My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved accordingly, and, on Question, Motion agreed to.

House again in Committee on Amendment No. 130EW.

[The CHAIRMAN OF COMMITTEES in the Chair.]

moved, as an amendment to Amendment No. 130EW, Amendment No. 130FG:

I am happy to tell the noble Lord that I agree with him about the importance of consultation with the groups that he is concerned about. I am happy to accept his amendment in principle. Perhaps we can work on the drafting before Report stage. I also gave positive responses to the noble Lord’s amendments, Amendments Nos. 130FC and 130FD. With hindsight, I could probably have been even more positive. I should like to clarify for the noble Lord that I believe we can also accept these two amendments in principle. Again, I should like to work with him on the technical drafting over the summer.

I am delighted to hear that and am very happy to withdraw the amendment.

Amendment No. 130FG, as an amendment to Amendment No. 130EW, by leave, withdrawn.

[Amendments Nos. 130FH to 130FK, as amendments to Amendment No. 130EW, not moved.]

I apologise for that confusion; it is a rather difficult area. Those few noble Lords who have taken an occasional interest in this Bill may well have wondered what was going on yesterday. It was rather like a pugilistic event between the two Front Benches for most of the time. We had hoped that, following our debate on Monday, the Minister would have withdrawn this amendment, but he chose not to do so. As was noticed yesterday, we spent some considerable time in Committee debating further what could have been transferred to the more productive environment of the DWP consulting in earnest with those who have briefed us. On consultation, I, like my noble friend Lord Lucas, was delighted by the Minister’s response to the previous amendment.

We accept the Minister’s assurances that the department will now consult further and hope that that consultation will be broadly based, and not simply with those who agree, wholly or in part, with what the Minister certainly gave me the impression were the Government’s settled views. I also hope that the Minister will brief us and colleagues on the Liberal Democrat Benches in good time before Report stage commences. That is shortly after the Summer Recess. My noble friend Lady Noakes said on Monday that the consultation document did not make it clear that the Government were consulting on such a sweeping power as the one contained in Amendment No. 130EW. The word “draconian” springs to mind. In response, the Minister said that,

“it is pretty explicit in paragraph 1.38 of the consultation document”.—[Official Report, 14/7/08; col. 1087.]

That confused me, for one. I think the Minister intended to refer to paragraph 1.40, not 1.38. That paragraph says:

“The Government … proposes to take a regulation-making power which is sufficiently broad-based to enable amendments to be made to ensure that the Regulator has effective powers to deal with … innovation in the market, and to make sure that the effect of the powers is clear to all the parties in the market”.

The consultees would, in my view, have concluded rightly that what the Government would legislate for bore some relation to the specific issues discussed in the remaining 40 pages of the consultation document. Instead, Amendment No. 130EW takes the widest possible power to make the largest possible number of changes, potentially with infinite retrospective effect. This is part of the problem with the consultation, and one that the Government simply must address. The power needs to be much more tightly drawn.

The Bill depends crucially on consensus that the contents of Part 1 are the right way forward. The amendment that we have been debating for, it seems, days—although I suppose it is hours—is not, strictly, part of that consensus. The high-handed way that the Government are handling their own amendments to this Bill is not conducive to consensus holding on the wide range of concerns that we still have about Part 1. In particular, we are far from satisfied that the personal accounts project can be delivered on time at an acceptable cost to members and without taxpayer subsidy. We will return to those issues on Report. Our enthusiasm for consensus at that stage will bear a direct relationship to the way that the Government are prepared to address the outstanding issues. It would have been an act of good government for the Minister to have withdrawn his amendment so that his department could commence discussions on an open basis with all—I repeat, all—the interested parties. Instead, by pressing their amendment, the Government seek to go into any such discussions with the whip hand of having the amendment as part of the Bill. That, as I have said before, is a disgraceful way to legislate, especially as Ministers know in their heart of hearts—in fact, rather more than that, because the noble Lord has just said that he will consider favourably some of my noble friend’s amendments—that what is being bludgeoned into the Bill today will be amended before it reaches the statute book.

We have thought long and hard about this. If we were to press Amendment No. 130EW to a Division today, we would run the risk of failing to achieve a satisfactory resolution during the remaining stages of the Bill. Whoever won the Division, the House would have expressed an opinion that would make later changes more difficult or perhaps even impossible. We on these Benches are committed to responsible opposition. In the interests of achieving the right result in the end, we believe that we should not erect procedural barriers to amendments on Report. On that basis, and with a very heavy heart indeed, I shall not be seeking to divide the Committee on this amendment.

I hope that the noble Lord will agree that what we have had over the past few days is a series of important debates with some excellent speeches that have raised genuine concerns. I hope also that I have been able to reassure noble Lords on a number of issues. It is fair to say that as a result of these debates we are all largely heading towards the same place. I detect that there is broad agreement that the Government need to take action to address emerging issues. I have made it clear that over the summer we will have discussions with those noble Lords, in good time as the noble Lord requests, who have shown a keen interest in these issues to ensure that we can develop the legislation in a way that strikes the right balance. We will engage with stakeholders, including the CBI and the BBCA, to work closely with us on these very important issues. We need to use the relatively short period of the summer to work on how we can best achieve the policy intent set out in April.

The risks are real and there is a need for the Government to act on them. Our amendment sets out our intention to make changes to anti-avoidance legislation to tackle these risks. On that basis, I urge noble Lords to accept the amendment. Having said that, I am grateful to the noble Lord for indicating that he will not resist it, and I understand his comments on how this has come about.

On Question, Amendment No. 130EW agreed to.

[Amendments Nos. 131 to 133 not moved.]

moved Amendment No. 134:

The amendment moved by the noble Lord, Lord Skelmersdale, seeks to make the Government announce in Parliament their intentions with regard to the start date for earnings uprating of the basic state pension within six months of the provisions of this Bill coming into force. Let me begin by stating, as I have done already in earlier debates in Committee, that the Government have clearly set out their commitment to introduce earnings uprating. We gave this commitment in the May 2006 White Paper, which first set out our proposals for pensions reform. I assure noble Lords that we will honour that commitment.

Restoring the earnings link is fundamental to our forward plans for the pension system. It is the bedrock on which our reforms are built and we recognise that there is interest in finding out when it will happen. Our objective is to do this from 2012, subject to affordability and the fiscal position, or in any event by the end of the next Parliament at the latest. This timing strikes a balance between maintaining affordability of our overall package of reforms, yet tackling the challenges identified by the Pensions Commission. We have said that we will make a statement on the precise date at the beginning of the next Parliament.

The noble Lord’s amendment would require the Secretary of State to make an announcement regarding the timing of the earnings link within six months of the provisions of the Bill coming into force. That would be at least three years before 2012. It would not allow the Secretary of State further time to take account of affordability and the fiscal position before announcing when earnings uprating will start. It is sensible to retain the current arrangements to review the timing of the earnings link with due regard to affordability if the prevailing economic conditions closer to the time look uncertain.

We will make an announcement early in the next Parliament, and the Pensions Act 2007 commits us to making an order before 1 April 2011. Section 5 of the Pensions Act 2007 requires the Secretary of State to make an order identifying the designated tax year—the first tax year in which a review with regard to earnings will take place—and earnings uprating will start the following year. We have legislated to restore the earnings link to the basic state pension to ensure that it happens. We have put that commitment on the face of the 2007 Pensions Act to provide certainty. We do not think that stipulating the timing of an announcement to be made to Parliament about our intention to restore the earnings link in the way proposed by this amendment is necessary. We have given as much commitment on this as is reasonable and prudent, and therefore I ask the noble Lord to withdraw this amendment.

I will say in reply to the noble Lord’s assertion that if his party was in government at the moment, the earnings link would be restored, that I can presume he will give us a precise date as to when in the event, in my view unlikely, that his party returns to government, they would restore the link. Can we have certainty from the noble Lord, if he is seeking to press us on the issue? However, we have made our commitments very clear and I would ask him to withdraw the amendment.

Never being one to resist a challenge, I can tell the noble Lord that rather than by the end of the next Parliament, it would be early in the next Parliament, should we win the election. That is why, despite all the assurances and the long timescale of those assurances, I do not think that what the noble Lord has been telling us, not once but several times during the course of our deliberations because the matter has been raised on other amendments, is sufficient. It is one thing to be reasonable and prudent, but it is quite another to be as vague as the noble Lord has been over this.

