The Minister has a tendency to draw caricature dividing lines. I also noticed that after saying that “organic” was not the right word, he lapsed back into saying it. That reflects a tension in the Minister’s mind. He again tries to paint a very black scenario. Why should the regulator be given the power to force schemes to merge? Well, in many other areas of pensions policy the Minister is giving the regulators more powers. As I understand it, he has previously agreed that scale matters. He now says that, all things being equal, scaling up could be the right thing to do. I did not quite catch his last words. He again lapsed into the use of “organic”, which does not seem to meet the argument.
Let us not overestimate the disagreement, as I think the Minister does. Our view is that it is perfectly sensible to give the Pensions Regulator the power to force mergers of pension schemes where in the regulator’s opinion they are too small to give value for money. That is not a revolutionary proposal. In the Minister’s desire to create a bigger divide between us, he is caricaturing the position. Giving trustees the power under their fiduciary duty to consider whether their scheme is large enough to get value for money seems a sensible move. If the Pensions Regulator thinks there are small schemes that cannot get value for money and takes the view that they should merge, we do not see that as a doomsday scenario. In fact, it is to the benefit of those who matter, the scheme members.
This debate comes down to a difference on the importance of scale. The Minister does not see scale as being as important as we do. He also argues that scale is emerging organically. Let us be clear: there are 200,000 pension schemes in the UK. There is no other system in the world with that level of fragmentation. Pension provision is not a cottage industry. There are some industries where it makes sense to proceed on a cottage basis. The Minister also lapsed into using the word “bespoke”. When I hear the word “bespoke” my ears prick up. It is one of those adjectives that people use when they want to make a certain sort of argument.
Our view, which is supported by the evidence, is that this is not a cottage industry. We think the Government and the Minister should recognise that and not be a little complacent about the moves towards scale. Our new clause would be a sensible addition to the Bill. However, given the discussions that are still to take place and the serried ranks of Government Members, I beg to ask leave to withdraw the motion.