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Commons Chamber

Volume 577: debated on Monday 17 March 2014

House of Commons

Monday 17 March 2014

The House met at half-past Two o’clock

Prayers

[Mr Speaker in the Chair]

Oral Answers to Questions

Defence

The Secretary of State was asked—

Military Procurement

I recognise that small businesses are an important source of innovation and flexibility in meeting defence and security requirements. I am determined to help small and medium-sized enterprises access defence opportunities, including standardising and simplifying our procurement systems, so from this month we are minimising the use of pre-qualification questionnaires and increasing use of standard contract templates for low-risk requirements of under £100,000.

We are regularly making progress on these and other SME initiatives, but we also need to inform the SME community that it is getting easier to do business with the Ministry of Defence, which is why we publish the SME action plan on the gov.uk website and why I am undertaking a series of regional visits to talk to SMEs, such as the excellent event that my hon. Friend hosted in Hereford on 6 December 2013.

I very much thank my hon. Friend for that reply and for the extremely encouraging news that he has described. There are a large number of specialist defence suppliers in my constituency in Herefordshire. They provide vital new technologies and training for the troops, but they often face huge and apparently unnecessary mark-ups and delays forced on them by the requirement to be part of prime contracts. What can the MOD do to help these companies compete more fairly?

I agree with my hon. Friend that SMEs have an important role to play across defence procurement, but in particular in new technologies and in training. That is why the Government are committed to increasing the proportion of our annual spend on SMEs. Last year that rose to 15% by value of all spend, with some £1 billion spent directly and £2 billion spent indirectly through larger prime contractors, but the proportion of new contracts is even greater with over a third of all new contracts placed with SMEs in each of the last three years.

Devolved Administrations and their arm’s length agencies often have very close relationships with their SME community. What discussions is the Ministry of Defence having with the devolved Administrations to make sure defence contractors based outside England also have an opportunity to bid?

Of course defence, and therefore defence procurement, is not a devolved matter and therefore the work the Ministry of Defence does is primarily with industries right across the country. I have undertaken events in Scotland and I am looking forward to an event in Wales in due course later this year.

May I wish you a very happy St Patrick’s day, Mr Speaker, and no doubt MOD Ministers will be pleased to put on record their appreciation for the increasing co-operation with the Irish defence forces?

In a parliamentary answer on 3 October 2011 the MOD admitted that out of 6,000 SME contracts with the MOD, only 50 contracts were in Scotland, which is 0.83%, just under 10 times less than Scotland’s population share. When will the MOD answer my question on SME spending across the UK by region, which was tabled in January?

As I have said to the hon. Gentleman previously, we do not believe it is relevant to look at the location of where we procure equipment. We want to procure the best equipment for our armed forces from the best place. Scotland of course has a significant share of much of our spending, not least through the aircraft carrier contracts, which I saw for myself last week, and much of that defence work would be at risk were Scotland to vote yes in the referendum in September.

Defence Equipment and Support

2. What discussions he has had with the Chancellor of the Exchequer on staff pay and conditions in the new DE&S model. (903044)

We have agreed with Treasury Ministers that Defence Equipment and Support will be established as a bespoke central Government trading entity from 1 April this year, with the necessary freedom to operate, including freedom, within very broad limits, to set the pay and conditions of its civil service staff.

I thank the Secretary of State for that response, but bearing in mind that bringing private skills into Defence Equipment and Support is likely to create a two-tier work force and, if handled badly, could demoralise an already hollowed-out department, will the Secretary of State update the House on what discussions he has had with employee representatives and trade unions within Defence Equipment and Support regarding changes to employees’ pay and conditions?

There have been discussions with the trade unions and there will of course be further discussions with the trade unions as DE&S-plus develops its pay model, but we do have to face the reality that this part of the public service is very much commercial-facing. It deals with commercial bodies and it interacts and exchanges staff with commercial contractors, and we have to be able to pay competitive rates and we have to adopt competitive employment practices if we are to get the best deal for the taxpayer and the best deal for our armed forces.

Does my right hon. Friend agree that reforming defence procurement is a key step in driving better value for money for the defence budget, and will he join me in paying tribute to the staff of DE&S in my constituency, especially those involved in the draw-down of kit and equipment from Afghanistan?

The staff at DE&S at Abbey Wood perform an extraordinary range of functions and play a vital part in this new whole-force concept. It is about how the armed forces work together, regulars and reserves, with civilian employees of the Ministry of Defence—whom I am happy to put on the record in the House today are not pen-pushers, as some parts of our media would have us believe, but vital components of our defence infrastructure.

The Secretary of State is ever the optimist, but he will know that staff in DE&S and industry need certainty, and nothing in the changes to DE&S fits that description. His Department still has not confirmed the arrangements to bring the managed service providers into the business. He talked about the flexibilities and freedoms being broad—they are not in the public domain yet, and April is almost upon us. Is he not cutting it just a little fine?

No. The contract notices for the procurement of the managed service providers will be published shortly. We are finalising the terms of the memorandum of understanding between the Treasury and the MOD, but the broad parameters have been agreed. The freedoms will be very broad, but there will be some constraints, as I hope the hon. Lady would expect. There will be an overall envelope of resources for operating costs, which will be subject to a downward trajectory over time, representing efficiency. Within that envelope, there will be very broad freedom to tailor pay and conditions to the requirements of the marketplace.

Did the shadow Secretary of State for Defence not say in December of last year that we all wanted to see the best of the public sector alongside the best of the private sector? If everyone is in agreement on this—from the shadow Secretary of State for Defence to Lord Levene—it must be a good idea. Presumably, the only really important thing here is ensuring value for money for taxpayers.

My right hon. Friend is exactly right: it is about ensuring that the armed forces get the kit they need and have been promised when they need it, and that the taxpayer gets a fair deal. By creating DE&S as a trading entity with freedoms and flexibilities to enter the marketplace and hire the people it needs to do the job properly and effectively, we will ensure that outcome.

Reserve Forces

3. What progress his Department has made on its planned increase in the activity of reserves in Cornwall. (903046)

I know my hon. Friend is concerned about the future of reserves in her constituency following the proposed relocation of D company, 6th Rifles, and I welcome her strong interest in this issue on behalf of her constituents. I understand that my predecessor, my right hon. Friend for South Leicestershire (Mr Robathan), gave her a commitment that we would look closely at this decision, but that examination is not yet complete.

I thank my right hon. Friend for that response. We have had good news in Cornwall about more RAF reservists being stationed at RAF St Mawgan, but the continued uncertainty about the future of The Rifles in Cornwall is a major concern. People in Cornwall want to support their country and to have the opportunity to serve as Army reservists. May I therefore urge my right hon. Friend to make a speedy, and the right, decision to enable people to serve from Truro?

I stress to my hon. Friend that we are not closing the Truro Army Reserve centre, which will remain the home of elements of both medical and logistics units, as well as supporting local cadet forces in any event. However, I do understand the strong historical attachment The Rifles have to Cornwall, so I hope to be able to give her a clear answer on this matter in the near future.

Whether people are seeking to join the reserves in Cornwall or in any other part of the country, everyone I talk to says it is still taking too long from the point at which they express an interest in joining the reserves to the point at which they are subsequently enlisted. What is the Minister doing and what more can be done to speed up that process, so we can get more people serving in the reserves—in Cornwall and in the rest of the country?

I am glad to be able to say to the hon. Gentleman, whom I know in view of his past service takes a close interest in these matters, that we have reduced some of the bureaucracy in the process—we have simplified the forms and some of the medical procedures—and we launched a new recruitment campaign in January, the benefits of which are beginning to feed through. The process was too bureaucratic; it is less so now, and it is beginning to work.

May I urge the Minister, when considering the move of The Rifles from Truro to Barnstaple, to recognise that the Army Reserve centre in Barnstaple is the only opportunity for people to participate in the Army Reserve, covering an area from west Somerset down to North Cornwall? If we are to achieve the targets we set ourselves nationally for increasing the size of the reserves, it is very important that people in all communities, however rural, have a realistic opportunity to participate in the reserves.

I understand the point being made by the hon. Gentleman, a predecessor of mine in this job. We are looking to grow the Army Reserve in Cornwall and in Devon, and indeed across the whole United Kingdom.

Flooding: Military Assistance

4. What assessment he has made of the effectiveness of military assistance provided to civil authorities during recent flooding. (903047)

The MOD’s ongoing support to the civil authorities has been significant and achieved real effect on the ground, with a peak of about 5,000 personnel from all three services available to provide everything from sandbagging to aerial reconnaissance. We provided assistance to nine county councils and five unitary authorities. We are now in the recovery phase, with 220 service personnel still engaged. Once the task is complete, we will work with the civil authorities to assess in detail our armed forces’ contribution to the overall national response and to look at how the contribution of the armed forces to civil resilience can be enhanced and accelerated in future emergencies.

I thank my right hon. Friend for that answer. I bring to the House’s attention the honourable membership of the Institution of Royal Engineers that I hold because I am a Member of Parliament for a constituency with Royal Engineers in it. Will he join me in congratulating the Royal Engineers on their work across the country, not only in helping to fix the problems, but in being involved in the emergency checks, which means that we are able to get around the entire country in just a matter of weeks?

I am happy to join my hon. Friend in congratulating the Royal Engineers on the role they have played. There is a continuing detachment of Royal Engineers inspecting thousands of flood defences around the country, triaging them so that the Environment Agency can target its specialist engineers on those most at risk.

One reason why civil authorities may be reluctant to call in military assistance is the full costing regime in the MOD. Has the Secretary of State considered introducing a marginal costing scheme, which would make that interaction easier for all the parties concerned?

The hon. Lady is understating the case—one of the reasons most certainly is fear of what the costs will be. The MOD’s position is clear: we would like to do more to support the civil authorities, and we want to make sure that the defence budget is neither advantaged nor disadvantaged from doing so. That implies a full marginal costing recovery regime, and I have written to my colleagues at the Treasury suggesting that we look at a change to the regime to make the situation much clearer to the civil authorities in advance.

May I add my congratulations to RAF Linton-on-Ouse and the neighbouring Royal Engineers who have helped in both the vale of York, and Thirsk and Malton during previous floods? On the funding, I understand that one reason why civil authorities were slow to take up the offer from the military was precisely the issue of who was to pay. Will my right hon. Friend explain to the House from which budget the payment will be drawn?

In almost all cases—perhaps I can say in all cases—the net additional cost of military operations that is recoverable from authorities that have lead responsibility under the Civil Contingencies Act 2004 will be 100% funded under the Bellwin formula, in accordance with the statement that the Secretary of State for Communities and Local Government made to the House about the increase in the percentage recovery rates to 100% to cover this emergency.

Spouses of Armed Forces Personnel

We know that one of the most important factors in enabling spouses to enter employment is making sure that good child care provision is available at a good cost. In addition to the measures that the Government have taken to help all workers, I am pleased to tell the House that £20 million of the LIBOR funding announced by the Chancellor in the autumn will specifically go to help the provision of child care facilities for service families, particularly the infrastructure. We also have a number of excellent schemes to encourage people to go into employment and to support them to set up their own businesses, as well, of course, as the corporate covenant.

I thank my hon. Friend for that answer. May I commend to her the work of the social enterprise Recruit for Spouses, which is doing so much to challenge outdated perceptions of military families always being on the move and to engage with businesses to unlock the potential of armed forces spouses? Recruit for Spouses is based in Wiltshire, and it does a lot of work in both Wiltshire and in Swindon.

As it happens, I have heard of Recruit for Spouses and I know that its aims are admirable, and of course we support all such projects. That is one reason why I mentioned the corporate covenant: it is very important that businesses recognise the real benefits they get when they employ people who are married to our excellent service personnel, because their spouses tend to be as good.

Is the Minister not living a little bit in the 20th century rather than the 21st century? It is not just child care that spouses need, but a tailor-made system that allows them to use their enormous talent for a productive purpose. Could she not do something more adventurous? We are talking about not trailing spouses, but people who give a great deal to this country under enormous stress.

I am sorry, but I do not think that the hon. Gentleman heard what I said. I will happily go into more detail. We have programmes in place with the Royal British Legion Industries and the university of Wolverhampton, which run workshops specifically for spouses on finding jobs and on helping them to start businesses, so, on the contrary, I am far from living in a previous century. I do not underestimate the issues. I have spoken to various families’ federations, which told me in no uncertain terms that child care costs and the availability of good provision are absolutely critical. The hon. Gentleman should welcome my announcement of £20 million of LIBOR funding. I do not think that he matched that when he was in Government.

19. As a graduate of the excellent armed forces parliamentary scheme, I have had the privilege of learning about all aspects of military life, including the ability to settle in one location thus enabling military spouses to find and to keep down regular employment. What estimates has my hon. Friend made about whether the return of British troops from Germany will help increase the opportunity for spousal employment in the future? (903063)

That is a good question. We believe that the return of units from Germany offers a major opportunity for more service families to lead more stable lives, and we also know that that is important. It is vital that Government, local authorities, employers, the Army and the other services work together and plan carefully. A good case in point is the great work that is being undertaken by Rutland county council and its partners. Let me give one quick example of that. Its latest initiative is to hold a job fair at Kendrew barracks next month.

Army 2020

The Army remains on track to implement Army 2020 structures in accordance with the announcement made by the Secretary of State on 5 July 2012.

Of particular note is the fact that all units have now been assigned to the new reaction force, adaptable force or force troops; regular and reserve units have been paired, in line with the move to a fully integrated Army; and future unit locations have been confirmed, taking account of the return of units from Germany to the United Kingdom.