Perhaps the noble Lord will permit me to intervene. He said that his party, given the chance—although I do not think that that will happen—will see to this early in the next Parliament. Would that be before 2012?

It depends on when the election is called. I wish to seek the opinion of the Committee.

moved Amendment No. 134ZB:

I am pleased to lend my support to my noble friend’s amendment. It is a small but important change that would be helpful to a number of low-paid, low-income women. When I was listening to the example that was given, the words “daylight robbery” came to mind. We have people on low income who, at a time in their lives when they feel that they may be able to save for a pension, put money into a pensions pot but then, due to lifestyle changes, cannot continue to pay and never feel the benefit of that hard-earned money. As it stands, that is extremely discriminatory. It is discriminatory in another way, too: if the individual had been an employee in an occupational pension scheme, they would have been in an entirely different position and would have felt the full benefit of their contribution into the fund.

The amendment impacts on some of the poorest people in our community who want to do the right thing. They do not want to fall on the state. When they have been able to afford to pay something into a pot for retirement, they have done so. Yet in that process, because of their life circumstances, they could lose hard-earned money. They would have been better off putting it in the bank, for instance, than into a pensions pot.

I have great pleasure in supporting the amendment. I will listen with interest to the Minister’s reply. I hope that he gives us some reason to hope that, when we return to the Bill later in the year, this is one area on which we will be able to get a yes.

I add our support to the amendment so ably introduced by the noble Baroness, Lady Hollis. The key thing that she said is that there are pots of money that the industry wants nothing to do with. She has done the Committee a great service in reminding us of that, as the problem is getting worse. It affects the lowest-paid households in our community and it needs to be addressed. It cannot be beyond the wit of man for the Government to come to some accommodation with the industry, which self-confessedly does not want to get involved in de minimis—so far as it is concerned—levels of money that are none the less hugely important to the people who have these stranded hairdressers’ pots, as was so eloquently argued by the noble Baroness. For the life of me, I cannot see any reason why, with a bit of effort and good will, we could not get some kind of solution along the lines that the noble Baroness has suggested.

I, too, have sympathy with the noble Baroness’s amendment, which would move the pensions savings regime in this country a little closer to the flexible model that we would like to see. Giving pensioners more control over their retirement would add an incentive for them to save more over their lifetime and would benefit many as the concept of working life becomes less clearly defined, especially as one approaches retirement age, whenever that is.

The Committee may remember that the Minister answered a Question on that subject on Monday. The Pensions Act 2004 allows anyone over state pension age to continue paying national insurance contributions up to the age of 70 and thereafter to commute this extra sum into a lump sum as an alternative to an increased weekly pension. I am sure that the noble Baroness remembers discussing that. Therefore, for the noble Lord to say, as he did at Question Time on Monday, that the Government encourage people to work beyond 70 is somewhat erroneous. Be that as it may, the interesting thing about commuting a full five years of the end-of-life state pension is that it amounts to about £25,000. I wonder whether that is why £25,000 is mentioned in the noble Baroness’s amendment.

We have discussed numerous times the impact of a more fragmented working life on people’s pension pots. The inconvenience and unnecessary administration costs of multiple small pots rather than fewer large pots are, I am sure, fully appreciated by the Government. If they are not, they jolly well ought to be. The changes over the past few years to increase the portability of small pensions were very welcome and I see the possibility of raising the commutation limit in much the same spirit. However, I would have preferred it if the noble Baroness and the noble Lord had not mentioned hairdressers’ small pots in connection with £25,000; I think that they would rarely have such a large pot.

I support the amendment. I was attracted by the idea when it was raised earlier. Given that more and more people of both sexes now take jobs for short periods and then move on, this would be a fitting measure. If a female hairdresser manages to put aside a quarter of her pension savings, even before she has children or has to look after a grandparent or a parent, that is even more reason to think of all the money that the state saves through people undertaking such caring responsibilities. Like the noble Baroness, Lady Hollis, I prefer not to cap the total funds, particularly as we are talking about relatively small sums. I also like the possibility of moving the sum—whatever it is—the other way into a different, and no doubt existing, pension scheme that is already in the hands of insurance companies. That way, the companies might not feel quite so threatened as apparently they do by some of the plans that are being put forward.

I thank my noble friend Lady Hollis for raising this important issue, which is clearly supported across the Committee. I shall confine my remarks to stranded pots, which is the substance of the issue to which she spoke.

We have made clear our commitment to banning pension transfers into and out of personal accounts. As the Committee will be aware, this prohibition is designed to minimise the impact on the market caused by the scheme’s introduction in 2012 and to ensure that the scheme remains focused on the target market of low to moderate earners. The transfer ban is designed to promote simplicity for employers, individuals and the personal account scheme, as transfers can involve complex financial decisions and processes for all parties. We recognise, however, that some personal account members at the point of retirement may wish to consolidate their pension savings into a single vehicle and that the transfer ban could complicate their arrangements.

I am sympathetic to my noble friend’s concerns that the personal account scheme should facilitate ways to maximise retirement incomes. I should like to examine our approach to those individuals with stranded pots that are too small to be economically attractive to annuity providers but when combined with the value of other pension funds are not eligible for trivial commutation. Allowing individuals in this scenario to transfer their personal accounts funds to and from the scheme could promote the consolidation of pension saving while keeping with our commitment to focus the scheme on the target market.

I assure my noble friend that the scheme order with regard to transfers in and Clause 111 with regard to transfers out provide us with sufficient flexibility to legislate if we decide that these exceptions should apply. We would like to discuss this issue with stakeholders over the summer in advance of developing the likely content and approach for the secondary legislation, the scheme order and the non-legislative scheme rules for a public consultation in March 2009. I am therefore confident that we can make progress on this issue. With those assurances, I hope that my noble friend will not press her amendment.

I thank the Committee. It is always a pleasure—and not just for political reasons—to get such warm support for an issue on which we all recognise that injustice is being done to people who can least afford to lose their modest savings, as my noble friend Lady Dean so eloquently put it. I am glad that the Minister respected the fact that the Committee fully supports finding a way to move forward on this issue without necessarily circumscribing the way in which he should do it.

I also thank my noble friend and the staff who have worked hard on this issue—this is essentially an HMRC rather than a DWP issue, which I think is why it was uncovered relatively late—for the positive and constructive response. However, does he expect, or wish for, the trigger of a probing amendment on Report so that he can tell the House what the arrangements will be? I realise that the Summer Recess is approaching and that he will be exploring a lot of other issues, but I am sure that he has no intention of allowing this to be lost in the short, long or distant grass. None the less, I hope that before I withdraw the amendment he can advise me whether he would welcome a probing amendment on Report so that we would all know whether the Government have managed to move the debate forward over the summer.

I always welcome amendments from my noble friend. Irrespective of whether they are forthcoming, I shall ensure that we stay in touch with her as this issue develops over the next couple of months.

I am grateful to my noble friend. I shall take advice on whether I need to table an amendment or whether it would be better for my noble friend to send a letter to noble Lords at the end of the summer, which would do just as well. I again thank noble Lords for their support for the amendment, which I beg leave to withdraw.

Amendment, by leave, withdrawn.

moved Amendment No. 134ZBA:

With these amendments, the noble Lord raises the relationship between transparent decision-making and effective regulation. This issue was discussed by the Public Accounts Committee in another place recently, and the Government and the regulator recognise that there is an important balance to be struck.

The power to publish reports in Section 89 is a permissive power. It is for the regulator to consider when and in what circumstances to publish reports. When Parliament discussed this during the passage of the 2004 Act it agreed that this provision should be widely drawn to ensure that there are no restrictions on what the regulator is able to publish following an investigation. The regulator originally considered that, given the issues of confidentiality, it was better to approach this on a “publish by exception” basis.

The Public Accounts Committee recently considered transparency in reporting as part of its scrutiny of the Pensions Regulator. It found that the regulator should publish determinations to bring clarity and transparency to regulator decisions. There was no question that this process necessitated changes to statute. In response to the PAC hearing, since December 2007 it has been the regulator’s policy to publish determinations on issues reserved to the Pensions Regulator’s determination panel unless there is a good reason not to. It has published detailed determinations in some high profile cases such as the Sea Containers and Telent cases. This publication policy is in the public domain. The regulator recognises the educative value in publishing reports and now has a firm policy that it should publish in all cases other than by exception. All past determinations were recently published on the Pensions Regulator’s web pages.

