I agree with the concluding comment made by the hon. Member for Ryedale: this is an important aspect of the Bill. I am grateful for the probing that members of the Committee are giving us because that is quite right and proper.
I say first to the hon. Member for Eastbourne, “Look behind you.” His colleague, the hon. Member for Ryedale, is right to say that we must be very careful about putting rigidities into the Bill, as the amendments would do. It is not right to put in rigidities at this stage when flexibility is necessary to maximise the chance of success.
When speaking in support of his amendment, the hon. Member for Eastbourne slightly gave the game away. He said, I think, that he did not know what the specific numbers would be, how long it would take to achieve a particular phase, or what the charging levels would be. He said that had “plumped for” a number to put into the legislation. That indicates that it would be an artificial constraint. If the only reasoning behind the numbers in the amendment is that they were “plumped for”, the proposal is no more secure than our suggestion on flexibility about which the hon. Gentleman is concerned.
The hon. Gentleman sees the difficulty of trying to have anything other than flexible arrangements in the Bill. I entirely understand why he wishes to probe the issue, but he has discovered that trying to go beyond such flexibility produces another set of problems. I suggest that if he pursued the road of trying to cement the charge at a particular level, that could add to the difficulties, such as regarding the need for other sources of funding to support the scheme, which he previously expressed concern about. He is arguing against his previous position.
If the hon. Gentleman wants reassurances about short-term public support for such a scheme, we need to give the authority flexibility on charging. If the funding from charging is constrained, that could increase the call on other sources of funding such as public support. From listening to the debate, one can understand the importance of the flexibility that the Government seek, which is why the Bill has been drafted in its present form.
As we have established, low charges are at the heart of the personal accounts scheme. As I have said, we want the scheme to be self-financing in the long term. The trustee corporation will meet all the costs of setting up and running the scheme through charges paid by members. However, the Bill enables the trustee corporation to fulfil that aim by allowing it to charge members for any costs that it incurs in relation to the exercise of its functions.
Amendment No. 61 would introduce the word “must” rather than “may” in relation to when the trustee corporation can levy charges. There are difficulties with that, as the hon. Member for Ryedale indicated. A permissive power is all that is required, and all that would be safe in the circumstances. The trustee corporation is intended to be independent from Government when acting as sole trustee of the personal accounts scheme. It is therefore right for it to retain some discretion, as long as it operates within the parameters that we have set down—mainly to be self-financing.
The precise level and structure of the scheme’s charges are still to be decided. As we have indicated, the structure is being consulted on, and the levels are to be determined later. That will depend on the costs of setting up and running the scheme, its detailed design, and the outcome of the commercial procurement process. We are aware that there is a consultation among stakeholders on the charging structure.
The hon. Member for Eastbourne pursued the point about when the charging structure decisions will be made. A final decision can be made only when the Personal Accounts Delivery Authority has completed its work on designing the scheme and all the commercial procurement processes. The authority will want to reflect on the responses to the charging structure consultation.
I expect that the charging structure will be set out in due course in the scheme order, which will, of course, be subject to further consultation and parliamentary scrutiny. The authority will want to reflect on the views that it receives in response to the consultation and on the recommendations that it provides to Ministers on the charging structure. It is vital that the delivery authority is given time and flexibility to complete its work and to develop a funding strategy that best balances members’ interests with delivering a scheme that is commercially viable, without compromising the Government’s intention for the scheme to be self-financing in the long term.
However, amendments Nos. 43 and 52 would restrict the delivery authority’s ability to find an optimal funding strategy by placing an upper limit on the membership charges that apply under the scheme and requiring that the scheme be self-financing within five years. This argument exposes one of the difficult trade-offs that the delivery authority must seek to balance in providing advice. Although we would want to move to self-financing as quickly as possible, we must ensure that members’ interests are not compromised.
A requirement for the scheme to be self-financing in five years would be likely to lead to unreasonably high charges for the first cohort of members. I do not think that the hon. Member for Eastbourne would wish that to happen. It would certainly eat into their savings and might result in high levels of opt-out at the very time when we want to see the scheme established and the maximum number of people staying in it. Equally, capping scheme charges at 0.3 per cent., as the hon. Gentleman proposes, would affect the revenues of the scheme in the way that I described and would be contrary to reassurances that he was seeking earlier in respect of public funding support.