The Defence Committee’s report into Army 2020, which was published last week, expressed grave concerns about the reduction to 82,000 soldiers, the way in which that figure was arrived at and the fact that the Army was informed of it rather than consulted about it. When the Minister for the Armed Forces opened our report and read it, did he have even the slightest momentary frisson of worry that he might—just might—have done the wrong thing?

I have a frisson when I open any Defence Committee report. It is worth taking into account the fact that the report has only recently been received and the implications of its recommendations are being reviewed by the respective staffs. We will be providing a full response to the report in the normal way in May 2014. It is clear to me that the Army’s response to the challenges posed by the end of combat operations in Afghanistan and the move to a UK base force remains fully valid.

In that Select Committee report, Sir Peter Wall, the Chief of the General Staff, says that Army 2020 was financially driven. Does the Minister agree with that? Furthermore, will the shortfall of 8,000 not lead to capability gaps? If so, what will he do to plug those gaps?

As my right hon. Friend the Defence Secretary has said on numerous occasions, the Ministry of Defence and the armed forces cannot operate oblivious to the country’s fiscal position. However, we and the Army are quite clear that Army 2020 represents the best answers to the challenges, fiscal and otherwise, the country faces and is best placed to help us address the future.

Events such as in Crimea and the South China sea remind us of the need for strong defence. Has the time not now come for a fundamental reassessment of how much we spend on our armed forces? That figure should be increased even if white elephants such High Speed 2 have to be sacrificed along the way. We may have the fourth or fifth biggest defence budget, but we rank nearer 30th when it comes to deploying troops overseas, which is nonsense given the extent of our global interests.

My hon. Friend might want to turn up to Treasury questions in the near future and ask the same question. In the meantime, as he mentions overseas deployments, he might be interested to hear that last week I visited 2nd Battalion the Royal Regiment of Fusiliers in Cyprus, in which I know he takes a strong interest. I can report to him and the House that despite difficult circumstances its members are in good order. The planning for the merger of the two regiments of the Royal Regiment of Fusiliers is almost complete and a number of soldiers in the 2nd Battalion have expressed interest in remaining in the Army. We are seeking to facilitate that wherever possible.

In paragraph 32 of its recent report on Army 2020, the Defence Committee stated:

“We were…concerned to hear that it was the Ministry of Defence’s Permanent Secretary who told the Chief of the General Staff the future size of the Army under the Army 2020 plan.”

Will the Minister say what exactly the role of the Chief of the General Staff was in determining the size of the Army? Why was it left to the permanent secretary to inform him what the size of the Army would be under Army 2020?

Decisions about the overall size of the armed forces are ultimately taken by Ministers, but the Army 2020 plan was designed by the Army, and it is the Army that has the primary responsibility for implementing it. While we are on the subject of advice, one thing we will not do in trying to grow the Army and the reserves is follow the example of the previous Government, who thought that it was a good idea, for growing the Territorial Army, to threaten not to pay its members for turning up for training.

Military Personnel: LIBOR Funding

7. What progress he has made on using funding from LIBOR fines to benefit former and serving military personnel. (903050)

9. What progress he has made on using funding from LIBOR fines to benefit former and serving military personnel. (903053)

The short answer is that a great deal of progress has been made. As Members will know, in December 2012 the Chancellor transferred £35 million from fines levied on the banks following the LIBOR scandal. The whole of that £35 million has now been allocated to almost 100 projects that will provide support to members of the armed forces community. In addition, we can now look forward to the £40 million recently announced for the veterans accommodation fund, the £20 million about which I have already given details and, in perpetuity, £10 million each year for our service charities.

I am grateful to my hon. Friend for her answer. Will some of the money from the LIBOR fines be used to deal with the awful mental illness that comes to those who have lost loved ones in conflict, and to help the families of those who have suffered mental health problems after spending time overseas in conflict areas?

I am happy to confirm that Cruse Bereavement Care, a wonderful charity that comforts bereaved people—not only service families but anyone who has lost someone—has received £500,000 of LIBOR funding. An additional £2.77 million has gone to Combat Stress, and SSAFA has a number of projects that have benefited, to the tune of £2 million. I hope that shows that we take this work very seriously.

Finding the right accommodation for veterans who have been wounded or injured is an important part of upholding the duty we owe them for their sacrifice. What assistance is the Ministry of Defence providing to ensure that veterans with a housing need are properly supported?

As I have explained, £40 million of LIBOR funding has been set aside specifically for what we are calling the veterans accommodation fund. It will make a big difference, and is available to fund the building of purpose-built accommodation and the purchase or refurbishment of existing housing. The bid criteria have been published and the fund is open for applications now.

Queen Elizabeth Class Carrier Programme.

8. What recent assessment he has made of the economic effects on west Fife of the Queen Elizabeth class carrier programme. (903051)

The carrier programme as a whole is estimated to have sustained about 10,000 jobs across the UK, 4,000 of which are based in Scotland. Although we have made no specific assessment of the impact on the hon. Gentleman’s constituency, to the end of January the Ministry of Defence had spent about £2.3 billion on work billed to the programme by BAE Systems on the Clyde, and by Babcock at Rosyth. I was pleased to visit Rosyth last week to see the progress of the work on the Queen Elizabeth carrier, which is on track to be flooded up in July. The initial bow sections of the Prince of Wales carrier are dockside, ready for assembly to start later this year.

I am grateful for that answer. Is the Minister aware that Babcock commented last week that if Scotland votes yes it would be highly unlikely that my constituency dockyard would get further orders for maintenance work from the MOD? Is that why the Scottish National party has admitted that there would be significant job losses at Rosyth in the event of independence?

The hon. Gentleman will not be surprised to learn that I keep an eye on press cuttings relating to all defence procurement matters. The in-service support solution for the Queen Elizabeth class carriers is still in development and will not be decided until next year, but much support will be delivered at the base port and on deployment at sea. I think, however, that the hon. Gentleman was referring to depth maintenance and refit, and the security implications of that work being undertaken in a non-sovereign dock outside the UK would need to be carefully considered. Several dry docks in the UK are physically capable of accommodating such ships outside Scotland.

NATO Summit

10. What discussions he has had with his counterparts in NATO member states in preparation for the NATO summit in September 2014. (903054)

My right hon. Friend the Secretary of State has had a range of discussions with his counterparts in recent months in relation to the NATO summit in Wales this September. Most recently he discussed the summit and its possible content with fellow Defence Ministers at the NATO defence ministerial in Brussels on 26 and 27 February. The Wales summit falls at a crucial time for partners as they contemplate a post-2014 future and the importance of the transatlantic alliance. It is also a great opportunity to showcase the best of British to our allies and partners.

As an active member of the NATO Parliamentary Assembly, may I ask what plans there are for parliamentarians from the 28 member nations—to engage with the NATO summit later this year?

We look forward to members of the NATO Parliamentary Assembly playing an active role, and we are exploring what that might mean. May I say how pleased I am that the hon. Member for York Central (Hugh Bayley) is president of the Assembly? The Prime Minister has appointed my hon. Friend the Member for Bournemouth East (Mr Ellwood) as his parliamentary adviser on the summit. I know that my hon. Friend is working hard, and I look forward to working with him on the preparations.

The hon. Member for Bournemouth East (Mr Ellwood) has already approached me about an event that he wishes to stage, so he is going about his duties with great conscientiousness, and I hope to be able to assist him in his endeavours.

With the threat of cyber-attack and espionage rising substantially, will the UK play an active part at the summit in pushing for NATO-wide cyber-capability?

The hon. Gentleman is right to raise that point. He will know that the UK’s preparations are reckoned to be far advanced, but he will also understand that cyber-defence is a sovereign capability. However, it is important that supranational institutions such as NATO ensure that their own systems are protected from cyber-attack.

May we have an assurance that if there is any discussion of Ukraine at the NATO summit, careful attention will be paid to the defence anxieties of Latvia, Lithuania and Estonia about what appears to be the emergence of a Putin doctrine, not least because of the close proximity of Kaliningrad to all three countries?

The right hon. and learned Gentleman is right to raise the concerns of the Baltic states, which are nervous at the moment. Of course, they are covered by article 5, so they have a particular relationship with NATO that is not enjoyed by Ukraine.

Does the best of British that we are hoping to show to the delegates include the best of Newport, which is a wonderful habitat for the conference? Will the conference arrangements be such that the delegates will have plenty of time to see and enjoy the robust personality of Newport and its beautiful hinterland?

The hon. Gentleman is a doughty advocate for the area that he represents, and he is absolutely right that the summit is an opportunity to show off Newport and Wales in general. It will clearly be great to showcase our military, but the summit is also a great opportunity for Wales.

There is, rightly, broad consensus on both sides of the House that military action in Crimea is not an option, but will the Minister confirm what contribution the UK has made to NATO in response to the Ukraine crisis, and what role our forces have played in NATO training exercises in Europe? Will the matter be discussed up to and including at the autumn summit?

The hon. Gentleman knows of the strategic concept in relation to NATO and what it implies. He will also be aware of our contribution of the E-3D airborne warning and control system aircraft that is currently deployed to make sure that we have situation awareness in Poland and Romania. We are, of course, open to requests from NATO, in relation to what we might do on collective security, but he knows very well the implications of article 5. The importance here is to de-escalate, not escalate.

I thank the Minister for that considered reply. It is the Opposition’s view that we must be prepared to ask serious questions about the UK’s role in NATO and about the security of our allies, including those in the Baltic states and eastern Europe. Does the Minister agree that the forthcoming summit should discuss how NATO can best protect our own security, as well as that of our allies? Is it not clear that one of the most important discussions up to and at the autumn summit must be about the future long-term strategic direction for NATO following the present crisis?

The agenda is primarily a matter for the Secretary-General of NATO, not for the host nation, although it is probably true to say that the host nation traditionally has a role in trying to suggest and shape the agenda for summits on its soil. The hon. Gentleman might expect us to be considering what NATO means post-2014. He would probably expect the transatlantic alliance to be debated at some length, and what will happen with regard to Afghanistan and NATO’s involvement in that country. I suspect that all those things will be important and top of the agenda in Cardiff, but it is important to note that this is primarily a matter for the Secretary-General.

Armed Forces Covenant

We continually review areas where we can make a difference, from home purchase schemes and health care to transition and increased pupil premiums in schools, and our approach is making a difference right across the armed forces community. Upholding the covenant is not a matter just for the Government; it is the responsibility of the whole of society. Charities, employers, local authorities and individuals are all asked to recognise members of the armed forces community and give them the respect, support and fair treatment that they so richly deserve.

A 2012 survey showed that one in five of our armed forces received abuse back home, and 6% were victims of violence. I do not think we need to legislate for new offences, but is my hon. Friend satisfied that the police properly investigate all allegations, and has she considered with other Government colleagues the case for raising the sentence for criminal violence harassment where it deliberately targets serving British troops?

As my hon. Friend will know, different offences relating to violence have different sentences attached to them. I do not think there is a case for raising those sentences overall, and the sentencing guidelines make it clear that if somebody is assaulted by virtue of their being in the armed forces, that is clearly an aggravating feature and as a result, in simple terms, the perpetrator receives a higher sentence—and rightly so.

In opening, the Minister rightly mentioned transition. Given the concerns about members of the armed forces’ transition that were highlighted in the recent review by Lord Ashcroft, which of his recommendations will the Ministry of Defence be taking forward?

We are considering all the recommendations in Lord Ashcroft’s report. On balance, it was a positive report, and it shows what many of us know—that when our personnel transit out of service, they do so extremely well. They are more likely to find a job than other members of society, because of the remarkable skills that they have, often as a result of the experience that they gained as members of our military. On balance, things are working well, but that does not mean that we cannot do more. We are looking at that report and at improving things, and much of the work I am doing leads to that.

On Thursday, my right hon. Friend the Secretary of State for Defence announced that the Service Complaints Commissioner would become an ombudsman, for which the existing commissioner, the excellent Dr Susan Atkins, and the Defence Committee have been calling for years. Does the Under-Secretary agree that this very welcome move will mean that the complaints system will be both quicker and fairer, and will help to bring in more aspects of the armed forces covenant?

Absolutely. I completely agree with my right hon. Friend in his assessment of the benefits of this new system. As he says, Dr Susan Atkins has welcomed this greatly, and may I use this opportunity to pay tribute to the great work she has done? I notice that the Royal British Legion also welcomed these changes. The new system will do exactly as he says: it will help to speed things up, and where there has been maladministration the service complaints ombudsman will not shirk from making recommendations to the Defence Council, and we will see huge improvements.

Offshore Patrol Vessels

12. What progress his Department has made on its procurement of three new offshore patrol vessels from BAE Systems. (903056)

We are in negotiations with BAE Systems for the contract to build the three new offshore patrol vessels announced in November. As part of these arrangements, only last Wednesday, during a visit to Scotstoun, I announced that the MOD had committed £20 million to this programme, with the award of a contract for long-lead items, such as engines and gearboxes, which need to be ordered in advance. The main investment decision is due in coming months and construction work of the vessels is due to begin this autumn.

Will my hon. Friend also set out the timetable for the building of these frigates and ships, and say a little about when the base porting announcement might be made?

I thought that my hon. Friend might be interested in the base porting announcement. As is normal practice, we will make the announcement around the time of the main gate investment decision, which, as I have already said, is likely to be this autumn. I am sure that he will advocate strongly his constituency interest, but I have to advise him that other hon. Members will be doing so as well.

Army 2020

Under Army 2020, the Army will be equipped to face future threats after more than a decade of enduring operations and will remain capable of operating across the full spectrum of military capability, either at home or overseas.

The Minister said earlier this afternoon that the MOD cannot be “oblivious” to the country’s fiscal position, but the Treasury cannot have it both ways. If it insisted that the Army had to suffer dangerous cuts in a non-strategic review in 2010, surely in 2020, when the economy will be growing, the Army, in a dangerous world, is entitled to share in the proceeds of growth.

