Clause 36

Pensions Bill – in a Public Bill Committee at 4:30 pm on 29th January 2008.

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References to the Pensions Regulator Tribunal

Photo of Andrew Selous Andrew Selous Shadow Minister (Work and Pensions)

I beg to move amendment No. 147, in clause 36, page 16, line 17, leave out ‘may’ and insert ‘must’.

The clause deals with references to the Pensions Regulator tribunal. My hon. Friends and I tabled the amendment because we heard strong, heartfelt pleas—certainly from the representatives of employers’ organisations during our evidence sessions—that the compliance and enforcement regime should be proportionate, with the big stick used only when really needed. Given the wording of clause 36, it strikes me that giving the Secretary of State a discretionary power on how he or she might constitute a tribunal and the manner in which the tribunal would be called would not give employers the reassurance that they need that they will have the right to go to a tribunal.

Some time ago, one of our older and wiser colleagues put it to me that summary justice without the right of appeal is the hallmark of a dictatorship. While I would not suggest that ministerial motives go quite so far, the serious point is that while we all back a tough compliance regime, it must be fair. Those employers who are being hauled up, perhaps for inadvertent errors, must have rights. It might be that the business is incredibly busy, that the order book is overflowing, that there are staff problems, or that the matter has genuinely slipped their minds. The right to go to a tribunal should be absolute, which is why I query the word “may” and think that “must” should be inserted.

Photo of Paul Rowen Paul Rowen Shadow Minister, Work & Pensions

I hope that the Minister can give us some indication of why the word used is “may” and not “must”. We all accept that the compliance regime has to have a light touch and to be fair. The impact assessment sets out the three clear areas in which the regime has to meet standards.

The other side of the coin is missing, however, although I accept that this will not happen in the vast majority of cases. I am sure—we have seen the figures—that most employers will operate the scheme without problems. However, there will be a small number of employers with whom there are problems, and the compliance regime is meant to deal with that. Equally, there might be compelling reasons why that employer has not met his or her obligations, so allowing him or her the right to a tribunal is the appropriate way forward.

I hope that the Minister can respond favourably. Given the consensus that has been developed so far, the slight change from a three-letter word to a four-letter word might help to get more widespread support for the measures in the Bill.

Photo of James Plaskitt James Plaskitt Parliamentary Under-Secretary, Department for Work and Pensions

I am grateful to those who have contributed to the debate. It might be helpful if I clarify a few points first.

The Pensions Regulator is funded by a levy on pension schemes. That levy is used to pay for a range of activities. We do not believe that the funds raised by the levy should be used to cover the costs to the Pensions  Regulator of designing and putting in place its compliance procedures in the run-up to 2012. That work is essential if the regulator is to discharge its compliance responsibilities in the future. It is for a broader public benefit and, therefore, should be funded accordingly. We propose to do that through grants in aid using powers under schedule 5 of the Pensions Act 2004. Interestingly, that means that the work would be funded from the Consolidated Fund, into which we have just agreed to put money under the previous clause. Expenditure and funding given to the regulator to develop its compliance regime will be accounted for separately from its current activity and funding regime.

There were queries at one point about the issue of funding, so I want to respond. On the question of “may” versus “must”, the “may” in subsection (1) refers to making regulations. There is also a right to appeal in subsection (1). I hope that that covers the point and that the hon. Member for South-West Bedfordshire will withdraw the amendment.

Photo of Andrew Selous Andrew Selous Shadow Minister (Work and Pensions) 4:45 pm, 29th January 2008

Having heard the Minister’s assurance that anyone who has come before the Pensions Regulator has the right to go to a tribunal, I am happy to withdraw my amendment. The wording of clause 36 was not clear to me, but having heard the Minister’s reassurance, I am entirely happy to beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Paul Rowen Paul Rowen Shadow Minister, Work & Pensions

I beg to move amendment No. 97, in clause 36, page 16, line 29, at end add—

‘(4) The Secretary of State shall publish a report on the funding of the Pensions Regulator Tribunal for references made under this section within 12 months of the section coming into force.’.

This is very much a probing amendment that was tabled to get more information from the Minister. He has already partly answered how the tribunal is to be adequately funded. A lot of people have talked about making sure that the Pensions Regulator is adequately funded. We will have that discussion when we come to chapter 5, which deals with the regulator and the way in which it will operate. Particularly regarding the run-up period and beyond, I would like to know what the Minister sees as the funding requirement for the tribunal, and how he will ensure that the funding is made available.