I appreciate the intention behind the noble Lord’s amendment: providing as much transparency as possible in regulatory decision-making. However, it would make publication of reports mandatory and remove any exercise of judgment by the regulator on whether publication was appropriate. This additional administrative duty upon the regulator would not materially enhance its performance in the exercise of its statutory functions. It could constrain a regulator’s ability to depart from its published policy on the exercise of its functions even where justice and circumstances would otherwise require it, for example where there is a criminal investigation.

It would also require the regulator to publish even when it considered that the circumstances of the case made the parties affected identifiable, even with anonymisation. In the regulator’s experience, employers and the pensions industry would have serious concerns with this proposal. The information would be of a commercial nature and usually sensitive. Even in an anonymised form there is a serious question of whether corporates would want to share this with other parties. Many clearance applications relate to future corporate transactions, and, as such, parties often require stringent confidentiality on the facts of the case. In some cases clearance will be sought for transactions that subsequently do not take place. It is important that parties feel able to share all relevant facts with the regulator without concern that details of their business position or potential strategic moves will be published.

Such a mandatory requirement would undermine the industry’s trust in the regulator to maintain confidences, deterring potential approaches and interaction and generating uncertainty within the industry. This amendment would run counter to the regulator’s efforts to maintain the confidence of the pensions industry in maintaining confidential and commercially sensitive information. There is already transparency under the regulator’s current regime. The regulator provides both advisers and their clients—the applicants or trustees—with the detailed determination notices. These set out the reasons for the regulator’s intervention and provide advisers with a frame of reference about how the regulator operates.

On the second amendment, the Pension Regulator’s determinations panel procedures give the panel a power to direct how a hearing will take place, potentially including what documents should be shared. The amendment would go wider in scope than is intended. It would make that apply to all determinations, even those not made by the panel. This would make the clearance process virtually unworkable given the number of documents involved. It could result in clearance applications undergoing investigations taking several months and raise questions about which documents corporates would want to share.

I understand the noble Lord’s intentions, but there is a risk that such an approach could divert focus and resources from other areas that require regulatory action. As established and also under the Hampton principles, the regulator is risk-based, with the freedom to focus its resources on those issues that place members’ benefits or the PPF at the greatest risk. If accepted, the amendment could stifle the regulator’s ability to react quickly in clearance applications. Introducing these requirements on the regulator would simply constrain its flexibility to focus resources on key risks. It would be unnecessary unless the regulator considers the relevant information when making its decisions. Then such decisions could be open to challenge.

If it would help the noble Lord, I would be happy to facilitate the opportunity for him to meet with the Pensions Regulator to discuss his concerns in greater detail. Perhaps, with his colleagues and other noble Lords, he might find this a fruitful way of getting further into these issues.

The danger is that regulators become like Ministers in their need to justify themselves. Ministers do this by introducing legislation and subordinate legislation into Parliament, and there are occasions when the regulator does it by secrecy. Otherwise, if a body of case law, as referred to by my noble friend Lord Lucas, were built up, the regulator might have less of a job to do. People would know the direction in which he was acting. To allow the regulator to make his own decisions with little proscription through Acts of Parliament is a little suspicious. Should my noble friend accept the offer of a meeting with the regulator, I would like to join in to express these thoughts more fully to him.

I would be more than happy to facilitate the noble Lord’s involvement in that as well. Obviously it is not entirely my decision but I cannot believe it would not be possible.

I am grateful for what the Minister has said. He gave a full answer to my first amendment; I must go away, read it carefully and think on it. While I was less in agreement with what he said on the second amendment I will certainly be happy to follow the path he laid out and discuss these matters with the Pensions Regulator. I look forward to spending my holidays in such a blissful state. I must apologise to him that I am now going to desert the Committee to defend the honour of the Lords against the Commons on the river. I am sure he will manage the rest of the Bill without my help.

We will miss the noble Lord but wish him well in his endeavours later today.

I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 134ZBB to 134ZBD not moved.]

Clause 107 agreed to.

Clause 108 agreed to.

moved Amendment No. 134ZC:

Keen as I am—or rather, as I have been throughout the passage of this Bill—to consider the great raft of government amendments to which we have been exposed in a spirit of scepticism and questioning, the Minister will be relieved to hear that I find this amendment totally benign. However, I would just tease whoever drafted the Bill for needing to correct this mistake.

I am sorry; I did not quite get the noble Lord’s final stinging question.

Don’t worry.

On Question, amendment agreed to.

Schedule 8 agreed to.

moved Amendment No. 134A:

Our occupational pension system depends, in large, on trustees who play a vital role in the running of the schemes and looking after the interests of scheme members. The noble Lord was clear about that when he moved the amendment. However, it is not always the case that a board of trustees is equipped to deal with the challenges that it can face—collectively, it may not have the knowledge and expertise it needs, or a conflict of interest may arise that hinders the effective operation of the trustee board.

The Pensions Act 1995 provides the Pensions Regulator with a power that enables it to install trustees. These trustees may be existing members of the scheme or, where appropriate, independent trustees who are professional trustees and fully independent of the employer or any other interest in the scheme.

In another place, Clause 109 amended the Bill to replace the “necessary” test in Section 7(3) of the Pensions Act 1995 with one of reasonableness so that the Pensions Regulator could take action to appoint trustees where it is reasonable to do so. The noble Lord’s amendment, as he outlined, would reverse that amendment and retain the present “necessary” test.

The “necessary” test was introduced in the context of a different regulator and a different market environment. As we have discussed a number of times, particularly this week, developments in the pensions market are fast moving and the “necessary” test requires a burden of proof that is inappropriately weighted against regulatory intervention, even where that intervention may be the right and the most reasonable course of action.

We have seen recently how the regulator used this power to install independent trustees in a scheme whose employer had been taken over by a new organisation that sought to install its own senior staff as trustees and to manage the scheme’s assets in order to achieve returns to shareholders of the new organisation that appeared to place these new employer-appointed trustees in the position of an acute conflict of interest. This case is one example of the way that developments in the pensions market can be fast moving, and risks in the pensions environment can change quickly. It has become clear that the “necessary” test constrains the regulator, who may only appoint a trustee if he is satisfied that there is no other option available, and must act almost as a last resort. If regulation is to be effective, it must be sufficiently agile to enable swift intervention where there is justification. A “reasonable” test will deliver this. The test is well known in law and will provide the regulator with a less fettered power, while remaining transparent and proportionate. When using this power, the regulator will have to seek the approval of the determinations panel, and its decision in turn will be subject to appeal to the Pensions Regulator Tribunal, and subsequently to the Court of Appeal.

The noble Lord raised the issue of trustees and the Telent case. This has now been resolved to the satisfaction of all parties, and is an example of how developments in the pensions market can be fast moving, and risks in the pension environment can change quickly. In that case, the regulator was able to use existing powers to install independent trustees. However, it has become clear that the “necessary” test constrains the regulator, who may only appoint a trustee if he is satisfied that there is no other option available, and must act almost as a last resort, as I said earlier.

The CBI commented on these amendments when they were moved in Commons Committee on 19 February 2008:

“These additional powers were deemed necessary to ensure the regulator can effectively regulate against the new business models that have been developed in the non-insured pensions buyout market. The 2004 Pensions Act, which established the regulator, has been largely successful and any new powers must be used for the intended purpose only and not affect the majority of schemes and legitimate business activity”.

We certainly agree with that comment.

I hope that that explanation has satisfied the noble Lord and that he will withdraw the amendment.

I will withdraw the amendment, but I still have difficulty, not least with the Minister’s answer, which I will have to read with great care. I have difficulty because, as the Minister admitted, the Telent case did not need the “necessary” test. I accept that the “necessary” test is used in legislation covering another regulator. If the Minister could give me the reference at some stage—he does not have to do it now—I would be grateful.

There is no doubt that the regulator must have the power to remove trustees, either individually or as a block, in certain circumstances. We all agree on that. The question remains, how does he classify his judgment? Should it be “reasonable”, which has been defined in many cases on the statute book by the courts? I will look extremely carefully at what the Minister has said, and I will be particularly interested to read his—what will it be?—17th or 18th letter, with the reference to the legislation about another regulator. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 109 agreed to.