Again, my hon. Friend tempts me to stray into what are perhaps Treasury matters. It is evident that the Ministry of Defence must live within its means, as must all other Departments. There is no national security without economic security. That said, we believe that with Army 2020 we have a credible and realistic plan, and we are determined to carry it through.

Does my right hon. Friend agree that while many of us would like to see more emphasis on and funding for defence within the money available, the rebalancing brings us into line with all other English-speaking countries? May I further report that my local TA battalion has recruited as many people during the last two months as during the previous 10, because at last the pipeline is starting to come unblocked?

On behalf of the whole House, I am delighted to receive my hon. Friend’s positive report. We do believe that we can meet the target. The reserve forces when I served in the 1980s had 75,000 men and women under arms. I have to believe that now, with a larger population, we can get to 30,000 trained, particularly as we start with 19,000 trained now. Put another way, it would require a net increase of only about 20 in each of the 650 parliamentary constituencies in this country across a period of four years. I believe that is eminently achievable and, backed by initiatives such as the corporate covenant to get employers’ support, we are getting on with it. We will deliver this programme.

Conflict Prevention

14. What steps his Department is taking to support conflict prevention; and if he will make a statement. (903058)

Together with the Department for International Development and the Foreign and Commonwealth Office, the Ministry of Defence is a full partner in the delivery of the July 2011 building stability overseas strategy, and uses a multi-departmental approach to prioritise UK activity in upstream conflict prevention and stabilising fragile and conflict-affected states around the world in association with partner nations.

In addition, the Ministry of Defence has developed the international defence engagement strategy jointly with the FCO. Published in February 2013, this sets out how the Ministry of Defence can contribute most effectively to the building stability overseas strategy, as well as wider overseas Government objectives.

I welcome the Ministry of Defence’s involvement in the strategy. Security sector reform is one of its key elements with regard to conflict prevention. How do we ensure that, by building capacity among local security forces, we do not inadvertently enable repression and repressive tactics among those organisations, and that we instead make people feel safer in those countries?

My hon. Friend will be aware that, when taking training to countries we partner, we put a great deal of effort into instilling what might be called the “moral component” of warfare very directly into what we teach and into what we inculcate in them. That is a very strong part of our overall offer. We can never guarantee that the people we train will not go on to do terrible things, but we can reduce the chances of that happening and make sure that the ethos we are rightly proud of in our own armed forces is exported to others.

21. The Minister spoke about multi-departmental work, but may I press him on multilateral work? What is he doing to make sure that a priority of work with NATO and the European Union is a focus on conflict prevention? (903065)

My hon. Friend takes a great interest in this and will be aware of the large number of military and civilian missions that the European Union has mounted: there are 16 in all, four of which are military. My hon. Friend will be aware of the EU training mission to Mali—EUTM Mali—and EUCAP Nestor. It is very important to understand that in all of these scenarios we have to work with partners, meaning NATO first and foremost, but other partnerships where it is expedient to do so.

HMS Vanguard

15. What recent progress his Department has made on its response to the internal radiation leak aboard HMS Vanguard; and if he will make a statement. (903059)

Let me make it clear to the hon. Lady that there has been no issue with the reactor on HMS Vanguard or, indeed, any of our submarines. I announced to the House on 6 March that there had been a small fuel element breach in the naval test reactor at Dounreay, but that did not lead to a leak of radiation from the reactor circuit.

I thank the Secretary of State for his answer. What assessment has he made of whether the reactors on all Vanguard and Astute-class submarines will last the full lifetime of the submarines?

As I explained to the House when I made my statement, the purpose of the naval test reactor at Dounreay is to run the reactor hard and flat out, as it were, ahead of the operational reactors on the submarines, to see what happens as they approach the end of their planned life. The reactors on board our submarines have nothing like the percentage fuel burn that the reactor at Dounreay has now experienced, so we are looking at something that has developed at a much further advanced stage of the life of the reactor. We have, however, taken the decision, on a precautionary basis, to refuel HMS Vanguard during her planned deep-maintenance period. Once the reactor at Dounreay is decommissioned, it will be examined in detail and we will then have much greater evidence of what has caused the issue and be able to make sensible decisions about the future.

Will the Secretary of State advise whether and when the Commodore at Clyde naval base was alerted to a potential issue with the reactors of the Vanguard submarines, and whether, no matter whose responsibility it was, he would have expected the relevant local authorities— namely Argyll and Bute and West Dunbartonshire councils—to be alerted?

If there had been any health and safety risk or any risk to the environment, I certainly would have expected the relevant local authorities to have been notified, but there was none at any time. The Scottish Environment Protection Agency has a written agreement with the MOD that allows it oversight of these matters in military bases in Scotland. If it had thought there was any risk at any time, it would have notified the necessary civil authorities.

Topical Questions

My first priority remains the success of our operations in Afghanistan. Beyond that, my priorities are maintaining budgets in balance, developing our reserve forces, reinforcing the armed forces covenant and reforming the defence procurement organisation so that our armed forces can be confident of being properly equipped.

The people of Wiltshire love the Army and will welcome the 4,000 soldiers who are shortly due to return there from Germany, but we also love Stonehenge and the mysterious mists and swirling druidical mysteries that surround the stones. Will the Secretary of State look carefully at reports that houses to be built to house the 4,000 soldiers will block off the rising sun at the summer equinox, and if they do, will he make sure that it does not happen?

My hon. Friend is right to highlight the importance of preserving important sites such as Stonehenge and of having a careful approach to the design of any development that might impact on them. I, too, have seen the press articles to which he referred. I am happy to reassure him that although Larkhill is an important element of our strategy for accommodating troops returning from Germany—we intend to invest about £800 million in the area to accommodate 4,300 service personnel—no decision has been taken about the location of additional service accommodation. A public consultation is about to close, and organisations such as English Heritage have very clearly expressed the issues that he has raised. We will make a decision in due course.

Although we welcome the events in France and, indeed, around the UK to commemorate the 70th anniversary of D-day in 1944, does the Secretary of State not agree that it would be appropriate to hold a national event in London at that great symbol of sacrifice, the Cenotaph, to provide a real focal point for remembrance here?

I share the hon. Lady’s concern that we should mark the 70th anniversary appropriately and, indeed, that we should learn the lessons of the past in this respect. I know that considerable work is under way to make sure that the 70th anniversary in France is a huge success, and that veterans and their carers who want to go are supported in returning to the beaches to commemorate this huge anniversary. On anything more than that, we will have to wait and see, but the important thing is to make sure that veterans and carers who want to go can do so in the manner they wish.

T2. An attack on one NATO country is an attack on all of them. Can we therefore thank God that Ukraine never did join NATO, because otherwise we might now be involved in a European war? (903070)

As the Under-Secretary of State for Defence, my hon. Friend the Member for South West Wiltshire (Dr Murrison), has already said, the status of Ukraine is quite different from the status of NATO countries—NATO countries enjoy the article 5 guarantee, which protects and assures their security—but we are doing everything we can to reassure our NATO allies about the protection that we offer. I am able to advise the House this afternoon that we have taken the decision this morning to offer NATO UK Typhoon aircraft from late April to augment the Polish contribution to the NATO Baltic air policing mission. I hope that will provide reassurance to our NATO allies in the east.

T6. In thinking about the importance of learning from the past, has the Secretary of State read “Why England Slept”, a little book by John Fitzgerald Kennedy? It is about Britain not being prepared in the 1930s for what was going to happen in Germany. Does he think that England, or Britain, is sleeping now, with an uncertain and unpredictable presence in the east of Europe? (903074)

I have not read the book, but I have said consistently in this House and elsewhere since I came into this post that we should not forget Russia’s very significant rearmament programme. Russia remains a major military force on the continent of Europe, and its interests are not always aligned with ours, as we have seen only too clearly over the past few weeks.

T4. Much as no one wishes to see the cold war return, do not recent events between Russia and Ukraine indicate that this is not some flight of fancy, but that it really could happen, and does that not mean that we must be extremely careful never to let down our nuclear or conventional defence guard? (903072)

What those events do show is that we have been right throughout in maintaining the need to continue with a strategic nuclear deterrent as the ultimate guarantor of Britain’s sovereignty and freedom of action. The world is a very uncertain place, while the time horizons for the provision of military equipment are very long, and we are looking forward 40 or 50 years in the planning. The events of the past months and years show that it would be a very brave man indeed who said that there would be no threat to our sovereignty and independence over that time horizon.

T7. Last week, the Under-Secretary of State for Defence, the hon. Member for Ludlow (Mr Dunne), admitted that he had wasted £50 million on the Cipher cyber-security project. This weekend, we heard that the NATO website and other websites came under attack following the recent actions in Ukraine. Will the Minister give us a timely assessment of the UK’s and NATO’s cyber readiness, particularly with regard to the situation in Ukraine? (903075)

The Cipher contract cost the MOD £46 million. Work under the contract ceased in June of last year at the end of a protracted assessment phase, which concluded that the project would not meet the full defence capability requirement at value for money for the taxpayer. I remind the hon. Lady that the contract was placed in November 2008. It is a classic example of the legacy of out-of-control procurement contracts that we were left when we took office in May 2010.

T5. To pick up the theme from the hon. Member for Huddersfield (Mr Sheerman), between 1935 and 1939, defence expenditure doubled in response to the deteriorating security situation in Europe. Does the Department do any contingency planning to determine how our defence capability could be improved rapidly if there was a greater call on our nation’s defence resources? (903073)

As I have said before in the House, part of the outcome of the strategic defence and security review in 2010 was that we should focus, while consolidating our armed forces, on our regeneration capability in case the need arose, or the resources became available, for capabilities or scale of operations that we do not have.

We were delighted that the Secretary of State and his Australian counterpart made it through the Barrow fog to visit the shipyard on Thursday to announce major new infrastructure investment to make the Successor programme possible and the cutting of steel on the seventh Astute-class submarine. Did his conversations with the company and the work force on that day maintain his confidence that the leak in the test Vanguard reactor will not affect the build of the Astute programme?

I am not sure that I discussed that matter with the work force at Barrow, although I did have some interesting conversations that reassured me greatly about their commitment to the programme. We are clear that the incident at Dounreay will not have any impact on the progress of the Astute or Successor programmes.

T8. Will the Secretary of State join me in paying tribute on St Patrick’s day to all the Irish citizens who currently serve in Her Majesty’s armed forces and the 100,000 who sacrificed their lives in the British armed forces during the first world war? Does he agree that our defence partnership with Ireland would be immensely strengthened if it considered joining NATO? (903076)

My hon. Friend will know that we are working closely with the Republic of Ireland to ensure that our period of shared history is commemorated appropriately. Today, we are operating with troops from the Republic of Ireland in Mali. He will know that the UK and Ireland stand shoulder to shoulder in EUTM Mali. It is a strengthening relationship and one that has great promise.

As the Secretary of State says, procurement times are long. Joint Helicopter Command has indicated that it requires a new fleet of Apache AH-64E attack helicopters for operational use by 2020. Has that contract been signed yet?

If the hon. Gentleman is familiar with the AgustaWestland contracts, he will be aware that last month the Secretary of State announced a contract for the sustainment of the existing Apache fleet for the next five years. Thereafter, we are looking to introduce a contract that will take the effective use of the helicopter up to 2040. Discussions on how we should go about procuring that sustainment upgrade are under way.

T9. In Budget week, will the Defence Secretary join me in commending Britain’s improved economic outlook, thanks to the Chancellor’s stewardship, which potentially gives rise to finding the annual £65 million required to run the second aircraft carrier? Does my right hon. Friend agree that operating two carriers would strategically extend and involve Britain’s diplomatic military influence in a manner not seen for a generation? (903077)

I am happy to join my hon. Friend in congratulating the Chancellor on the remarkable recovery in Britain’s economic prospects. He knows well my own view, which is that having invested £3 billion each in building our carriers, it would look strange if we did not make every possible effort to find the relatively small amounts of money that will enable them to be operated, so that we can have a set of doctrine based on the continuous availability of a carrier at sea.

The Secretary of State gave a written statement saying that the armed forces complaints commissioner is now to become an armed forces ombudsman. Will he explain why an announcement of such importance to the House and the armed forces family was not made on the Floor of the House, rather than through The Times and through a written statement, as that would have given us far greater awareness of what was going to happen?

May I suggest to the hon. Lady that, as many of her colleagues have clearly understood, if Members wish to pursue a written statement further, they always have the option of asking an urgent question?

Given that Russia has effectively annexed Crimea, in contravention of the Budapest agreement signed by Britain, the United States and Ukraine in 1994, and that it continues to threaten eastern Ukraine, what consideration has my right hon. Friend the Secretary of State, or indeed NATO, given to mounting maritime exercises in the Black sea so that a message may be sent to Mr Putin’s Russia that any attack on Odessa would be a step too far?

We are clear that a graduated response to these unjustified actions by Russia is necessary, but it should be a diplomatic response in terms of economic and trade sanctions. Meetings are ongoing today across the European Union to try to agree the best way to deliver that response.

There is no doubt that the late Corporal McLaughlin of 3 Para demonstrated outstanding courage during the battle for Mount Longdon in the Falklands conflict of 1982. We know that a citation was put forward by his commanding officer, but it was apparently not considered by the MOD. Given that new evidence now casts doubt on the reason it was not considered, would it be reasonable for Ministers to look at the detail of the case and satisfy themselves that an injustice has not been served on Corporal McLaughlin, his unit and his family?