As I said, the Minister has already partly answered the question, but I will be interested to hear what he says because we want employers to have the right to go to that tribunal. We also want to ensure that it has enough resources—human or whatever—to enable adequate and speedy dealings with any issues arising, especially in the initial stages following the introduction of the Bill. The worst thing that could happen would be a backlog of cases before the tribunal that were not resolved, because that would affect not just the employer, but the employee. That would have an impact on the success of the scheme and could well increase the costs. It is important that, in the initial stages, the tribunal is adequately funded—not just financially, but with the human resources to ensure that anything put before it is dealt with speedily.

Photo of Andrew Selous Andrew Selous Shadow Minister (Work and Pensions)

I agree with the sentiments expressed by the hon. Gentleman. I understand exactly where he is coming from. In our previous debate, the Minister reassured the Committee that anyone who wants to go before the tribunal will be able to do so. The only question that remains is for me is to ask the Minister for an assurance that that will happen in a reasonably timely manner and that that is being factored into the Government’s plans. We all know that justice delayed can be justice denied—there might be adverse publicity for an employer who has been hauled up before the Pensions Regulator. If employers want to go to the tribunal, it is important that we know that they can, but they should be able to go reasonably speedily and, as the hon. Gentleman said, they should get a proper service when they get there.

Photo of James Plaskitt James Plaskitt Parliamentary Under-Secretary, Department for Work and Pensions

I appreciate the points that both hon. Members have made. I understand why they are seeking such assurances and I will now try to give them. However, I will say a little more by way of explanation, because there is an interaction between what we are doing in the Bill and the decisions already taken and envisaged in the Tribunals, Courts and Enforcement Act 2007. If I can, I will explain the interrelationship between the two.

Photo of Andrew Selous Andrew Selous Shadow Minister (Work and Pensions)

There is no reference to that in the clause.

Photo of James Plaskitt James Plaskitt Parliamentary Under-Secretary, Department for Work and Pensions

This is a bit tricky, but I will try to take the Committee through it.

While the Bill names the Pensions Regulator tribunal as the appellate body to hear appeals under this regime, we do not envisage that it will actually perform that function. That is because by the time appeals under the new regime are ready to be heard, we anticipate that the functions of the Pensions Regulator tribunal will have moved into the new tribunals structure, which is being set up under the 2007 Act.

Section 3 of 2007 Act establishes new first-tier and upper-tier tribunals. Once the provision is in force, section 30 of that Act will be used to transfer the functions of the Pensions Regulator tribunal to the new arrangements. It is envisaged that the functions relating to the new duties introduced from 2012 will go to the first-tier tribunal. Given the likely nature of appeals under this regime, we feel that that tribunal is indeed the more appropriate appellate body, because it will be the first-instance tribunal for most jurisdictions, and most appeals from original decision-making bodies will commence in that tier. We anticipate that the functions will transfer to the new arrangements in 2009, subject to the completion of recommendations on tax appeals modernisation work outlined in the Government’s consultation paper on implementing part 1 of the 2007 Act.

The amendment proposes that we produce a report on funding the Pensions Regulator tribunal for references made under this regime. I understand the concern that has been expressed that the Pensions Regulator and the tribunal should each be adequately resourced for their roles in relation to this work.

We are working with the Pensions Regulator to develop the new regime and to assess the costs and resources required to undertake the new compliance functions in general. As I have said, we envisage using the first-tier tribunal. However, we expect the approach on funding  to be similar to that taken to the Pensions Regulator tribunal. The Department will continue liaising with the Tribunals Service to assess the additional resource requirements and the funding implications of the new initiative. I assure the Committee that our officials are working closely with colleagues at the Tribunals Service to ensure that the new appellate functions will be successfully accommodated in the revised structure.

The hon. Member for South-West Bedfordshire raised a point about timeliness. Part of the reason why the Government are implementing the tribunals reform system under the 2007 Act is to try to deliver exactly that. I want to reassure him and the rest of the Committee that we are committed to funding this mechanism in such a way that it can act speedily.

Photo of Andrew Selous Andrew Selous Shadow Minister (Work and Pensions)

I might have missed this, in which case I apologise to the Minister and the Committee, but I am not entirely clear about where the funding for the tribunal will come from. I am not sure whether the Minister said it was from the Consolidated Fund, or whether it will come from any part of the pensions contributions that are made.

Photo of James Plaskitt James Plaskitt Parliamentary Under-Secretary, Department for Work and Pensions

No, it will not come from the contributions. I tried to make that clear, but I will reiterate that. Now that I have clarified that and addressed the other points raised, I hope that the hon. Member for Rochdale will withdraw the amendment.

Photo of Paul Rowen Paul Rowen Shadow Minister, Work & Pensions

I am grateful for the Minister’s clarification, which was very helpful. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 36 ordered to stand part of the Bill.