[Amendment No. 134B not moved.]

On Question, Whether Clause 110 shall stand part of the Bill?

I should mention my noble friend Lady Noakes, now we are almost at the end of the Bill, who apologises for not being here to grill the Minister in her inimitable way. Alas, she had another appointment.

My noble friend and I gave notice that we wished to debate this clause because of concerns that had been expressed about the way in which the regulator is potentially usurping the proper role of trustees when valuing the assets and liabilities of a scheme. It takes the regulator into areas of judgment that are properly those of trustees. The Government have described the need for this clause in the Explanatory Notes. Paragraph 306 on page 46 states that,

“doubt has arisen as to whether the Pensions Regulator can make use of the powers in section 231(2) if the sole ground of concern is that the actuarial methods or assumptions used in the calculation of the technical provisions do not appear to have been chosen prudently”.

Stated thus, Clause 110 seems unobjectionable. However, as is so often the case, what you read on the label does not fairly describe the contents. The amendment says nothing about prudence in the selection of actuarial assumptions. The regulator’s powers in Section 231 of the Pensions Act 2004, which are being amended by Clause 110, relate to the failure of the trustees and others to do certain things. The powers were not designed to be attached to judgmental issues such as pitching the regulator’s judgment about particular actuarial assumptions against those of trustees. The Government’s explanation of Clause 110’s amendment to this section does not tell the whole story.

I agree that the regulator should have appropriate powers. However, given the extensive parliamentary consideration given to the Pensions Act 2004, we should be wary of further extension without good evidence of need. The regulator has been consulting on guidance on actuarial assumptions, and this has sent shockwaves through those who still struggle to support defined benefit schemes. The regulator has signalled that he will “scrutinise”—this is code for something tougher—those schemes that do not use the long cohort for mortality improvement, or use underpinning improvement assumptions tending towards zero. I believe that I am correct in saying that most schemes at present use the medium cohort rather than the long cohort. This is a significant move, and one that has generated much controversy among pension providers; hence the need for this clarifying clause. The confusion that it is designed to clear up was the natural confusion felt by those who had no idea that the regulator should have the right to pronounce on judgments at this level, and who strongly resist such a move.

The decision on whether a long or medium cohort should be used is one of many that the trustees must make on the advice of their actuary. It would be wrong if the regulator was able to impose the choice of a long cohort, with no evidence that a risk-based approach will be used. The long cohort may or may not be the right route to follow, but the concern is that this will be imposed on a big-bang basis and produce huge shocks to the funding assumptions of employers. We know that the Government believe in a risk-based approach. The Pension Protection Fund is predicated on just such an assumption. However, there is no evidence that the regulator will apply a risk-based approach to forcing changes. The evidence from the consultation document suggests the reverse. Furthermore, the regulator intends to go back to March 2007, and could potentially unpick hard-fought agreements about recovery plans between trustees and employing firms.

This is the background to the additional power in Clause 110. The regulator has already moved beyond the basic approach that it is for the trustees to decide their actuarial assumptions on a prudent basis, and on the basis of actuarial advice. The regulator has various powers to back that up if the trustees are behaving improperly, including the power to appoint new trustees, which we have debated from time to time. Now the Government are seeking to give the regulator the power to overturn the trustees’ assumptions, even if they have been arrived at prudently on the basis of actuarial advice. It will be the regulator imposing the judgment over the trustees.

We fear that this is another nail being hammered into the coffin of the trust-based foundation of defined benefit provision. I shall listen with interest to hear whether the Minister can allay the fears that have been expressed by the CBI and some individual, large, defined benefit scheme employers. If this is another nail in the coffin of DB schemes, it cannot be the right thing to be doing.

I seek to allay the concerns of the noble Lord, Lord Skelmersdale.

Clause 110 addresses an issue which has arisen about the circumstances in which the Pensions Regulator can use its powers to regulate the scheme funding requirements for private sector defined benefit schemes.

Section 231 of the Pensions Act 2004 provides the regulator with a wide range of powers relating to the scheme funding requirements. They enable the regulator to take action, for example, where there has been a breach of the legislation, or where the trustees and the sponsoring employer cannot reach agreement on a key aspect of their scheme’s funding arrangements. Those powers include a power to specify the actuarial assumptions to be used in a valuation of a pension scheme’s assets and liabilities.

One of the key responsibilities of a pension scheme’s trustees is to decide what actuarial assumptions are to be used in an actuarial valuation of their scheme. Legislation specifically requires the trustees to choose those assumptions prudently. The regulator has recently faced resistance in cases where it has queried the extent to which the trustees have complied with the requirement to choose actuarial valuations prudently, and its power to act in those circumstances has been challenged.

The actuarial assumptions used in a valuation are absolutely critical in establishing a scheme’s correct funding position and in determining an appropriate level of employer and, if appropriate, employee contributions to the scheme. In short, the purpose of the clause is to ensure that the regulator can use its existing scheme funding powers where the assumptions chosen by the trustees do not appear to be prudent. It is necessary to ensure that the regulator can take appropriate action to prevent increased risks to the security of scheme members’ benefits.

The noble Lord referred to the regulator consulting on longevity assumptions. That is an important issue, and the regulator’s consultation has provided the opportunity for a serious discussion of the issues. The regulator has undertaken a full consultation and is taking seriously the views raised. It would not be appropriate to comment on the outcome, because that would prejudge the consultation, but it is clearly in all our interests that longevity issues are tackled effectively and that we do not store up ever bigger problems for another day. Equally, we are clearly committed to ensuring that actions across the system are appropriate and proportionate. I understand that the regulator expects to publish its response shortly.

The noble Lord also raised issues around whether the regulator would use this power to impose long cohort assumptions. There are no standard assumptions to impose. The regulator will ensure that a scheme-specific approach is taken, as should all trustees as part of ensuring prudent technical provisions. It will not impose a long cohort assumption.

The noble Lord referred to the Association of Pension Lawyers, and he will be aware that it has written to DWP officials about the effect of this clause. The association was concerned that the clause gives the regulator new, wide powers and that it introduces subjective considerations by the regulator for the first time. The APL is also concerned that the clause is being introduced without sufficient consultation. As I said earlier, the power for the regulator to direct the actuarial assumptions to be used in calculating a pension scheme valuation already exists. The clause simply ensures that the existing power can actually be used where the actuarial assumptions do not appear to have been chosen prudently by the trustees.

We do not agree with the suggestion that the clause introduces subjective consideration by the regulator for the first time. The regulator’s scheme funding powers can be used only where it appears to the regulator that there has been a breach of the legislation. The regulator must therefore already decide in each case whether it considers that such a breach has occurred. Similar powers also already exist in respect of scheme funding recovery plans. The regulator can intervene if it considers that the trustees have not taken account of matters such as their scheme’s asset and liability structure, its risk profile, its liquidity requirements and the age profile of its members.

The noble Lord also referred to the description of the clause in the Explanatory Notes. He may be aware that we acknowledge that the description of the clause in the notes that accompanied the Bill on its introduction could have been better expressed. There is an intention to update those notes in subsequent versions of the Bill. I hope that the noble Lord will be reassured by what I have said.

Perhaps I might respond to one or two of those points. I was well aware that there was a proposal to produce revised Explanatory Notes, but I am not sure whether they will be revised over the summer, or whether the notes will accompany the Act when it arrives on the statute book.

However, I had no idea that the description of Clause 110 was one of the revisions that was going to appear in that new document. I am grateful for that, and I am sure that the various stakeholders will also be grateful. Quite a lot of stakeholders are currently somewhat concerned. I will refer them to the Minister’s answer, so that they can give me further advice on this point.

If it would help the noble Lord, the information that I have is that we expect to update the notes over the summer, so they should be ready fairly soon.

I am very grateful for that, and there are plenty of people outside who will be even more grateful.

When defending the regulator’s decision to insist on long cohorts, the Minister talks as if the more prudence that is used in deciding actuarial assumptions, the better. That is at least a familiar argument. The Pension Protection Fund, which I mentioned in my opening speech in the clause stand part debate, insists that pension schemes are overfunded to 140 per cent before they can be let off the major part of the levy, regardless of the possibility that overpaying into a fund by that margin might actively harm the future prospects of a company. The same applies in this case. An overly prudent set of assumptions will mean that the company and the contributors will have to pay higher contributions than is necessary.