I have been to the Falkland Islands and visited the battlefield at Mount Longdon. Having done so, I can appreciate what a remarkable feat of arms it was for that assault to have taken place and to have succeeded. I fully acknowledge the hon. Gentleman’s regimental links in all of this, but as he will know, the decision to give individual military awards is not a matter for Ministers of the Crown. Such things are examined through well-established procedures, and it is not down to Ministers to take individual decisions.

Is the Secretary of State aware that some Scandinavian armies are not allowed out after dark? This pernicious human rights culture is already infiltrating our armed forces. What will he do to exempt our armed forces from human rights laws?

There are issues about the encroachment of judicial processes into the operation of the armed forces. A number of cases currently before the courts, or pending, could have a significant impact, and we are watching them closely. We are clear that once we commit our armed forces to combat, they must be able to carry out operations without fear of constant review in the civil courts. If we find that the current cases develop in a way that makes that difficult, we will come back to the House with proposals to remedy the situation.

Speaker’s Statement

It is my sad duty to have to report today to the House the death, at the age of 88, of the right hon. Tony Benn, who served in this House from 1950 with only very modest interruptions until 2001, representing over that period of half a century two parliamentary constituencies, Bristol South East and Chesterfield, the first for 30 years and the second for approximately 17 years. Colleagues in all parts of the House will remember Tony Benn very well. For my part, I believe he was a man of deep socialist principle, of great integrity, and of demonstrable passion and compassion; a brilliant parliamentarian, a brilliant platform speaker, and a brilliant diarist. The House will also doubtless know—I can recall for Members’ benefit—that, when he left the House, alongside, at the time, only Sir Edward Heath, Tony was granted the freedom of the House. It was a freedom that he exercised. I think it is right that a book of condolence should be established, and it has been—it sits in the Library and is there for Members, staff of the House, Members’ staff and others to sign.

I thought it might perhaps also be convenient for the House to know what arrangements are intended by me and by the usual channels to acknowledge Tony’s contribution. On Wednesday, there will be an opportunity for the Prime Minister and the Leader of the Opposition to pay tribute to Tony, and on Thursday, after Question Time, a tributes session will be opened by the Deputy Prime Minister and responded to by the deputy Leader of the Opposition. There will then be an opportunity for Back Bench Members to record their own recollections and impressions of Tony Benn. The intention is that that set of exchanges will be wound up by the shadow Leader of the House and by the Leader of the House. At what is, in particular for the family, a very sad time, a difficult time, a time of trauma and a time for grief, I hope that we collectively want to extend our condolences to Tony’s children, two of whom, Hilary and Stephen, I can see in my line of vision, to all his grandchildren—it is a privilege to see Emily present today—and to all members of the family.

Points of Order

On a point of order, Mr Speaker. I thank you very much for what you have just said. I wonder if you might assist me and my hon. Friend the Member for Bristol East (Kerry McCarthy) in making our constituents aware that books of condolence lie in Chesterfield Labour club and Bristol city hall. We know people want to make their comments known and hope they provide some comfort to the family.

I am grateful to the hon. Gentleman. He has effectively advertised his own point. It will be on the record and I am sure he will be taking further steps to ensure that people are aware of those important facts.

On a point of order, Mr Speaker. I am sure that, should it have been my father you were speaking about, I would have been delighted with your very kind comments.

On a completely unrelated matter, sadly, last Thursday, I raised a point of order about Members who shout “Aye” and then vote no, and vice versa. Mr Deputy Speaker was kind enough to repeat your judgment. Subsequently, at least three witnesses have come to me to say that they have seen hon. Members ignoring that advice. I have not named them and would not do so because I have not warned them, but I wonder what you would like me to do, Mr Speaker. Should the witnesses write to you?

I was not present at the time, but I am advised by a very high—even bewigged, dare I say—authority that the matter was dealt with at the time, and that there is no particular merit in going back over the incident, as far as I am aware. However, I say to the hon. Gentleman that Members are free to write to me at any time if they feel that there has been an impropriety or a breach of protocol. The matter should be treated on its merits. It is the case—[Interruption.] Order. It is the case that vote should follow voice. That is a very long-established principle. Vote should not go in opposition to voice.

The hon. Gentleman is gesticulating in an eccentric fashion, but we will come to him in a moment.

Further to that point of order, Mr Speaker. It is helpful to have your ruling on the record, but the matter was most certainly not dealt with, because we were advised to wait for the recorded vote to be made available. Your ruling is clear, but one wonders what the situation is now for those who called a vote in false circumstances.

I thank the hon. Lady for what she has said. I know that she always seeks to be helpful to the House, and I always listen to her.

Further to that point of order, Mr Speaker. I apologise for my eccentric gesticulations, but one cannot change the habit of a lifetime. I speak as one who, within living memory, may have been guilty of that practice in getting what we considered to be a rather important vote on Syria on the record. If it is decided that the practice is unsuitable and should never be repeated, when there is an important Back-Bench debate on which there needs to be a vote to make the public well aware of the opinion of the House, and the Government choose for technical reasons to advise everyone to abstain, are there other mechanisms available that would enable that vote to be called?

For a moment I thought that, not for the first time, the hon. Gentleman had foxed me. I am sorry to disappoint him, but his point is not quite as powerful, or his inquiry as penetrating, as he imagined. The short answer to his question is yes. There is a simple mechanism by which a Member who is anxious to ensure that the will of the House is tested can see to it that it is, and that is the mechanism of putting in Tellers. That is a different matter from registering a vote in opposition to what the voice has said.

Hon. Members: He should join the Labour party.

The hon. Member for New Forest East (Dr Lewis) says that he did that once before, but I think he was operating under cover at the time.

Further to that point of order, Mr Speaker. The hon. Member for New Forest East (Dr Lewis) has got form. He is the last person who should talk about doing things for other reasons. He joined the Labour party many years ago because he wanted to protect a so-called Labour MP who, when he next came to Parliament, crossed the Floor of the House and joined the Tories. The hon. Gentleman has got form.

There are only two responses to the hon. Gentleman. First, lots of us have got form. Secondly, he has made the point conclusively for me that it is time to move on.

On a point of order, Mr Speaker. This morning, Sir David Higgins announced his proposals on High Speed 2, which include the suggestion that there should be a station at Crewe. That completely ignores the excellent proposal advanced by Stoke-on-Trent city council that would save £5 billion and bring services to Manchester seven years earlier. Has the Secretary of State for Transport given any indication that he will come to the House and explain why Sir David Higgins has apparently ignored the recently concluded consultation and introduced proposals that completely fail to take into account the other sound suggestions that have been made?

I thank the hon. Gentleman for that point of order, to which there are two responses. First, the observations by Sir David in his report will be the subject of ongoing debate, and probably dispute, for a long time to come. I make that point, within the boundaries of what the Chair can say, with some personal feeling.

Secondly, I know that it is the Secretary of State’s intention to make a statement on that important matter. Initially, I believe he had intended to make an oral statement to the House today, but it may have come to the hon. Gentleman’s notice that the Secretary of State is engaged elsewhere, and quite unavoidably would not be able to make that statement at this time. I am hopeful, however, that he will soon make it.

Business without Debate

Co-operative and community benefit societies Bill [Lords]

Motion made, and Question put forthwith (Standing Order No. 58), That the Bill be read a Second time.

Question agreed to.

Bill accordingly read a Second time.

Motion made, and Question put forthwith, That the Bill be not committed—(Greg Hands.)

Question agreed to.

Motion made, and Question put forthwith, That the Bill be now read the Third time.

Question agreed to.

Bill read the Third time and passed, without amendment.

Pensions Bill (Ways and Means) (No. 2)

Resolved,

That, for the purposes of any Act resulting from the Pensions Bill, it is expedient to authorise the levying of charges under the Pensions Schemes Act 1993 for the purpose of meeting expenditure of the Commissioners for Her Majesty’s Revenue and Customs under or by virtue of the Act.—(Steve Webb.)

pensions Bill (programme) (No. 3)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Pensions Bill for the purpose of supplementing the Orders of 17 June 2013 (Pensions Bill (Programme)) and 29 October 2013 (Pensions Bill (Programme) (No. 2)):

Consideration of Lords Amendments

(1) Proceedings on consideration of Lords Amendments shall (so far as not previously concluded) be brought to a conclusion three hours after their commencement at today’s sitting.

Subsequent stages

(2) Any further Message from the Lords may be considered forthwith without any Question being put.

(3) The proceedings on any further Message from the Lords shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement.—(Greg Hands.)

Question agreed to.

Pensions Bill

Consideration of Lords amendments

I must draw the House’s attention to the fact that financial privilege is involved in Lords amendments 1, 3, 9 to 13, 15 to 23, 27, 29 and 32 to 38. If the House agrees to them, an appropriate entry will be made in the Journal.

Clause 2

Entitlement to state pension at full or reduced rate

I beg to move, That this House disagrees with Lords amendment 1.

We are on the home straight of the Pensions Bill. It has been all the way through this House and their lordships’ House, and we have come back to it today to deal with amendments that, with one exception, make it a better Bill. I am grateful to my noble Friends Lord Freud and Lord Bates who, from the ministerial Benches, took the Bill through another place. I am also grateful to all my colleagues who have contributed to the Bill, and to peers on both sides of the House of Lords who have made insightful contributions and improved the Bill in a number of ways.

We have made a number of amendments in response to concerns raised by noble Lords, so I emphasise that our decision to ask this House to disagree with their amendment 1 is exceptional. Indeed, that is the only amendment with which we are asking the House to disagree, so I hope that we will be seen to have taken a constructive approach and that we have sought to improve the Bill on a cross-party basis wherever possible. For reasons that I will explain, however, we ask the House to disagree with this amendment.

As the House will know, access to the national insurance system through employment is dependent on earning above the lower earnings limit, which is currently £109 a week or, expressed annually, £5,668. People earning above the lower earnings limit but below the primary threshold of £149 a week receive a credit and do not pay national insurance but effectively build up national insurance rights. The issue raised by Baroness Hollis in another place related to the position of people who have more than one job, none of which, by itself, results in their paying national insurance but whose wages, if added together, would be above the lower earnings limit. It was suggested that there was apparent unfairness, because someone with a single job that pays £120 a week would get a year of national insurance, whereas someone with two jobs, each paying £60 a week, would not.

We are grateful to Baroness Hollis for raising the issue. We will set out the extent to which we think the issue is significant, the extent to which we think there is evidence for it and how the Government plan to address it. We ask the House to disagree with the amendment, but we accept the principle that we need a pensions and national insurance system that is fit for the modern age. Crediting and various other issues have evolved and need to evolve to reflect the fact that we are dealing with a changing labour market. I want to share with the House some examples of how that has happened and will continue to happen. One particular example is the introduction of universal credit.

At present, there is a set of low-earning individuals who do not get credits. When universal credit is fully in place and they come within its scope, they will receive credits. Potentially, some will be the very same people we are talking about in relation to the amendment. The House may not be aware that the introduction of universal credit will bring an estimated 800,000 additional low-earning households into the scope of crediting. That demonstrates that the Government are not complacent about the changing labour market, or the position of low earners and their access to the national insurance system. This is a concrete and substantive way through which people will gain access in future.

I understand the concern of Baroness Hollis that people might miss out on a qualifying year for national insurance. Why does that matter? If they were repeatedly to miss out on qualifying years, they might fail to build up a full single-tier pension. That requires 35 qualifying years, bearing in mind that these are years of contributions or credits. However, the mere fact that I have used the phrase “35 qualifying years” demonstrates the first reason why the problem might not be as significant as one might, at first sight, imagine. An 18-year-old might, for the sake of argument, have a 50-year working life, or possibly slightly more. Of that 50 years, only 35 years need to be qualifying years for a full single-tier pension. That person could, therefore, spend 15 years doing multiple small jobs—which is exactly what the noble Baroness is concerned about—and it would not make a jot of difference to their single-tier pension entitlement.

We do not know how many people spend how many years in this situation, and that brings me to one of my central points: we do not have the evidence base to know the scale of any potential problem, let alone to rush to solutions, which is what the amendment does. We have cross-sectional data. On the basis of surveys, we know how many people report having multiple jobs in any given year. We know what the wages are and we can have a stab at aggregating them. What we do not know very reliably is how that changes over time: whether the people who in any given year have multiple small jobs are the same people the next year and the next year. If it is just a transient phase that happens for a few years of someone’s working life and does not happen again, it may be entirely irrelevant to their state pension position.

This matter came to my attention through a constituent who was in exactly this position, and the Minister will be aware that I raised it in Committee. The amendment is an enabling amendment rather than a prescriptive amendment, and even if there are only a few people who will be in that position, is it not worth making provision for them? Not everybody will necessarily enter the labour force at 18, particularly with greater further education and so on, so reaching 35 years might be quite difficult for some people. If there is a small number, as the Minister keeps telling us, I do not understand the objection to the amendment.

I am grateful to the hon. Lady who, as she says, has shown an interest in this issue. There will be an issue of proportionality in any change. We estimate that perhaps 50,000 people might at any given point be doing multiple small jobs that together take them over the floor, but do not on their own. If, for most of those people, this happened for a few years and did not happen again, and it was relevant to the state pension for only a handful of people, should we legislate for that handful? It could happen and it probably does happen to some people, but to make well-informed policy the Government ought at least to assess the scale of the problem.

In particular, we should not rush into specific solutions. The amendment advocates a specific model, but I believe that we must begin by identifying not just the number but the types of people who are doing multiple part-time jobs of this kind. For instance, are they people with children? Is that why they are doing such jobs? If they have children under 12, they will receive credits under the general system.

We must match our data on multiple small jobs with data from other sources. We must look at longitudinal as well as cross-sectional data in order to gain a sense of the scale of the problem and the types of people affected, rather than legislating for a single solution. We believe that the amendment is technically flawed for a number of reasons, but we certainly think that rushing to amend the Bill in order to give ourselves power to do something that we might or might not want to do because it is one possible solution to a problem whose scale we do not know would be premature.

