said to the hon. Lady, this is not a unique provision; it exists in respect of many other requirements to retain records for similar purposes.

Inevitably, the proposed regulations will apply to very small family businesses in which the keeping of records will be, by definition, much more burdensome. Although we all understand that we keep our own tax records, keeping other people’s information is so much more difficult for a small employer, especially in the circumstances that I have described. Given that the agency collecting the contributions will have the records, should the Minister not think again about whether the widowed lady should keep them for six years afterwards?

The hon. Lady is slightly over-egging this. It is not that difficult to keep the records that are required in this case. As I have tried to say, we will ensure that the regulations are not over-burdensome. We want to make absolutely sure that the information  is very straightforward and simple. I do not accept that it will be significantly burdensome, as I think the hon. Lady said, to retain records of this type, even for small employers. From my knowledge of small employers, they are already retaining quite a lot of information. This will not be a completely new and isolated requirement that is imposed on them. It will not be much out of line with requirements that they are already fulfilling. I want to stress that we are trying to make this straightforward for employers, including small employers, since they would be holding the information in the format that the regulator needs. The common standards of holding information will also make things easier, because the employers will understand what they have to hold and how they have to hold it. The regulator, on receiving the information, could judge more easily whether the employers in question have or have not been compliant.

The regulations, which set out the details of the record-keeping duties, will of course be subject to consultation. Those covered by the regulations will have every opportunity to give their views on how the regulations should be set out. We recognise that the intention of the Amendment is to give employers flexibility in how they keep the required records, but it would give too much flexibility, with no boundaries, which is what we intend the regulations to prescribe. Furthermore, as tabled, the amendment would conflict with the power in Clause 40(1). That subsection gives the Secretary of State the power to specify the forms in which records must be kept. The amendment would allow employers to choose for themselves how to keep their records, so long as it was somehow in keeping with the concept of reasonableness. On those grounds, I hope that the hon. Member for South-West Bedfordshire will agree to withdraw the amendment.

I am grateful to the Minister. The Amendment was probing. The debate has been useful, not least for the contribution of my hon. Friend the Member for Bromsgrove, who raised some real issues, particularly about sole traders and unincorporated businesses, where there are small family issues. Think about where, if the premises have gone, the widow keeps all the documents. Are they to go up in the loft or something? There is perhaps a need for some further consultation with very small business organisations on such issues—perhaps the records could be lodged in some central place, so that the widow would not have to keep them in her own home, if her husband’s business no longer exists. There are some practical issues like that. However, I have accepted the points that the Minister made. I am grateful to him for the explanations. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 40 ordered to stand part of the Bill.