With no clear understanding of how a surplus is to be repaid, overpayment is most certainly not to the advantage of those involved. The question remains: who is the right person to look at each scheme individually and make a decision as to the correct set of assumptions that the trustees have made? I point out fairly forcefully that cohorts is only one of a number of assumptions that must be made on a case-by-case basis, using knowledge of the unique characteristics of the sponsoring company, the make-up of the contributors, and so on.

I am glad to have the Minister’s assurance, which I think I unravelled from his words, that the regulator will not enforce long cohorts. Have I got that right?

I stress the point that issues of prudence are fundamentally a matter for the trustees, but the regulator clearly has a role, and it will be dealt with on a scheme-specific basis. You have to look at all the factors.

That was not what I was asking. Was I right in understanding the Minister’s assurance that the regulator will not enforce long cohorts? I am sure that I wrote it down correctly.

Yes, the noble Lord is right in his understanding; that is what I said.

That is extremely helpful. None the less, we believe that the regulator is not the correct answer. If we continue down this route, we will end up with a one-size-fits-all definition of what every pension scheme will look like. Moreover, as I said, direct benefit schemes will continue on their downward spiral. As I said at the beginning, I will take advice on this. But I would be fairly surprised if we did not come back to this issue on Report.

Clause 110 agreed to.

moved Amendment No. 134C:

moved Amendment No. 136ZB:

I declare an interest as a trustee. First, when I was appointed as a trustee in your Lordships’ House, I was, to the best of my knowledge, appointed by the usual channels in this House, not the usual channels in the other place. Secondly, those who have most recently been appointed as trustees have had the most experience of pension funds. So although my noble friend is correct to say that such experience did not previously seem to be a requisite, the position has changed more recently.

I welcome my noble friend to the debate. He is indeed a trustee, and he is one of the exceptions among the 10 members of the trustee board. All the others, with the exception of Sir Graham Bright, are Members of the House of Commons. I exempt my noble friend from what I said about appointment through the usual channels in the House of Commons; he has obviously been appointed through the usual channels in the House of Lords. If that satisfies him, I am very happy to make the correction. But the point is that he was appointed. The point that I am making is that the conditions that apply to other pension schemes should apply also to our own pension fund.

My noble friend may well have his viewpoint, which many of us may share, but I would simply re-emphasise that I was appointed solely because I had been a trustee for a normal pension scheme which was certainly regimented. Although one of my noble friends shakes his head—he was, of course, at the Welsh Office when the Welsh Development Agency ran into trouble—that experience seemed relevant.

My noble friend seems to be extending the debate. If I may advise him, I would say that that is not necessarily totally in his interests. He may well have been a trustee of another pension scheme; it is not exactly a unique qualification in this House. I am taking it from the point of view of members of the scheme. The trustees are there to represent the members, so they should have the right to choose a certain proportion of them. I am not making a case against the present trustees; I have been careful not to do so. I strongly advise my noble friend not to provoke me or I may go down a rather different road.

My amendment proposes that at least one-third of the trustees should be not only nominated by the members but elected by them. If they were able only to nominate them, that would bring us back to the current position. Election is the proper way of doing it. The current position is that eight of the 10 trustees are serving Members of Parliament, appointed by the Whips; one, as we heard, is a Member of this House, appointed by the Whips here; and one has been nominated by the association representing former Members of Parliament—a step taken only recently, though it is a step. All of them are members of the scheme; there is no independent member of any kind on the trustee board. In other words, there is no truly independent member and no independent chairman. I emphasise that this is not a criticism of the current chairman, who has done a great deal to try to rectify some of the faults in the present system. I pay tribute to Sir John Butterfill for that. However, there is no independence.

I simply do not believe that anyone can seriously claim that this is a perfect position for a pension fund to be in, let alone a parliamentary pension fund, given all the requirements and conditions that we place on other pension funds. We debate and enact Bill after Bill to place conditions, restrictions and rules on outside pension schemes, yet we have a parliamentary pension scheme system that is antiquated and unreformed. I cannot imagine why we think that reform is right for outside schemes but not applicable to our inside parliamentary scheme. Why do we think it right to enact Bill after Bill that applies outside but not to us?

I should be grateful for the Minister’s guidance, because we are in a pretty technical area and I do not want to table an amendment that does not bring into effect the purpose behind it. I have tried to remove the exemption for the parliamentary pension fund which exists under current law, and impose the requirement that at least one-third of pension trustees should be elected by members of the pension fund. That is my case, which is exploratory at this stage. I am anxious to find out whether the amendment serves the purpose that I have set out. If it does not, we have time to change it before Report stage. The Treasury is at the centre of these arrangements; it rules rather than the trustees. I would like to find out how it sees or defends a position that many in this country regard as out of date. I beg to move.

In making my first intervention on this Bill, I declare an interest as one of those who was affected by the errors described by my noble friend. I emphasise, too, that the present chairman of the parliamentary pension fund has made strenuous efforts in recent times to improve the management arrangements. It was extraordinary that the Fees Office had no professional expertise, that the advice received from both the National Insurance Contributions Office and HMRC was wrong and that the errors were not spotted by the Government Actuary or the National Audit Office.

One of the consequences is that the 177 pensioners who were overpaid and the 100 who were underpaid have probably been dealt with less generously than they would have been in a private pension scheme. I feel pretty sure that, in the days when I was a trustee of private pension schemes, with an error of this kind, whose net cost was not substantial after taking account of tax implications and so on and which had occurred because of the lack of professional expertise provided by the employer and the actuary not having done his job properly, most employers would have covered the costs rather than expecting pensioners to repay overpayments at a time that was extremely painful for them to do so.

I need not go further on those matters, except to take up some of the lessons that I think were learnt from what happened after the errors had been discovered. The trouble was that there was no representative group of pensioners from whom advice could be sought or with whom consultations could take place. There were consultations involving the Leader of the House of Commons and an effort was made to bring in the Association of Former Members of Parliament. However, the association was set up relatively recently, after these errors occurred, and I have to confess that I did not know of its existence. It certainly has no specific pension role and cannot be taken to be representative of pensioners.

When I was last a pension trustee in a firm of which I was a director, we had elected pension trustees and we made a point of having an annual meeting to which pensioners could come to cross-examine the trustees and to receive advice about the way in which their pension fund was being managed, the investments were being made and so on. There was always a good attendance at those meetings.

When this episode occurred, no such meeting was convened. I first heard about it when I received a letter saying that my pension would be reduced the following month and that I would be asked to repay a quite substantial sum over the next five years. There were no detailed discussions to explain what had gone on. We then had to seek advice. I sought advice from, among others, the Pensions Advisory Service; my noble friend has read out from the advice the normal way of dealing with these things in private schemes.

It is entirely wrong that the parliamentary scheme should be living in the dark ages of pensions representation and administration in this way. It should set an example and give a lead; it should not have to defend the indefensible. Surely pensioners receiving benefits from the parliamentary pension scheme are entitled to be fully and adequately represented by people whom they have helped to choose. They should have the opportunity to nominate and, preferably, to vote on those people; they should not simply be represented by people who, however honourable and whatever efforts they may put into their work, are not chosen representatives.

I warmly welcome the proposals made by my noble friend to bring the parliamentary pension scheme into the modern age. They would make sure that the scheme is properly run and that the representatives of the pensioners are chosen in the way that is considered appropriate for all other pension schemes today. Anything else is indefensible. If the Minister has to say that there is a fault in the detailed proposals that my noble friend has put forward, I hope that he will come up with a solution that offers the members of the parliamentary pension scheme the kind of representation that they should have and which they probably could have if they were members of any other scheme operating under normal rules.

I should start by declaring an interest as a very modest member of the scheme. I thank the noble Lord for this amendment and for raising this important issue. I do not have any details in my brief about the background to the errors, how they arose and what was entailed, but I can see that there may be a way of taking this matter forward.

The Pensions Act 2004 requires occupational pension schemes established under a trust to have arrangements in place that provide for at least one-third of its trustees to be member nominated. However, as I am sure Members of the Committee will be aware, and as has been explained, the parliamentary pension scheme is covered by separate statutory provisions in the Parliamentary Pensions (Consolidation and Amendment) Regulations 1993. Therefore, the parliamentary pension scheme is exempt from the 2004 requirements.