Is it not especially important to enable women to juggle caring for young children with part-time employment? Will the Minister reassure me that the great improvements that we have made in relation to credits will continue, so that women will retain the flexibility that so many of us really appreciate when our children are young?

My hon. Friend is right. It is important to attribute value to the time that people—both men and women—spend at home bringing up young children, and I can reassure her that years spent doing that will count in full as qualifying years towards a single-tier pension. For the first time, more or less, since the introduction of the system—at least, since earnings-related pensions were introduced— those years will count just as much as years spent running a FTSE 100 company. A year is a year, and a qualifying year is a qualifying year.

The provision will apply to anyone who is looking after a child under 12 and entitled to child benefit—well, it is slightly more complicated, but that is the basic idea—and to anyone who is caring for an elderly relative and receiving carers allowance, or, in certain cases, caring for more than 20 hours a week. There is, rightly, a network of credits which bring people into the system. Those will remain, and, in many respects, will become more valuable in the single-tier context.

The Minister advanced exactly the same arguments on Second Reading and in Committee. He said on those occasions that he did not have enough information. Given that we last considered the Bill several months ago, may I ask what steps he has taken to obtain the information that he feels is needed?

We have increased our earlier estimate of the number affected from about 20,000 to about 50,000. In 2010, the last Government reduced the scope of what used to be known as home responsibilities protection by reducing the upper age of children being cared for following the end of child benefit and not being covered by credits from 16 to 12, and that has slightly increased the number affected by our proposals. We also made a technical change in starting credits for 16 to 18-year-olds. Those two factors, combined with more recent data, give us an estimate of 50,000. So we have updated our estimates, but, as the hon. Lady says, we need to take the matter further. Although we do not accept the amendment, we do accept the need to build an evidence base, and I will explain in a moment how we plan to do that.

The Minister is demonstrating that for low-paid people the system is currently so complicated that they cannot tell whether or not it is worth working an extra hour. Will he make it simple for me? If the amendment were adopted, would low-paid people be worse off in that year while they were earning?

The honest answer to the question is that because there is not enough information in the amendment, we do not know, but that might be so.

Let us take the example of someone with two jobs paying £75 a week, who does not currently pay national insurance. If the two sums were added together to make £150 and national insurance were levied on that basis, that person would then have to pay national insurance. Such people might turn out not to need the qualifying year, because they would already have 35 qualifying years. As the hon. Gentleman says, a set of people could be worse off if the amendment were interpreted to mean what we assume that it means. It may merely mean opting in for a credit, which would be a free entitlement and would therefore constitute pure gain, but in that case there would be a different unfairness. We would have people who did a single job at £150 a week who had to pay NI and somebody else who had two jobs paying £75 a week who did not have to pay NI but got a free year of national insurance. My hon. Friend highlights an important point, and I am grateful to him.

We believe the amendment is both unnecessary from a legislative point of view, because we have crediting powers elsewhere, and sets a precedent which concerns us. The amendment is not clear either. The hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont) has tabled a motion to agree with the amendment, indicating that he disagrees with the Government’s view on this amendment. In a number of respects the amendment is flawed, and were he to be successful in a vote on its staying in the Bill, there would be no further parliamentary opportunity to correct it. This is the only amendment on which we disagree with the Lords, so that would be the end of the process. He would therefore have ensured that a defective clause became part of the law of the land and I am sure he would not want that to happen.

Let me give some examples of the flawed drafting. The amendment refers to the “lower earnings level”, but in fact there is no such thing. There is the lower earnings limit, which is what we imagine Baroness Hollis meant, but the amendment is unclear and we could not have in primary legislation a reference to a threshold that does not exist.

Secondly, the lower earnings limit, if that is what is meant, is normally expressed in weekly terms and has to be multiplied by 52 to be expressed in annual terms, so we would have to make sure that there was consistency. The amendment refers to a year, but it is unclear whether it is a calendar year or a financial year; we presume it is the latter. There is a whole raft of reasons why the amendment is flawed. I am sure that the hon. Gentleman would not want to put a flawed provision on the statute book, but that is exactly what voting against the Government would do.

We do not know for certain how the proposal would work, although we have a clue. If it is about crediting—about giving somebody a qualifying year without their having to pay for it—then we think that crediting ideas would fit better in section 22 of the Social Security Contributions and Benefits Act 1992 rather than as part of this Bill. Extensive regulation-making powers are available to us to modify the crediting system, if that is what is intended, so we do not think that such a proposal would be necessary from a legislative point of view.

If, however, we are talking about combining wages and aggregating and then levying national insurance, that would bring in a different set of unfairnesses. That applies particularly to the example of a person with a single job at £150 who has to pay NI and someone who has two jobs at £75 who does not have to pay that but who could be credited. That creates different anomalies which we obviously want to avoid.

On the issue of the evidence base, we have looked at people who have multiple jobs. Clearly, someone can have multiple jobs and one of them might pay above £109 a week, so the fact that someone has multiple jobs does not of itself exclude them from national insurance. Each job has to pay below £109. Of course, some people do not go above £109 even when their multiple jobs are put together—someone who does two lots of babysitting, perhaps, or a couple of cleaning jobs—so presumably they would not qualify. We are therefore talking about a very specific group of people with multiple jobs which together take them over £109, but neither of which is over £109 on its own.

We also would not want to include in our figures those who have children, those who are doing multiple small jobs because they are carers, or those on universal credit, because they would all be credited in. There are quite a few people with two or more small jobs, but Members can easily see that it is a big leap to the assertion that there is a big problem. Furthermore, as I have indicated, the fact that in any given year a person is in that situation may have no effect on their eventual state pension, because it depends on how long they are in that situation. We therefore need more evidence before we rush to policy conclusions.

We take seriously and respect these issues, so let me explain how we propose to build up an evidence base. First, we need to look further at the characteristics of people in such situations—who they are and how long they might have that kind of working pattern. Secondly, we commit to updating and revisiting our 50,000 figure to make sure it is the latest available. In that context, before moving on I want to say a few words about the issue of zero-hours contracts, as I have a feeling that might come up in our debate.

It is said that zero-hours contracts are a growing part of the labour market; the recent official figures substantially increased the estimated number of people with zero-hours contracts. There is some suggestion that the number of zero-hours contracts certainly has not risen as quickly as the figures might suggest, and that because of the discussion of this issue in the media, people are more aware that that is the kind of arrangement they have. The Office for National Statistics has urged caution in assuming that there has been this big surge in zero-hours contracts. However, I am pleased to be able to tell the House that the ONS is undertaking employer research into the use of zero-hours contracts, which should, I believe, be published next month and provide us with some robust evidence on the scale and use of that form of contract.

Although zero-hours contracts are a feature of the modern labour market, they are not what we are talking about in this debate. To be clear, we are talking about people having two or more mini-jobs which together take them above the £109 threshold. They might be zero-hours contracts, but there is no reason to assume that a zero-hours contract is a mini-job, that it results in someone earning less than £109, or that people who have zero-hours contracts have multiple jobs. Those are all dirty great leaps to an assumption that we are not entitled to make on the basis of the data.

For example, I understand that the average person with a zero-hours contract could typically work 15 to 20 hours a week or so. The zero is just what is guaranteed, but the typical outcome is very often a week of work that pays someone enough to have to pay national insurance. Again, related to that is the fact that qualifying years for national insurance are based on the situation over a whole year, so even if someone is on a weekly zero-hours contract and does not work every week—they work zero hours some weeks—they could still build up a full qualifying year, because in the weeks they work they might pay significant amounts of national insurance. Therefore, again, simply saying there are lots of zero-hours contracts does not prove that it is an issue. The fact that someone is on a zero-hours contract does not mean they have multiple jobs. The fact that people are on zero-hours contracts and sometimes work zero hours does not of itself stop people getting qualifying years. I imagine the debate may move in the direction of saying, “Oh, there’s all these zero-hours contracts. It’s a scandal and therefore we need this amendment,” and there are about 17 logical flaws in that reasoning.

Does the Minister feel that there is a technical problem in including such people, however small a group he thinks they form, because he seems to accept that people might end up not making up the 35 years towards a pension?

We have always been clear that there will be people who will not make the 35 years, particularly those who come into the country later in life, for example, but the link between multiple mini-jobs and not making the 35 years, which we are talking about here, is unclear at best. We simply do not know whether it is a transient phase for people or whether they are in a recurring pattern. Again, I counsel the House against rushing to policy conclusions in amendments that are not accurately drafted rather than saying, “Let’s get the evidence base together.”

As well as undertaking to update our own figures, we are happy to commit to a literature review of what is known about this end of the labour market, making sure we have access to all the available data. We are also content to convene what we have grandly called an analytical stakeholder forum—that is three words of jargon in one go, so it must be impressive. The point of that is to pick the brains of those who study this end of the labour market, and we will be very pleased to benefit from the insights of the noble Baroness Hollis, with whom I have already had an informal conversation about this matter. I should stress that she would like us to retain Lords amendment 1 to avoid misrepresenting her views. We are very keen to gain her insights and those of economists and others who study this end of the labour market to try to establish what more we might be able to find out through existing data and whether any further work needs to be done.

It seems to us that we need to take a step-by-step approach, rather than rushing to policy conclusions as the amendment would. If we found that there were lots of people in this situation and that something must be done, even the something that must be done might not be the thing proposed in this amendment, and it seems a bit odd to pick one option, which as far as we can see is a sort of opt-in crediting option, when there might be others. For example, one might think that lowering the lower earnings limit might be a better solution. That would reduce the number of people in this position because their combined wages would be more likely to be above that floor. It would not necessarily require an opt-in process, and it would be simpler. That might therefore be a better solution; there might be others. We might relax the rules on voluntary national insurance contributions and the deadlines for payment. One can think of a whole raft of solutions, but if we are not clear about the scale of the problem, the groups affected and the permanence or otherwise of the situation, putting just one such provision in primary legislation—giving ourselves a power we might not use through what is, at that, an ambiguous amendment—does not seem to us to be the way forward.

Let me try to draw these threads together, because we have a lot to get through. We are concerned that the amendment itself is unclear, and I have run through a number of reasons why, such as the reference to the lower earnings “level”, not “limit”, and the reference to “income”, not “earnings”. National insurance liability is based on earnings, so the wording would have to be thus changed. The lower earnings limit figure is currently a weekly figure, whereas the amendment refers to an annual figure. Of course, all these things could normally be tidied up, but we do not have the opportunity to do so because if the House accepts the amendment, that is it: it is the end of the parliamentary process, the Bill becomes law and a deeply flawed amendment is on the statute book.

It is unclear exactly how the amendment is meant to work. As was said earlier, would people have to opt in and get credited, or would there be a duty on Her Majesty’s Revenue and Customs to combine these incomes and then levy national insurance, which might be to the detriment of some? There are a great many issues to be examined, but it is not our view that we should not look at them. We should, and as I said at the outset I absolutely accept the principle that we should have a system of pension rights and national insurance that reflects the current labour market, rather than the one in existence after the second world war. We are making a number of changes in that regard, but as I have said, the amendment as it stands is flawed in a number of respects and ambiguous in others. It rushes to a single solution to a problem whose scale and nature we simply are not year clear about, so we believe that—

I understand that the Minister is anxious not to rush to a conclusion, but can he tell us what time scale he has in mind?

We envisage updating our own estimates by the summer and would be very happy to do that, and bringing together experts and trawling through the related literature in the latter part of this year. We do not want to kick this into the long grass. If we concluded that further data-gathering was needed, and it was qualitative rather than quantitative, that would take some time, but well-informed evidence-based policy making sometimes does take time, frustrating though it may be, and that is the approach the Government wish to take.

I urge the House to disagree with the Lords in their amendment 1.

I shall of course be disagreeing with the Government’s disagreement with Lords amendment 1.

Let me begin by putting the amendment and the labour market issues it pertains to into some context. Since 2008, only one quarter of the jobs created in this country have been permanent. There are hundreds of thousands of short-hours contracts and, according to some figures, approximately 1 million zero-hours contracts, in addition to other non-standard job patterns. Some 40% of all jobs are not the permanent, full-time positions that we traditionally associate with the UK labour market. That context is important to bear in mind: the Minister rightly referred to the need for the pensions system to keep up to date with changes in the labour market, and that is the reality of the labour market we are now all living with and working in.

The labour market structure needs to be seen alongside the structure of the state pension system. The Minister alluded to that, but as things stand, by 2016, under the Government’s state pension reforms, people will need 35 years of contributions to get a full state pension. Alongside that is the system of credits, which has been mentioned and others will doubtless refer to. Someone who is unemployed and on jobseeker’s allowance gets credits for the state pension, as does a working mother who has a child under 12. A grandparent caring for the child of a working mother can get credits for the state pension, as can someone on disability benefits or carer’s allowance. It is important to recognise those points in the context of an ever more complicated labour market.

The amendment is clear that it does not propose a particular solution. It is a permissive amendment and relates clearly to job insecurity issues and the changing nature of our labour market. The House had a very interesting debate on job insecurity at the beginning of February that covered a number of important issues, yet during it the pensions aspect was not raised. That reflects the extent to which we are all trying to catch up with this non-standard labour market—the shift from the full-time permanent employment that has historically characterised work in this country.

The Minister said, I think, that those who support the amendment should be aware that the Department for Business, Innovation and Skills is currently assessing zero-hours contracts. He is absolutely right, but if the Government accepted this permissive amendment, the DWP would be poised to respond swiftly to the BIS zero-hours contract review.

