Schedule 1

Part of Pensions Bill – in a Public Bill Committee at 10:30 am on 5th February 2008.

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Photo of James Plaskitt James Plaskitt Parliamentary Under-Secretary, Department for Work and Pensions 10:30 am, 5th February 2008

Let me see if I can demystify this. I will try to reassure the hon. Gentlemen that there are good reasons behind the arrangement in the Bill.

The amendment would remove the Secretary of State’s ability to determine the levels at which remuneration was set. We intend that the trustee corporation will act independently of the Government. That is right, and our aim is for an emulation, as far as possible, of trust-based occupational pensions schemes in the private sector. None the less, the trustee corporation is being set up as a public body with a central role in delivering a key aspect of public policy. Quite rightly, we expect a high standard of propriety from public bodies, and it is standard practice to include mechanisms for the Government to ensure that they achieve those high standards.

There is a balance to be struck, as the hon. Member for Rochdale indicated. For example, we intend the trustee corporation, once it is up and running, to have the freedom to appoint its own members, but in so doing, it should follow the good practice of the Office of the Commissioner for Public Appointments. When creating a non-departmental public body, it is standard practice to give the Secretary of State of the sponsoring Department the responsibility for remuneration. That is to ensure that the remuneration paid is in proportion to the role and weight of the posts. To reassure members, the Treasury 2007 guidance states:

“Whatever the legal status of an Arm’s Length Body, the Treasury will expect its sponsor department to have a mechanism for asserting an appropriate degree of control over it, especially in financial matters”.

Furthermore, Cabinet Office guidance states that Departments are responsible for determining whether remuneration should be paid to the board members of the public bodies they sponsor and the level at which that remuneration is set. The Bill simply follows the guidance. Such a procedure involving Government guidance on remuneration for key posts also applies to NDPBs such as the Civil Aviation Authority, the BBC Trust and the Independent Police Complaints Commission.

Allowing members of the trustee corporation to set their own levels of remuneration, as implied by the amendment, would be a highly unusual step in the public sector, since no other comparable body bears that responsibility. There is a further consequence of what the hon. Member for Eastbourne is suggesting: the trustee corporation would be left open to accusations of conflict of interest, as its members would be in a position in which they could set their own pay. Many of us in this room are aware of the problems that that might entail, but that would be especially so in this case as the members’ remuneration would come from scheme funds and thus would be paid by scheme members. That is a further reason why it is quite appropriate that the Secretary of State should have some involvement. Far from this being a heavy boot, as the hon. Member for Rochdale suggested, it is an essential safeguard, given the source of the funding to pay the remuneration, and the potential conflict of interest if this were done by some other arrangement to the one set out in the Bill.

In seeking this power, our intention is not to meddle in the day-to-day affairs of the scheme, but to use a standard mechanism by which the Government can ensure that a public body is conducting itself in the way in which we and members of the pension schemes would expect. With those reassurances, I hope that the hon. Member for Eastbourne will agree to withdraw the amendment.