As the noble Lord explained, his amendment would revoke this exemption and modify the requirement so that member-nominated trustees of the parliamentary pension scheme would be selected by a ballot of scheme members, rather than selected as a result of a process that involves some or all of the members as per the Pensions Act requirement. The existing provisions in the parliamentary pensions regulations arguably provide for greater involvement by members of the parliamentary pension scheme than those provided under the Pensions Act 2004. The parliamentary pensions regulations require all the trustees to be either Members of another place or former Members who are entitled to a pension from the scheme.

The particular point raised was that nominations are usually made through the usual channels. Last year, an appointment was made following a nomination by the Association of Former Members of Parliament. Sir Graham Bright was my old adversary in Luton South; he saw me off twice, regrettably, in 1987 and 1992, but I do not hold that against him. Appointments are made by order of the House of Commons. Members of another place may therefore effectively veto any appointments. I think that Members of the Committee will agree that, because there are separate statutory provisions, it serves no particular purpose to seek to apply the member-nominated trustee requirements in the Pensions Act 2004, which could create an unnecessary legislative complication.

If the noble Lord believes, as he clearly does, that aspects of the member-nominated provisions should be reflected in the parliamentary scheme regulations, perhaps the route forward is to seek to take them up first by making representations to the Leader of the House of Commons, who is responsible for those regulations. I am sure that the noble Lord, with his experience and standing, would be able to effect those arrangements and I would be very happy to work alongside him to do that.

There is a difficulty, of course, if this is done by changes in the regulations. Apart from anything else, if the new regulations came before this House, we would have no scope for amending them. We would have to take them as they stand. There are some difficulties in proceeding by that route.

At this stage, I am suggesting that, if the noble Lord feels able not to press his amendment, perhaps the first thing to do would be to see whether there could be some engagement with the Leader of the other place to raise these issues more directly. The noble Lord may be aware that a review of the parliamentary pension arrangements is in hand. The Leader in another place announced in a Written Ministerial Statement on 17 June—this was particularly because of the anticipated increase in the cost of benefits accruing under the parliamentary pension arrangements—that the Government would shortly be asking the Senior Salaries Review Body to undertake a major review of those arrangements. The review will need to consider among other things the findings of the Government Actuary’s valuation of the parliamentary contributory pension fund, which is to be completed in March 2009. It will perhaps be spring 2010 before the SSRB reports.

Speaking as a trustee, I know that one of the frustrations of the current trustees is the slow response that representations from trustees receive from the Leader of the House of Commons. While that route may or may not be appropriate, the speed of response is not acceptable. The Minister mentioned the Government Actuary’s assessment of the value of the fund, which is quite right. But it is now July 2008 and, as I understand it, the assessment will not be completed until March 2009 at best. Those time spans are detrimental to the trustees taking forward decisions. Perhaps my noble friend who tabled the amendments will remember that the current foundations were passed in 1993 when, if I remember correctly, a Conservative Government were in power. I am not sure whether both my noble friends were members of the Government at that time.

I certainly remember 1993 and the Conservative Government.

Let us cut out this ridiculous nonsense about whether it was a Conservative Government or a Labour Government. It is the first time that that has been introduced and it is a completely trivial point.

The Minister referred to the Senior Salaries Review Body, but surely that will not look at the structure of the scheme. It might consider the benefits and so on, but it is not going to look at the structure. It seems rather unnecessary—and, frankly, not relevant—to wait until it has reported. I cannot see what I am waiting for.

That is the point that I was going to make. I am a little unclear as to the remit of the SSRB, but I accept that it is more likely to be focused on benefit levels and financial arrangements than on the structure of the scheme.

The Minister has made a good offer—although it is slightly qualified by what the noble Lord, Lord Naseby, said—about having talks with the Leader of the House or making representations, however one wants to put it. Perhaps I could meet him, as a Treasury Minister, to express some of our reservations. That could perhaps run in tandem.

I am happy to be involved in that. I should stress that I speak as a DWP Minister these days; I used to do Treasury stuff in the Whips’ Office. I am sure that we can get the right officials around the table to explore these issues in more detail. Obviously it is outside my power to say how this matter might be taken forward but, given the concerns expressed, that would be a good first step. I am happy to commit to that, to facilitate engagement with the Leader of the House of Commons and, if communications have not been speedy enough in the past, to see what we can do to move them forward. I do not know where this might head at the end of the day—I cannot commit to that—but there is a real issue and I am happy to commit to working with noble Lords to see what movement we may be able to make. That is as far as I am able to go today.

I am grateful. I should say to the noble Lord, Lord Naseby, that I am extremely grateful for his contribution. It was no part of my intention to fall out with him, with the present trustees or with the chairman. I went out of my way, I hope, in my opening remarks to pay tribute particularly to the chairman. What my noble friend and I have been saying on the individual case is exactly the initial position of the trustees themselves. We are not concerned about individuals; we are concerned about the structure and about Parliament setting down regulations, rules and restrictions that apply to everyone else but, when it comes to its own scheme, saying that that would be going far too far. The answer to whether it was 1993, 1983 or 1973 is that the whole thing has moved on and we are getting into a much more modern and sensible pension structure. That is why the scheme should be looked at.

I am grateful for the manner in which the Minister has replied. My colleagues and I shall certainly take up the offer that he has made that, perhaps simultaneously, we should talk to the Leader of the House and, through his good offices, to Ministers on a way forward. On that basis, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clauses 112 to 114 agreed to.

moved Amendment No. 136A:

The Minister’s amendment to this Bill has, to a certain extent, been foreshadowed by an amendment tabled by my noble friend Lord Jenkin of Roding to the Energy Bill on 1 July relating to the sharing of information with the energy companies to help them identify those vulnerable to fuel poverty. The Minister has explained the predicament. In responding to my noble friend’s amendment then, the noble Lord, Lord Bach, quite rightly talked at length about the difficulty of ensuring that information was kept secure, and I would certainly agree with him on that. He noted the legitimate privacy and data protection concerns and pointed out:

“We must be sure that any sensitive information being shared can deliver the outcomes that we are looking for, is appropriately protected because the safeguards are in place and can be delivered in a way that is consistent with data protection and human rights legislation”.

All of this I fully agree with. The information we are talking about sharing is intensely personal. To hand over private financial information without the proper safeguards would be worse than irresponsible. That the information is a marker of poverty makes it yet more sensitive. How many more pensioners—the whole exercise is not about pensioners per se—would choose to suffer rather than accept state handouts if they were not completely confident that such a step would remain confidential? The Minister might incidentally balk at the word “handouts” but I have used it and I will stick by it.

The Government’s promise two weeks ago that they,

“will continue to keep the case for large-scale legislative data-sharing provision under close consideration”,

would be more reassuring if it was not clear that pension credit information is being used as a pilot test for all this. The noble Lord, Lord Bach, stated:

“The precise details of future arrangements are still being considered and discussed with supplier companies”.

He continued:

“The amendment to the Pensions Bill is an important start, and we will learn lessons from it to help inform further work”.—[Official Report, 1/7/08; col. GC 43-45.]

We cannot accept that pensioners are going to be made guinea pigs in this exercise. Can the Minister explain why the Government have decided to treat pensioners like what one of my noble friends recently described as a canary down a coal mine? They are proceeding with this amendment and have announced their intention to implement a policy of sharing sensitive information when they have admitted that the entire process has not been fully thought through and the safeguards they know are necessary have not been finalised. Either the Government have done the necessary groundwork and my noble friend’s amendment is perfectly reasonable and proportionate—although clearly the noble Lord’s colleague thought not—or much more work must be done before any data-sharing can be thought of.

The noble Lord said that the information of fuel companies must be “good enough”. I should be extremely grateful if he could expand on that rather remarkable statement. In the way that he said it, I found it not exactly readily explicable. Does the Minister not consider a more responsible way forward would be to establish how a power was going to be used before coming to Parliament and demanding it? Before he responds, I suggest to him that using the word “flexible” when talking about what he considers to be acceptable standards of safety would not be appropriate.

I have a brief contribution to make on this important change being introduced by the Government. First, I assume from the way in which the Minister introduced the amendment that the regulations that will flow as a consequence will be affirmative and not negative. I see him nodding, which is a comfort, because it is important for Parliament to be careful about how this power is used. I am in favour of data-sharing, and very much in favour of using the technology sensitively to produce better services for our most financially disadvantaged families.