The amendment seeks to future-proof the Bill, to construct a pensions platform underneath the poorly paid—those in deeply insecure, fractured work—and to make it clear that this House believes that they should not lose or be denied a full state pension because of changes in the labour market structure which are not of their doing.

Let me deal with some of the other points the Minister made. I shall begin at the end, so to speak, with the extraordinarily attractive offer that he made. He said that the Government are committed to a literature review and to an analytical stakeholder forum. One can hardly wait. He suggested that there are 17 logical flaws in the amendment. I am sure that Baroness Hollis would be delighted to hear all 17—assuming he has not just come up with that figure spontaneously—and it would be useful to know what they are. After all, we all believe in saying what we mean and meaning what we say.

For the avoidance of doubt, I think the hon. Gentleman will find that the record shows that I did not say there were 17 logical flaws in the amendment. I said that there were 17 logical flaws in leaping from the assertion that there are lots of zero-hours jobs nowadays, to this amendment. My point was that it takes an awful lot of logical assumptions, all of which are false, to get to the amendment.

Of course Hansard will tell this story, but it was a short quote and I think I managed to get it down correctly. If the Minister is saying that it was not that there were 17 flaws in the amendment, I am sure the whole House is delighted to have that clarification.

Let us probe a little further into the Minister’s argument. He says that on the Government’s estimates only about 50,000 people are affected, that there should be no “rush to solutions” and that the amendment is flawed technically for many reasons—but perhaps not 17. He says that the Government need to build their evidence base on the issue. Interestingly, he said that the Office for National Statistics has urged caution about the notion of an upsurge in zero-hours contracts. His point was, and the ONS’s point is, that it might be that individuals are more aware that they are on such a contract than that the upsurge has been so great. If that is the case, it does not negate the point that there are a significant number of these sorts of contracts around, and that has significant implications for a state pension system based on contribution.

I asked the Minister about the 17 logical flaws, but his argument also was that we do not know enough to go forward with an amendment to solve the problem. However, he also said he understands that the average zero-hours contract gives an individual between 15 and 20 hours of work a week. Is that his estimate or is it based on research? In a world where we are not precisely aware of the figures involved, there is a danger of bandying around our own figures without a relevant citation.

What situation are we trying to deal with through this amendment? As I said, we have an increasingly fractured and insecure labour market, and the question is whether individuals in that labour market and the pension system relating to that market are appropriately structured and linked. The amendment, introduced effectively in the other place by Baroness Hollis, seeks to deal with what is, on any measure, a significant problem. We welcome the fact that the Bill brings 4 million self-employed individuals into the state pension without an employer’s contribution, and of course those self-employed people pay £2.70 a week. The amendment’s thrust is that we need a similar approach for short-hours workers. The Minister rightly said that this is not just about zero-hours contracts; it is about the insecurity of short-hours working in the labour market more broadly and matching that up effectively with a universal state pension—the Minister is keen on that.

I have been listening to my hon. Friend and to the Minister, and I was alarmed by the Minister’s statement that people on zero-hours contracts “could” be okay, be that to do with their working arrangements in other areas or the fact that they may work a sufficient number of hours. That implies that they also might not be okay.

As usual, my hon. Friend makes a pertinent intervention.

There is an issue to address and the question is how to do it. The Minister suggested that Baroness Hollis’s amendment, which my colleagues and I agree with, prescribes a specific solution, but of course it does not; it is a permissive amendment. As the Minister, using that fertile mind of his, started to think about different solutions, one could see the point of the amendment even more: to give him and his colleagues in the Department for Work and Pensions the authority to think carefully about how to solve this problem. He gave a number of ideas as to how it might be solved, which was when we particularly saw the function of this amendment. It would bring the best minds in the DWP together to deliver a solution, and it would remove the need for subsequent primary legislation. So, by his own words, the Minister gives succour to the amendment.

The amendment has a clear purpose: it is a permissive amendment to enable the Government more finely to match the state pension reform that the Minister is introducing with the nature of the modern labour market. He talked about estimates of the number of individuals involved. As he will know, Baroness Hollis has come to a different conclusion about the number affected and is very clear that the universal credit, which he mentioned, will not help the largest group—single people—nor, usually, will it help women without younger children or households where the joint income, including the man’s income, floats them off universal credit altogether. She calculates the number of individuals affected as being 250,000, which is a very different figure from the one the Minister gives. Universal credit, which he said would ameliorate the problem, will not help single people, women without younger children or households where the joint income, including the male income, floats them off universal credit. It is important to put that on the record. If a significant number of people are affected by this and if the Minister wants to make the state pension as universal as possible, as the Opposition believe he does, it would seem sensible for him to accept a permissive amendment allowing him to go forward on the basis of his thoughts about the various ways in which this might be taken up by the Government and to get cracking on it. The fundamental point is: why should those who, through no fault of their own, are in short-hours working or zero-hours contracts—those various kinds of flexible employment contracts—be denied the benefits of a full state pension?

The Minister said that the problem is not as significant as Baroness Hollis has suggested and that someone would need only 35 of 50 years in the labour market to qualify, but the issue is that where people spend significant parts of their life on these contracts, what is meant to be a universal state pension does not necessarily become one.

I sense that the hon. Gentleman is concluding. The amendment is flawed in a number of respects. For example, it refers to a lower earnings level, but there is no such thing. Does he not have any qualms about the fact that if his vote were to succeed, he would be putting flawed legislation on to the statute book?

The Opposition’s view is clear: the issue of job insecurity, of short-hours working and of zero-hours contracts is a significant problem for the pensions market and, specifically, for the state pension. In that context, it seems wise to us to allow the Minister to crack on with solving this problem. I have confidence that he will ensure that this amendment, if agreed to by the House, provides the basis for matching up the state pension with people on these insecure and flexible employment contracts. On that basis, we disagree with the Minister’s disagreement, and we intend to support the Lords amendment.

Having been with this Bill from the outset, I remain disappointed, given the answers that the Minister gave to my interventions, that we have not made any substantial progress on resolving this issue. It will be predominantly women, although not necessarily entirely so, who will be disadvantaged. In other aspects of the Pensions Bill, the Minister has said how important it is that people will now build up their own entitlements for their own individual pensions. Being able to get a derived pension from a spouse, a deceased spouse or an ex-spouse will disappear from the system. We discussed that issue at considerable length during the passage of the Bill. Indeed the Minister has majored on this whole issue of people having their own individual entitlement.

I can understand a Minister saying in Committee that an amendment is flawed and could perhaps have been better expressed. However, given that we have been at this for some months and that there has been such interest in the matter, which goes right back to the evidence session and before, it is disappointing that an effort has not been made to reach out and say, “We think this is flawed, but this is what we can do about it to make it real.”

I am not convinced that the time scale suggested by the Minister is sufficiently energetic to allow this matter to proceed. Even if there are only a few people who fall outwith the other categories, they are none the less real. As my hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont) said, universal credit—even if does emerge in its full form, which is slightly doubtful—is not the complete solution. Those women who, in the past, depended on their husband’s contributions will no longer be able to do that and will not qualify for universal credit if their household income lifts them above the required level. I am disappointed that the Minister has not found a solution to the matter so far, and regret that he has not used this opportunity to do so.

Let me respond briefly to the debate. On the issue about the typical number of hours worked by someone on a zero-hours contract, I said 15 to 20 from memory, but the exact figure is 20 hours. The ONS estimates that the average number of hours worked by people on zero-hours contracts in 2013 was more than 20 hours. There is a danger that when we hear the words “zero hours” we assume that it means there is no money coming in. However, it simply refers to the number of hours guaranteed under the contract. Lots of people with zero-hours contracts are building up full qualifying years.

Of course the Minister will be more than aware that averages can hide a multitude of sins; I am sure he accepts that.

Yes, I do. The point is that 20 hours on a minimum wage would get someone above the lower earnings limit. If half of everyone on zero-hours contracts are doing more than 20 hours, we can immediately say that they will qualify, and those doing slightly fewer hours will also qualify. The link between zero-hours contracts and multi mini-jobs, which is the subject of the amendment, is, at best, unclear. In extremis, it could be that no one on a zero-hours contract is even covered by this amendment, if they have only one job at a time and no other job. We do not know and nor does the hon. Gentleman. Our sequencing is evidence first and policy next; the Opposition’s is the other way around.

The hon. Gentleman refers to the emerging labour market, and chose 2008 as his base because that enabled him to get a figure that worked for him. However, let me bring him right up to date. In the past year, the number of women working full-time increased by 270,000 while the number of women in two jobs, which is germane to the amendment, decreased by 25,000. The suggestion that there is some sort of inexorable rise might be wrong. If we were to update our figures, we might find that the number has continued to go down. There is a whole raft of statistics I could give the hon. Gentleman, but to assume that this is a vast issue and that the numbers are inexorably rising is far from the case.

The case of the hon. Member for Edinburgh East (Sheila Gilmore) is that even if only one person were in this situation, we should fix it, but there is an issue of proportionality here. To set up the lightest touch crediting regime based on past precedent would probably cost about £1 million and more than £1 million to run. One must always ask the question—as least we do on the Government Benches—about value for money. That is why we need to know how many people are affected, who is affected and the best way to deal with the issue.

Finally, when the hon. Gentleman was asked whether he cared about putting flawed amendments in the Bill, he essentially said that he did not; he simply wanted to make a political point. That is regrettable. As legislators, we are voting today on legislation. This is not an Opposition day debate where he can make a point. This is deciding what goes into the law of the land. I am rather disappointed that he feels that it does not matter if an ambiguous and unclear amendment, which uses terms that have no meaning in reality, should just go in the Bill, so that he has the chance to have a vote and put out a press release. That is obviously where he is coming from. I regret that, and urge the House to disagree with the Lords amendment.

Question put, That this House disagrees with Lords amendment 1.

Clause 24

Abolition of contracting-out for salary related schemes etc

Following that brief moment of disagreement with their lordships, I am pleased to say that we encourage the House to agree with all other Lords amendments to the Bill. Some amendments in this group were initiated by the Government all on their own, while others are constructive amendments that we tabled in response to concerns raised by noble Lords and others. That shows our willingness to improve the Bill when we think that valid arguments have been made.

Lords amendments 19 and 21 will affect the spouses of service personnel. In the context of our motion to disagree with Lords amendment 1, which was tabled by Baroness Hollis, it is appropriate to say that Lords amendments 19 and 21 respond to a concern that she helpfully raised during the Commons Public Bill Committee’s oral evidence sessions about the position, under the single-tier state pension, of wives of service personnel who have served overseas.

Lords amendment 21 places a duty on the Secretary of State to legislate for a new retrospective national insurance credit for spouses and civil partners of armed forces personnel who accompanied their partner on postings outside the UK from 1975-76 onwards. We promised to think about the matter as long ago as last June—have we really been considering the Bill for that long?—after it was raised in our oral evidence sessions. As we know, the single-tier pension is essentially based on one’s own record of national insurance contributions and credits, rather than a derived entitlement from a partner. However, that creates a problem for women who were posted overseas with their husband and, for entirely legitimate reasons—because, say, they did not speak the language of the country they were in—were unable to work, or could not build up national insurance rights because of their role supporting their husband.

It is right that we take action for that group. There is a cross-Government commitment in the armed forces covenant to removing the disadvantages caused by military life, and we recognise the difficulty that spouses and civil partners would have faced in maintaining their national insurance record while on an overseas posting. Their prospects of securing employment during the posting would have been significantly hampered by language barriers, for example, and they may have been unable to accrue UK qualifying years while abroad. Since last June, we have worked closely with colleagues in the Ministry of Defence to devise a workable solution, and we are pleased to offer an approach that addresses this unique difficulty faced by the service community.

Under the Lords amendments and subsequent regulations, credits will be available for people who reach state pension age on or after 2016. Those credits build on the prospective credits in place from 2010-11, and help to ensure that people will not be prevented from gaining a full single-tier pension, even if they are in the now rare situation of having spent their entire working life accompanying their spouse abroad. The detailed design of the scheme, including the application process and information on when applications may start to be made, will be set out in regulations. Although it is difficult to give a precise figure, we estimate that about 20,000 people could benefit from the credits. Lords amendment 19 is a technical measure to accommodate the retrospective credits in the calculation of an individual’s foundation amount.

Lords amendment 2 deals with the issue of a statutory override for protected persons. The single-tier pension means the end of contracting out, so employers will have to pay more national insurance. The Bill provides for a statutory override to allow employers to change future contribution levels or accrual rates in order to recoup that increased national insurance when they would otherwise be prevented from making changes by their scheme rules. During the Bill’s passage through this House, the Government consulted on whether protected persons should be within the scope of the statutory override. We think that a relatively small group of individuals—perhaps 60,000—are affected.

The responses to the consultation were polarised, as employers wanted the flexibility to apply the override, while trade unions and others representing employees did not. We took the balanced judgment that we should honour promises made at the time of privatisation—promises that, in many cases, were subsequently confirmed by Ministers when legislation providing for pension protection was enacted. Lords amendment 2 makes it explicit that the statutory override cannot be used in relation to protected persons. Regulations will specify the details of who is considered to be a protected person, but the intention is to include all the people set out in our consultation response, especially rail workers, including Transport for London employees, and workers in the electricity, coal, and nuclear waste and decommissioning industries.

The group includes several technical amendments. Lords amendments 20 and 22 amend the Social Security Contributions and Benefits Act 1992 to make it clear that funds for paying the single-tier pension are provided by national insurance contributions, and that references to “benefit” include the single-tier pension. Lords amendment 23 repeals redundant provisions in the Marriage (Same Sex Couples) Act 2013, while Lords amendment 24 removes a redundant reference in legislation to the contracting-out compliance standard. Lords amendment 25 deals with the application of the statutory override to shared-cost arrangements. Lords amendment 26 is a response to a recommendation made by the Delegated Powers and Regulatory Reform Committee. It removes the power to create exceptions to the limit on the amount that employers may recoup under the override. The Bill originally allowed regulations to be made to create exemptions to the limit to deal with unconventional funding arrangements, but we are now making provision for such a power in primary legislation under Lords amendment 25.

