I am grateful to the hon. Gentleman for his remarks. He has raised some important issues. My slight hesitation is that he portrays the matter as if the Government have suddenly come on board with the Opposition’s agenda. If I refer to the remarks by my hon. Friend the Member for Gloucester this morning, the framework for automatic enrolment was set up with no governance at all in place for contract-based schemes. We have made sure that we have responded positively to the OFT’s report.
There is a timing issue. The hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East keeps quoting the OFT report, but the IGCs that we are talking about have been introduced in response to that. They were initiated following an agreement between the OFT and the Association of British Insurers, and the OFT thinks that that is the right response to its recommendations. The hon. Gentleman describes a situation without that governance in place and the problems that that brings, but we would not be introducing IGCs if we did not think there was a problem of governance in some of the contract-based schemes.
The hon. Gentleman did not really deal with the effectiveness of independent governance committees. He says that they are quasi-independent, but when we have a committee that has an independent chair, a majority of independent members, time limits on how long people can serve, and limited occasions on which they can be reappointed, the chances of capture by the host scheme are dealt with. He says that new clause 5 complicates things, but all it says is that we have something new: collective benefits. We need a regulatory regime for something that is brand-new. I used the word “complex”, but, as I think a former President once said, I mis-spoke. “Comprehensive” was the word I was struggling for—a comprehensive system of member protection.
New clause 5 says that there is a difference between collectives and individual DC. It stands to reason: in collectives, the people in charge make judgment calls, balance the interests of members, and make decisions that members simply cannot take or be involved in. That is why we need the additional measure of governance. That simply is not the case with individual DC.
Essentially, the hon. Gentleman says that trust is good, and in many cases I would agree with him, but his case needs to be stronger than that. To demonstrate why we should accept new clause 14, he needs to persuade the Committee that contract cannot be good. If he says that everything has to be under trust, we have to sweep away 47,000 contract-based schemes and force them all to have trustees. When I intervened on him at that point, he just said, “Well, most of it is group personal pensions, so that’s all right. We have to start somewhere.” I did not understand his answer to the question. We have 47,000 schemes. New clause 14 would put a burden on the best part of 47,000 pension schemes, and he says, “Well, they can just merge.”