There is an issue of consent here, which slightly troubles me, because I know from previous experience that a number of pensioner householders in this country do not want to apply for pension credit. They do not want to become involved in the system at all as a matter of principle. Those who do want to become involved in it still consider it, rightly or wrongly, to have a stigma attached to it. When the Government and the electricity and gas-supplying authorities get together to share this information, they must be very careful about how they use it, because they are using it without consent. I guess it is impossible to acquire the consent of everyone involved and to be able to take advantage of some of the consequences that might flow from it. However, we must be very careful about consent as we go down this route.

This issue will probably expand, rather than contract, in the way in which the Government interface with financially disadvantaged households. I am keen to hear more about how the Government will handle informed consent, and I will certainly raise the matter in proceedings on any affirmative regulations that come before the House as a result of this amendment to the primary legislation.

The issue of fuel poverty is hugely important now. We are living at a time when energy prices will stay high. They may not all be in the $150-per-barrel league, but we are far removed from $30 a barrel and are not going back to it—of that I am absolutely certain. The Government must therefore do everything that they can to anticipate the hardship that is an inevitable consequence for disadvantaged households in this country. Fuel poverty will become even worse because the economy will, at least in the immediate future, see something of a downturn. For all these reasons, urgent action needs to be taken.

If this all works, and if everything that can go right does go right, we may end up with a two-way dialogue that gives information back to the DWP and that informs it, perhaps for the first time, that things are much worse in some of these households than it currently imagines. The Government cannot simply say that it is for the electricity and gas-supply industries to deal with the consequences, although there are lots of important things that can be addressed, such as metering and the unfair treatment of people who pay cash and do not have debit cards or pay by direct debit. We all know about this. Some issues have been on the stocks for many years that need actively to be resolved. Surely the DWP must accept some responsibility if the flow of information that starts as a result of this amendment throws up new situations. It should be big enough to stand behind that change, recognise that it is a valuable improvement and come to the table with some financial improvements that will deal with some of its consequences.

It may be a little surprising that I enter for the first time into such a dramatic Bill as this, but declaring my interest as the chairman of Ofgem, the energy regulator, may explain my interest in the debate. It might be useful to give notably the noble Lord, Lord Skelmersdale, a little of the background to this welcome proposal, introduced by the noble Lord, Lord McKenzie.

The authority, which I chair, is under statutory guidance, issued by Parliament, to pay particular attention to fuel poverty. That measure was introduced several years ago. The problem is now reaching crisis proportions because of existing and anticipated price rises; the newspapers speak of very high percentage increases over the next few months. My concern as the authority chair, and as an individual, is to act under the authority’s responsibilities. Fuel poverty is of profound importance in dealing with such a large population in their day-to-day activities. I should draw the attention of the noble Lord, Lord Skelmersdale, to the fact that pensioners over the age of 60 represent 50 per cent of those in fuel poverty in this country.

I was pointing out that fuel poverty affects a much wider group than pensioners alone.

I am grateful for that intervention and will come to it at the end of my contribution. What will the Government do for people in fuel poverty? It is such a huge problem; we estimate that 3.5 million to 4 million households are already affected, and the figure could go up to 5 million. Among those affected are single occupancy households and really quite poor pensioners, and I do not forget single mothers, the disabled and the disadvantaged. My question to the Minister is: what do the Government intend doing to make similar provisions? This assumes a satisfactory negotiation of the regulations, which we will come to in relation to this Bill. Can the Minister give a clear indication that all the extra money provided “voluntarily” during the last Budget will not be absorbed by this particular group, important though it is?

I now give some background. It was interesting that the Minister did not mention my own organisation, Ofgem, the gas and electricity markets authority. In April it held a fuel poverty summit, which I chaired. The important point is not that I chaired it but that there were five Ministers present, including one from Wales, two Secretaries of State and five of the six major energy suppliers. Of even greater significance, the front-line agencies that deal with this issue face to face were present. They had seen the worst of the issue and the breadth of the problems. All sides of the argument were in the room. The purpose of the summit was, not to tell the Government to supply more money, although my authority has been among those saying that, because fuel poverty is of such importance; rather, it was to say, crudely, let us try to get the best bang for the bucks, and to ensure that the money already in the system—both from the Government and others—is best used and targeted, and that the people who need it most are identified.

From the summit, a few weeks later, a fuel action plan, involving all parties, was produced to try to tackle this—I will not burden your Lordships with the range of issues raised. I underline with passion—if I may use the word in this House—that it is important that this is dealt with now and in the future. What came very clearly out of the discussions was the need for government help in this area. While I understand the concern of the noble Lord, Lord Skelmersdale, over the remaining half, it was vital that for the first time the Government were willing to address the problem of using the resources and information they have properly protected—an important point, again, to which I will come—for dealing with this.

I draw noble Lords’ attention to Age Concern’s analysis; it gives a cautious welcome to the measure, precisely because of the DWP data that will help energy suppliers to identify those most in need, rather than the scattergun approach that tends to be taken. I hope all sides supported rapid progress with the measure. I pay tribute to Mr O’Brien for the measure he took and the speed with which he seized the opportunity to use this, if I may say so, slow-moving legislation to open a door that had been bolted as a policy issue and a methodology. What we need, of course, are regulations, hence the Bill. These are of central importance to identify who will be targeted—I understand that it is to be the over-70s on benefits, or perhaps an even older group. The figures are large even on that basis. Moreover, the data security will be protected not only from the Government’s point of view, but also from that of suppliers, because they will use the information to identify their customers in order that the two sides can meet.

Thirdly, on how this system would operate in practice, I understand very well the concerns of noble Lords opposite about possible abuses. Indeed, in the past the Government have had one or two problems in this area. I am grateful for the confidence shown in my own organisation when it was suggested that it should be the intermediary between the two—the trusted third party to manage the process. I think I have convinced the Government that we are not the right body because we are not experienced in large data manipulation, but it is important that there should be a trusted intermediary capable of managing large amounts of data. That is not unusual; many organisations have such experience.

The other aspect referred to by the noble Lord, Lord McKenzie, in moving the amendment is how suppliers will use this information. Perhaps I may deal with one or two of the points made earlier by other noble Lords. It is thought that everyone will somehow have their privacy invaded without their knowledge. That is not the intention; rather it is that individuals will have an opportunity to pursue the issue. They will be identified for the energy company if they agree to that; they will not be forced into it. The Age Concern data I have referred to emphasise that that should be of prime concern, and I agree. Elderly people need an explanation of what they are letting themselves in for. They need to be able to trust these companies, and in turn the companies need to be well aware that they must maintain the data properly. So it is not a scatter-gun approach that takes in everybody over a certain amount. It concerns only pensioners in receipt of pension credit who wish to benefit from this provision. Furthermore, the data will be handled carefully. However, the detail set out in regulations will be vital. There can be no confidence in a system that does not meet data privacy concerns, and it is essential that both the Government and companies have an agreement on data privacy. An agreement not only on the part of the companies but also by Government is essential and should be of reassurance to earlier contributors to the debate.

I turn now to the other 50 per cent of people whom my noble friend was concerned about. To think that only old people face problems is quite wrong; there are dreadful problems if you have to use 10 per cent of your income to pay for heat and other appliances. This is clearly of grave concern; hence, my question to the Minister to encourage clarity on these issues: what next? If a satisfactory arrangement is worked out and a fuel company clearly identifies what it intends to do with the information, we must ensure that those not included in the Bill are still dealt with.

The agreement announced recently in the Budget indicated that there would be an extra £225 million from the fuel suppliers over the next three years, an increase from £50 million a year to £150 million a year on social measures. That is to be welcomed, although almost all of it has probably been absorbed by recent price increases, while the anticipated further price rises make the problem even more difficult to deal with, and even more important. Perhaps the Minister could indicate, as I will, that fuel companies are not constrained by the £225 million. It is not a cap but an opportunity to develop still further. Their record is good, in my view, and they have tended to receive less credit than they deserve. Appeals to them to be more targeted in their advice have now also been honoured, and the challenge is also to the energy companies. If we have a problem that is not solved by further, long consideration of this Bill, I think that it will be regretted.