In response to points made by the Delegated Powers and Regulatory Reform Committee, Lords amendments 12 and 13 provide that several regulations under the Bill will be subject to the affirmative procedure, rather than the negative procedure. Lords amendment 13 specifically provides that frozen-rate regulations should be subject to the affirmative procedure on every use.

Lords amendments 3 and 27 create a new class of voluntary national insurance contributions—class 3A. As the concept of the contributions was introduced in the other place, it is worth my spending a moment explaining more about it, as the House has not yet had the chance to consider it. The new class of contributions will allow pensioners to top up their additional state pension. It will be available to people who reach state pension age before the introduction of the single-tier pension on 6 April 2016. Details of the scheme, including the pricing, the maximum number of units and the administrative processes, will be set out in regulations. We will make details of the prices available shortly, but they will be set on an actuarially fair basis using the latest longevity figures. We envisage that the scheme will open in October 2015 and run for 18 months. It will help groups who have only modest amounts of additional pension, if any, such as women and the self-employed whose social and economic contributions were not captured in the state earnings-related pension scheme and are not fully reflected in the state second pension.

The scheme has just two simple entitlement conditions: first, a person must reach state pension age before 6 April 2016; secondly, they must be entitled to a UK pension. Even if someone has the full 30 qualifying years for a full basic state pension, they will not be debarred from paying class 3A contributions and boosting their state pension because they will be buying additional state pension, not basic state pension. I stress that that distinguishes the contributions from class 3 national insurance contributions, which fill gaps in the basic state pension.

We intend to cap the amount of additional pension payable as a result of class 3A at about £25 a week. As that extra pension will be additional state pension, it will be uprated according to the consumer prices index. The pension will be inheritable and people will be able to defer it in line with existing rules. More details of the scheme will be announced shortly, but the main regulations will be subject to the affirmative procedure, so Members will have the opportunity to debate the detail.

We have undertaken research and polling to gauge interest in the scheme. We expect to publish more information on likely interest and take-up shortly after the Budget, but our first poll suggests that 14% of pensioners might be interested. People’s ability to pay class 3 voluntary national insurance contributions to cover gaps in their contribution record for the basic state pension will be unaffected by the introduction of class 3A. We will put in place administrative arrangements to ensure that individuals who apply to pay class 3A contributions are made aware that they should first check their eligibility to pay class 3 contributions. People will need to consider whether making class 3A contributions is the best option for them. We believe that class 3A will allow some people to boost their state pension income with a secure, inflation-proof income that has the added advantage of survivor benefits.

I hope that the House, like their lordships, will support the Lords amendments. They improve the system for military wives and offer protection for protected workers. They tidy up several technical aspects of the Bill and, for people reaching state pension age before April 2016, introduce a new option of paying voluntary national insurance to top up their additional state pension. I commend the Lords amendments to the House.

I do not intend to detain the House too long on this group. On Lords amendment 2, I welcome the Government’s decision. The issue of individuals with protected status in pension schemes that were nationalised has been significant, both for the House and for the people concerned. Those with protected status are a group of approximately 60,000 individuals employed on the railways, including by Transport for London, and in the electricity, nuclear waste and decommissioning and coal industries. They are protected because they were given guarantees by the Government of the day when the industries were privatised. On Report, the official Opposition made clear their view, and tabled an amendment that aimed to remove these protected schemes from the scope of the provisions on the statutory override as it pertains to the new flat-rate state pension and the end of contracting out.

I welcome the Government’s decision on the continued protection of these schemes. I pay tribute to my hon. Friends, the trade unions, and others with whom Members have worked closely to make the case. It is a good example of how a case properly made, and a Government prepared to listen to the detail and the reality, can produce an outcome that we all welcome.

My hon. Friend is making excellent points, and I thank him for his efforts to prosecute the case. Does he agree that the principle of trustee consent is an important one that we should honour?

I thank my hon. Friend for his intervention and for his work on the issue. As he knows, we tabled an amendment to clause 24 in Committee on this issue. We welcome the decision to accept Lords amendment 2, a concessionary Government amendment moved on Report.

Let me say a little about Lords amendment 21, another concessionary Government amendment moved on Report, which will place a duty on the Secretary of State to make regulations to allow service spouses and civil partners who are due to reach state pension age from 6 April 2016 to apply for national insurance credits for periods during which they accompanied their spouse abroad. I agree with the Minister that the amendment will strengthen the armed forces covenant and remove some of the disadvantages that the armed forces community may face in comparison with other citizens. I add to the Minister’s tribute to Baroness Hollis for her work in ensuring that the provision was included in the Bill.

I look forward to the provisions in Lords amendment 3 being taken forward by the Government. I look forward also to the pricing of those provisions. It will be striking to see what take-up there is of the offer to procure more state pension for people who retire before the new flat-rate state pension is brought in. On that note of consensus, we welcome this group of amendments.

I, too, will not detain the House for long, but there are a few points that I wish to place on record. I thank the Minister for meeting the trade unions on a number of occasions, and the Department for its active engagement in the consultation exercise.

I shall not rehearse the arguments about the importance of maintaining trustee consent, which were made by my hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont) from the Front Bench. The workers concerned are those in former nationalised industries, including coal mining; electricity transmission workers; workers in Transport for London and the train operating companies; and workers in the nuclear waste and decommissioning industries. An important principle is at stake, and I am grateful to the Minister for accepting the Lords amendments. As was pointed out, it is important that we have ongoing discussions, and I hope that the Minister will commit to that. If he would engage with the trade unions, which have undisputed expertise in this area and could assist the Department in the drafting of the regulations, that would be much appreciated.

I am grateful to both hon. Gentlemen who have spoken for their constructive responses. The amendments relating to protected persons have been welcomed, and I am grateful for that. I welcomed the opportunity recently to meet the hon. Member for Easington (Grahame M. Morris) and his colleagues from the relevant trade unions. I am pleased to assure him that we will be happy to have that ongoing dialogue when it comes to drafting the regulations that will implement these changes. As he knows, we take the view that a statutory override is not a statutory override if trustees have the power to block it. We differ on this point—I understand that—but we are imposing a substantial cost on employers, and we believe that they need to be able to recoup that. We hope and believe that many will do so in a constructive and collaborative way, with engagement with trustees and others.

The hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont) mentioned what might loosely be called the army wives provisions. As he says, they are an attempt to do right by our armed forces personnel and their families, and again, the measure seems to have attracted wide support. I am grateful for the support from across the House for these amendments from their lordships, which we accept. I commend Lords amendment 2 to the House.

Lords amendment 2 agreed to.

Lords amendment 3 agreed to, with Commons financial privileges waived.

Clause 37

Automatic Enrolment: powers to create general exceptions

We move to the final group of amendments and, as I mentioned earlier, we urge the House to agree with their lordships in all of them. For reasons that I shall explain, we do not accept Opposition amendment (a) to Lords amendment 9.

I shall run through the categories of amendment before us. I shall deal at the end with the charges and disclosure amendments, where there appears to be the remaining lack of agreement. I apologise in advance for the fact that it might take me a moment or two to work my way through the amendments as some of them are quite technical, but at this stage in our proceedings it is important not simply to nod these measures through. In some cases quite substantive changes were made in another place—welcome changes, we believe, but they are ones to which this House should give proper scrutiny.

I shall begin with amendments 5 and 6 and then 4, which relate to automatic enrolment. It is worth putting it on the record that automatic enrolment is already a huge success story, with 3.2 million people now enrolled. I had the pleasure last week of visiting Upton Park to meet someone who I am told is the three millionth person to be automatically enrolled. I have my doubts, but one never knows. I have to declare in some sort of register somewhere that I was given a West Ham shirt with the squad number 3 million on the back, which may be my transfer fee—I do not know. We have certainly reached an important stage in the process. It is one of the almost unsung success stories of this coalition Government to implement automatic enrolment in an effective way, to see more than 3 million brought in and to have very high levels of staying in—of the order of 90%—which means that getting on for 3 million people are now in workplace pensions who were not in such pensions just a couple of years ago. All the signs are that this will continue to be a success.

But ongoing success is dependent on being able to learn as we go and to make changes where necessary, and amendments 5 and 6 are tabled in that spirit and relate to defined benefit schemes. In general, DB schemes are high-quality pension schemes provided by employers who take pensions seriously, and we would not want employers to feel that they could not use a DB pension scheme for auto-enrolment because of some technicality or because in some way we provided a higher hurdle for a DB pension scheme to be used for automatic enrolment than for a defined contribution scheme. Amendments 5 and 6 allow for simpler alternative quality requirements for employers providing good quality DB schemes.

The amendments will allow DB schemes to meet either the existing test for money purchase schemes, or a test based on the cost of future accruals. More work has to be done on adding the detail in regulations, and we look forward to working with our stakeholders on that. The simpler tests will help those employers providing good schemes to meet their automatic enrolment duties. This is important because of the end of contracting out. Contracting out itself had a set of standards that schemes that wanted to contract out had to meet, and once contracting out has gone and those standards have gone we can use the opportunity to set simpler equality requirements for employers wanting to use DB schemes. I hope that that will be welcomed by the House.

Also in the context of making automatic enrolment work, amendment 4 relates to the power to ensure that employers do not have to enrol individuals for whom it makes no sense. We tabled a clause at the beginning of the process that would give us the power to exclude a small group of people where it would not make any sense for employers to have a legal duty automatically to enrol them. For example, employers said to us that they had employees who were high earners or who had exhausted their lifetime tax limits and had some protected or enhanced status who were asking not to be put into a pension scheme because that could jeopardise their tax status, and having been auto-enrolled they would have to opt out straight away. That would be a waste of employers’ and employees’ time. If they failed to opt out, they could lose valuable tax protection, which would create unnecessary bureaucracy for the employer and hassle for the employee, and we do not want to do any of that when it comes to auto-enrolment.

We always envisaged that we would exclude tightly defined and limited categories of employees from the auto-enrolment duty. Following consultation, we have now indicated specifically which groups of people those are. I have mentioned those with tax protection status and another would be those on the brink of retirement or leaving. Someone might have said that they were about to leave the company, but the legal requirements on automatic enrolment or re-enrolment meant that the firm had to put them in the pension scheme, perhaps days before they left. Clearly, we do not want to bring automatic enrolment into disrepute. We do not want firms to be required to do things that are not common sense, that have a cost to the firm, perhaps create hassle for the individual and are unnecessary, and we always envisaged that the exceptions would be limited in scope.

When we first discussed the provisions, the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont) got very excited about the Beecroft report and he called this the Beecroft clause and thought that we would use it to drive a coach and horses through auto-enrolment, exclude small firms and all the rest of it. We assured him that that was not our intention, but I sense that he did not believe us. In another place, we have chosen to make it clear, through amendment 4, that this power cannot be used to exclude an employer on the basis of size, whether that is the number of employees, turnover, VAT liability or whatever. It was never our intention to exclude these people. Faced with the ongoing, almost universal cynicism of the Opposition, we thought it best, for the avoidance of doubt, to put that in the Bill.

The hon. Gentleman sought such an amendment earlier in our proceedings, but we chose to do this in a cleaner and more precise way, simply so that people can be confident that the Government believe that automatic enrolment is—dare I use the phrase?—for the many, not the few. The process continues right down to firms that employ one person. Just because not many others work with someone, does not mean that they do not need to have a decent pension. We do not think that anyone should be excluded.

We accept that there are costs and burdens to small firms undertaking automatic enrolment, but we believe that the best way to address those is through amelioration measures of the sort that we have taken rather than by excluding them. For example, the National Employment Savings Trust is there to enable small firms to have somewhere to go to that has a public service duty to take their business, that has been designed with smaller firms in mind—obviously it is a significant provider at the larger end of the market—and designed to be easy to engage with for people who do not speak pensions, so it is jargon-free.

We have taken a number of other measures to ameliorate the position for smaller firms. For example, we have changed the phasing of the roll-out of auto enrolment so that those that employ 50 or fewer will, in general, not have to auto-enrol until at least June 2015, or, in some case, a good while after that. We have introduced a waiting period of up to three months, which again will help smaller firms. Crucially—I know the Opposition have objected to this—we have raised the trigger threshold to £10,000 a year from April 2014, which will mean a small firm employing perhaps one person on £7,000, £8,000 or £9,000 a year will not have to go through automatic enrolment. We believe that all of those measures are better ways of helping smaller firms than simply some sort of blanket exclusion. Therefore, amendment 4 makes it clear that that is not the way that we propose to proceed.

I will come back to the amendments on charges, because I think that that is the area of principal difference, and deal now with the other amendments in the group where there might be greater agreement. Amendments 28 and 29 relate to automatic transfers and what happens when somebody leaves a firm, leaving behind a small pension pot. We envisage that any pension pot of less than £10,000 left behind would fit our definition of a small pot. Their lordships debated whether our proposed model of automatic transfers, where the pension pot by default follows people as they change job, was the right model, or whether an alternative aggregator model—a home of lost pots model—would be a better bet. There was a high-quality debate where arguments were carefully made on both sides, and their lordships, by a large margin, with considerable Cross-Bench support, backed the Government’s position on this measure. So we will move ahead with our proposals for pot follows member, but we have to get the framework right to ensure greater consolidation. The Bill will provide that framework. Pot follows member will reduce the number of people with five or more dormant pension pots from one in four under the current system to one in 30. Our focus now is to work with employers, providers and consumer groups to deliver a safe and secure system.

It is clear that we should try to use the existing infrastructure where possible, including the existing PAYE system. As I told the House at oral questions on 24 February, we are working with our colleagues at HMRC on that. In addition to expenditure incurred by the DWP, amendment 29 extends the provision to allow any specific costs incurred by HMRC to be met from the general levy, which is the levy on pension schemes. If we go down that route, which incurs costs—we are finalising it at the moment, so this is an enabling power—HMRC will be able to recover them.

One of the attractions of going down that route is that if HMRC already holds data on the jobs that people have had, for example in the previous 12 months, and could also hold matching data on the pension schemes of which people were a member, it would be ideal to look at existing data sources. However, we have to do a full cost-benefit analysis internally. For example, a new pension scheme might be able to look at the member’s previous employers over the past 12 months and at other pension schemes of which they were a member. The new scheme could then contact those schemes, check for stranded pots and pull them across by default, unless the member objected, and the costs could be recovered from the general levy under Lords amendment 29.

Lords amendment 28 is a technical change designed to clarify that the automatic transfer provisions can apply to those who are not yet in receipt of their pension but are eligible to have access to their benefits—that is, those who are over the age of 55.

The next set of amendments relates to the Pension Protection Fund compensation cap, which we introduced during the course of our proceedings in this House. We said at the time that it would be necessary to complete the primary legislative framework in the House of Lords, and that is what we have done. Lords amendments 32 to 34 provide further detail on how pensionable service, for the purposes of the cap, is to be determined in specific circumstances, such as when a person is a member of two separate but connected schemes.

I will explain why that is important. The change we have made to the Pension Protection Fund cap is designed to help people who have given long service. The cap prevents people from getting very high levels of Pension Protection Fund compensation and is designed to exclude in particular some of the high earners who might have been involved in decisions about the future of a company. It also captures people who are not gratuitously rich, but who have built up a substantial pension, perhaps through working for one employer for their entire working life. We do not think that the cap was ever meant for such people, so we have provided that, beyond 20 years, it should be increased at a rate of 3% per additional year. The definition of the length of pensionable service is important, which is why Lords amendments 32 to 34, which tidy that up, are necessary.

Lords amendments 37 and 38 deal with the application of a cap during the assessment period and wind up. They provide for the valuation of scheme liabilities if the scheme is in assessment when legislation is commenced. The valuation will continue to be based on the current cap, although members of such schemes will be paid using the new cap during the assessment period. The amendments also provide for schemes winding up when the legislation is commenced. They will allocate assets based on the current cap.

Lords amendments 35, 36 and 38 clarify details such as the transitional provision to be made for those who share compensation following divorce. The policy for people with a pension in their own right and a pension based on a pension-sharing order is that each is kept separate and capped separately. This is to the benefit of members. The Pension Protection Fund has been applying the current cap in this way.

Finally on the PPF cap, Lords amendments 10 and 17 deal with the change to the application of the existing cap on compensation from two sources of pension and bring legislation in line with policy and practice. The current legislation assumes that the cap is applied after the amounts are added together. Amendments 10 and 17 amend the legislation so that it reflects current practice, and this will apply retrospectively. As I have said, that is to the benefit of members.

Lords amendments 11, 15, 16 and 18 relate to the Public Service Pensions Act 2013. In layperson’s language, the amendments allow consolidation of schemes without loss of transitional protection. The 2013 Act reforms public service pension schemes and provides for transitional protection from that reform for members of public service pensions who were less than 10 years from their normal retirement age in April 2012. The Act also stipulates that, for the larger public service schemes, the individual needs to have been a member prior to that date in order to be eligible for that protection.

Lords amendments 11, 15, 16 and 18 create exceptions to that rule to allow members of smaller public service schemes to be transferred into a larger scheme without losing their transitional protection. The Government’s intention is to seek to make administrative and management savings by consolidating smaller schemes into larger ones. The amendments mean that that can happen with no impact on members’ benefits.

Finally, the substantive set of amendments are those led by Lords amendment 9 which relate to charging. Obviously, this is a contentious issue. We believe that their lordships have improved the Bill and we will urge the House to accept their amendments.

Making automatic enrolment work is not just about the employer duty; it is about ensuring that people are enrolled into high-quality schemes. I want to be absolutely clear, because no doubt there will be a lot of hand-wringing from the Labour party on this issue. When the previous Government put in place part of the necessary legislative framework for automatic enrolment, they put in place no quality standards at all for auto-enrolment schemes, bar the requirement to have a default fund—just to have one; there was nothing about charges or quality—and a minimum employer and employee combined contribution. It is pretty shocking that the previous Government thought it was good enough to put 10 million people on workplace pension schemes with no consumer protection at all. When hon. Members hear what the Labour shadow spokesman—the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East—has to say about this issue, they will imagine that Labour has somehow been riding to the rescue of the consumer. However, they should remember that when the legislation was first passed it was done with no regard, as far as I can see, for the position of consumers. There was no action on charges, no action on small pots or, to be frank, no action on anything.

The coalition Government are committed to ensuring that schemes provide good value for money and are well governed. Lords amendment 9, therefore, deals with the transparency of costs and charges, which we believe is vital for good scheme governance. We already have powers to require disclosure under the Pension Schemes Act 1993. However, for the avoidance of doubt, amendment 9 places a duty on the Secretary of State and the Financial Conduct Authority—I will come back to that, because it is an important point—to require the disclosure of costs and charges. The charges to be disclosed will be set out in regulations, and rightly so.

On amendment (a), the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East wants to put in primary legislation a shopping list of the charges he can think of. I think the House will immediately see the flaw in that. The hon. Gentleman would be the first to say that the financial services industry has been known to be creative—if we ban something, it will do something else—so what is the point of putting in primary legislation a list of the charges he can think of, saying that they should be disclosed and then adding, “and anything else”, on the end? Clearly, there could be a new category of charge at any point and we do not want to be governed by having to pass a new Act of Parliament every time there is a new charge on which we want to take action. We think that the charges to be disclosed should be set out in regulations because that approach gives the Government maximum flexibility to respond to a fast-moving market. That is why we do not agree with amendment (a).

Under Lords amendment 9, the duty is placed on both the Secretary of State and the FCA, which reflects the dual regulation of pensions and means that the FCA will consult on how and what to disclose, but not if costs should be disclosed. One of the many problems with the Opposition’s amendment (a) is that it would remove that duty from the FCA. I do not know whether that is accidental or deliberate. The amendment would leave the power solely with the Secretary of State, but with none of the sanctions available to the FCA. Just to be clear, amendment (a) would take the duty to consult on how and what to disclose away from the FCA and give it to the Secretary of State, but the Secretary of State does not have the powers that the FCA has. To be frank, that is a muddle. I know the Opposition will vote for their amendment because they tabled it and they want to make a point and tweet about it, but the substance of the amendment, even in terms of what the Opposition want to achieve, is deeply flawed, because it would take a duty away from a body that has a power and give it to the Secretary of State, who does not have that power.

I usually sound grateful to the hon. Gentleman for his interventions, but I am not sure I am for that one. There is a bit of a pattern here. Labour has already called one vote on an amendment that was flawed, but it decided to vote for it anyway in order to make a point. I am explaining why amendment (a) is flawed, even according to the terms of what the Opposition want it to achieve, and it is obvious that the message has hit home, given the tenor of the hon. Gentleman’s response.

On the charges that will be outlined later and the requirement for them to be disclosed, how does the Minister envisage that process being taken forward? Will there be a consultation? Within what sort of time frame does he imagine the charges being outlined?

I am grateful to my hon. Friend who, as chair of the all-party group on pensions, has great knowledge and expertise on these issues. We need to take forward the matter in partnership with the FCA. As he knows, the Pensions Regulator regulates defined benefit and occupational defined contribution schemes, while the FCA works on group personal pensions, for example, but we want to make sure that, as far as possible, parallel regulations apply to both. We will, indeed, consult on exactly what should be included. We certainly want to get a move on with it all, so we will move as fast as we can, but we want to do so in partnership with other regulatory bodies. I hope that that offers him the assurance he seeks.

We are working out how best to publish the information. Some have suggested that we should just bung it on a website. We obviously want meaningful information, not just to have tens of thousands of pension schemes recording vast amounts of data. We think that it is most important to make the information available first to the fiduciaries in any scheme—the people, whether the trustees or the independent governance committees, who act on behalf of scheme members—and that members should have the information in meaningful form, not just pages of gibberish. We have all seen how information that is required by law to be sent to scheme members can turn out to be more or less useless, because nobody ever reads it. We therefore have to think about the right formats in which to supply information to fiduciaries and to scheme members, and the right way to make the information public, and we are thinking that through at the moment. Disclosure on its own is not enough; powers in the Bill will allow the Government to regulate to control charges and to require minimum standards of governance.

A further ambiguity or slight inconsistency in amendment (a) is that it specifically requires the Government to restrict “transaction costs”. The hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East may want to intervene, because the Opposition have previously said that transaction costs should not be part of a cap, certainly at this stage. We therefore assume that it is a drafting error but if their position is now that transaction costs should immediately be part of a cap, perhaps he can explain why he has changed his mind.

Lords amendments 7, 8, 30 and 31 remove references to work-based schemes, which will allow us to extend the powers to closed schemes. That is important, because a legacy scheme review of old, closed and other schemes is currently taking place, and we will need a legislative route if it is necessary, following the voluntary approach of the Association of British Insurers, to review high-cost and legacy schemes. Finally, amendment 14 means that regulations under the powers will be brought forward as soon as practicable, which follows a recommendation from the Delegated Powers and Regulatory Reform Committee, and ensures that the regulations will be affirmative on the first use. Our full response to our consultation on such matters will be published soon.

This is another group on which we urge the House to agree with their lordships in all their amendments. The Lords amendments will make automatic enrolment work better, particularly for defined benefit schemes; ensure that small employers are not excluded; allow HMRC to recover the costs of pot follows member, if we go down that route in relation to involving HMRC; make the PPF compensation cap work; ensure that protections for public service pensioners are properly implemented; and implement the changes made in another place to require the disclosure of information, particularly on transaction costs. All the Lords amendments make the Bill better. I commend Lords amendment 4 to the House.

I rise to speak to amendment (a), but let me start with Lords amendment 4. In Committee, the Opposition argued strongly that clause 37, as drafted, was far too widely drawn and left a possibility that those with an agenda to exempt smaller businesses from auto-enrolment could do so. We therefore welcome the Government’s concession. Among the Minister’s rather curious language, he said that I “got very excited” and that there was “almost universal cynicism” from the Opposition, but within that odd framing he has actually accepted what we said in Committee. That is very welcome, because it makes the Bill better.

Let us think about amendment (a) in the context of the wider debate. The issue of costs and charges for pensions has shot up the political agenda for obvious reasons. If the Government are enrolling millions of people into a pension scheme for the first time, they had better make sure that the schemes are all value for money.

I agree that the Government had better make sure that the schemes are value for money. Why, therefore, did Labour not legislate for that when it could have done so?

The Minister made that point in his speech, as he has done repeatedly, and he has now put it on the record again. Let me pick him up on something he said. In what has become his quite common style, he suggested that it was rather peculiar to give the Secretary of State powers to ensure that transaction costs are disclosed. However, he must be aware—in fact, he alluded to this—that the FCA already has powers to require transparency of transaction costs, but has never exercised them. Making the Secretary of State responsible does not mean that the Government should not use the FCA’s expertise. Indeed, the Government’s amendment states that the Secretary of State must consult the FCA when setting transaction costs for those pensions over which he wishes to retain responsibility, so why could the same model not be maintained for contract-based pensions? Of course it could be so maintained.

On the Minister’s suggestion that it is somehow peculiar in his world to list the transaction costs that must be disclosed in amendment (a), I have to tell him that we used Lord Lawson’s amendment in the House of Lords, where it was commended by Members on all sides, including by the Government spokesman, Lord Freud. [Interruption.] The Minister is mumbling, but he suggested that the amendment was peculiar, although Lord Lawson’s amendment was along exactly the same lines. I am afraid that the Minister is disagreeing not just with the Opposition, but with Government Members.

Let me say a little about our additions to Lord Lawson’s list. I make it very clear that our list of transaction costs is the same as that tabled by Lord Lawson in the Lords, with two additions—transaction costs in underlying funds; and interest on client cash balances or profits from stock lending retained by the fund manager. The reason for including such additional transaction costs is that it needs to be strongly signalled to the body setting the rule—whether the FCA or the Secretary of State—that those items should be declared.

Let us remember that the Investment Management Association has deliberately failed to include those items in its draft statement of recommended practice. Amendment (a) should be discussed in that context, not the diversionary trail thrown up by the Minister. It is important that transaction costs in underlying schemes are disclosed because a transparency regime can otherwise easily be bypassed by any fund manager that operates multiple funds. The fund receiving moneys can simply use them to purchase units in another house fund. The IMA SORP recognises that the fixed charges in underlying funds should be reported, but it fails to apply the same principle to transaction costs, which is why they are laid down in the amendment.

The House should be aware of the wider context. The Government have previously left it to the fund managers’ trade association to decide what, if any, transaction costs should be declared. The IMA has put forward a draft statement of recommended practice, which would require fund managers to declare some transaction costs in their annual accounts. The SORP must be agreed by a Government quango called the Financial Reporting Council. The concern that the SORP failed to include significant types of transaction costs led a cross-party group of MPs and peers to write to the FRC to say that it would be inappropriate for it to agree to a statement of transaction costs that omits significant types of transaction costs. That was widely reported at the time. It is common knowledge that a number of critical submissions were made to the FRC. Unusually, those submissions were not released at the end of the consultation period, and we still await them.