I have one final, small point on the proposed new clause. A figure in its subsection (5)(b) refers to costs. Your Lordships may think it so particular that it need not be mentioned. The Secretary of State is, understandably, given the power to recover the costs. In fact, although as a non-lawyer I hesitate to enter this fray, the words could also be construed as implying that suppliers could, in some way, have their costs introduced. I mention that because, while the Government understandably need to finance their activities, the last thing that an elderly or disabled person in fuel poverty would want to read is that the sum of money devoted to social initiatives will drain away into costs. Some clear indication at a later stage, perhaps on Report, that this measure will be as cost-constrained and developed as it can be would be helpful. I support the amendment.

I thank all noble Lords who have spoken in this debate, particularly those who have supported the amendment and done so enthusiastically. I will seek to respond first to the noble Lord, Lord Mogg, who made a powerful intervention on this issue. I should place on record our thanks for his engagement in the fuel poverty agenda and for working with fellow Ministers. He made it clear, as others have, that pensioners in fuel poverty is just part of the issue. There are many others whom we need to support and help as well. The noble Lord referred to the process as slow-moving, but I am pleased that my colleague Mike O’Brien has fully engaged with it and really helped to move it on: he is extremely committed to that.

It is my understanding that the noble Lord is also right on the fuel companies not being constrained by the figure of £225 million. If they wish to double it, or even do a bit more, the Government and those in fuel poverty would be delighted. He also makes an important point about the costs: we need to be clear on them. I think that the costs referred to here are those of dealing with the information exchange, but the noble Lord is absolutely right that we need to be clear who will bear those. We do not want those in fuel poverty to have to bear those costs.

Regarding those other than pensioners, the noble Lord asked “What next?”. I will probably write with more detail on that, as today I have before me the issues on pensions and pensioner credit. A point that arose from discussing the Energy Bill is that unless data-sharing measures are quite targeted, you run the risk of falling foul of data-sharing legislation, which is why there is a clear nexus between outcomes for those on pension credit and fuel poverty. Applying that to other groups needs more thought and discussion.

The noble Lord, Lord Skelmersdale, asked what I meant by, as I think he said it, information from energy suppliers being good enough to warrant data sharing. We need to be satisfied that what is on offer from energy suppliers is good enough to warrant data sharing. Obviously, how energy companies deploy the resources that they have voluntarily agreed to make available is, ultimately, up to them. If they chose to make only a portion of that available through this process, we would need to judge whether it is therefore right in those circumstances still to share information and go forward with these provisions. I was trying to make that point.

The noble Lord rather unfairly asked why we were treating pensioners as guinea pigs. That is not the case at all. We are taking powers now as we have a legislative opportunity to do so. A lot more work is needed to put them into effect, but there is a clearly identifiable group of people whom we can support if they are fuel poor, and it is right that we should do so.

The Minister accuses me of unfair criticism. What lay behind my thought was that there will be a welfare Bill next year, as he well knows. Given that there is a lot of discussion going on in all this, when the data-sharing measure is introduced, for this specific, correct and reasonable reason, it should be applied to everyone in fuel poverty, not just pensioners.

I acknowledge that concern, but the starting point—and this came up in the energy debate—is that to be able to share information in this way, a clear nexus is needed between outcomes for the range of data being shared and the input to those data. Those in receipt of pension credit aged 70 are a clearly identifiable group of people. It is much more difficult to so readily identify a range of other people who are in fuel poverty. That is work in progress, and discussions are proceeding on it. That should not prevent us from moving ahead where we can, and we need to do so quickly, as the noble Lord, Lord Mogg, said.

The question posed by the noble Lord is a good one. The mention of that Bill suggests that it is a useful vehicle for those remaining, to the extent that they are covered, but perhaps the Minister will agree that this means the regulations to bring this measure forward even faster can be got on to the statute book. As it is, if your Lordships agree and the Bill passes, it will still be another year before the Bill can be applied, so the noble Lord is correct in his implied conclusion.

I thank the noble Lord for that intervention. I want to be clear with regard to data sharing, about which there was some difficulty in the Energy Bill. Essentially, data sharing needs to be proportionate; that is, there needs to be a beneficial outcome for the great majority of those whose data are shared, and one that as far as possible is awarded automatically. That is why we can proceed with this—we have the opportunity to do so. If we have a welfare reform Bill next year, we will have another opportunity to do more.

The noble Lord, Lord Kirkwood, said that the Government were passing the buck to energy suppliers. I do not agree at all. There is a range of issues on which the Government are playing a direct part—I will not go through the whole list; the noble Lord is very familiar with them—regarding winter fuel payments, but this is an opportunity to work with the suppliers and we shall be grateful for the role they will play.

The noble Lord also touched upon the important issue of consent. A potential opt-out is being considered and worked through, and it would help to address that issue.

Data security is vital; it is at the heart of ensuring that the system works as we would want it to. The noble Lord, Lord Skelmersdale, asked how the power will be used. The Bill specifies that it may be used only for the benefit of people on pension credits; regulations will have to work within that and other legal frameworks.

I hope that that has dealt with the range of points raised. This is an important issue. I am grateful for the support of noble Lords. We need to move ahead with this and then do more at subsequent opportunities.

On Question, amendment agreed to.

moved Amendment No. 136AA:

This is an eminently sensible and long overdue amendment. For a Pensions Bill, this and the previous amendment are extremely interesting. However, I should like to probe the Minister a little on whether the pension entitlement that is being given up will be amalgamated back into the general fund. Although we all know that NICs—in those days, pension credits applied—are not held in a bank account waiting for the contributor to retire, these pensioners paid money to the Government in the expectation that they would be recompensed. What sums are we talking about? What is the average pot that is being given up? How many pensioners—the so-called Kindertransportees—are involved in this exercise?

Originally there were about 10,000 Kindertransportees. We are aware of 150 individuals who might benefit from this. Nothing is being given up in terms of returning contributions to individuals. We propose to wipe these people’s insurance records—if that is what they want; it will not necessarily be beneficial for all—so that they do not have to be recognised when computing German pension provision. This is a cost on the German pension scheme. Nothing will happen at the UK end other than there being a record of people being credited into a system. If they wish, that will simply be expunged, but no refunds will be awarded in that regard.

In a minority of cases it is possible that removing the pre-1948 insurance record could reduce a Kindertransportee’s entitlement to UK state pension. That is not the intended effect of these provisions, so we propose that the Secretary of State should have discretion to maintain an individual’s UK contributory benefits at their existing level should he wish to. They will not lose out on current UK entitlement. We simply wipe the record and create the opportunity for an increased German provision. I hope that that helps.

On Question, amendment agreed to.

moved Amendment No. 136AB:

moved Amendment No. 136AC:

The Minister will remember that, when I supported my noble friend Lord Hunt’s amendment on the abolition of compulsory annuities, I spoke about campaigns in your Lordships’ House. I am happy to support my noble friend Lord Fowler’s campaign for post-legislative scrutiny, which he introduced to your Lordships’ House in his maiden speech in 2001. In last year’s Pensions Bill, after what I would regard as a tiny bit of argy-bargy with another place, my noble friend managed to get the Government to accept post-legislative scrutiny of that legislation in 2014. The provision is in Section 24 of that Act. Amendment No. 136AC would produce the same result for this Bill.

I found it rather ironic that, today of all days, my noble friend Lord Fowler spoke about the expense of errors in social security and, especially, pensions law—an underestimate if ever I heard one. We have knowledge today of the ombudsman’s report on Equitable Life, which we on these Benches welcome. My party’s pressure forced the Government to allow the ombudsman to investigate the regulation of Equitable Life in the first place. The ombudsman highlights significant regulatory failings, including those that occurred when the present Prime Minister, as Chancellor of the Exchequer, was responsible. He cannot escape the blame.

The Government must now issue an apology and create a repayment scheme for those who lost out. The scheme must be consistent with sound public finances. That means that policyholders cannot expect to receive payments for the full losses suffered. None the less, if the Government do not come up rapidly with a plan, we most certainly will. We also remember the related environment for, and the cost of—we now know those costs—setting up the financial assistance scheme.

I have a little trouble, as the Minister no doubt does, with the date that my noble friend has chosen. The Government intend to consider changes to personal accounts—a good example is transfers in and out—in 2017. In order to achieve this, they will need to undertake at least a partial review the year before—that is, 2016—and consult on that review. Given that the Government have now conceded that pensions Acts need periodic review, I cannot imagine that the Minister will defy my noble friend Lord Fowler—at least, I jolly well hope not—in his endeavour on this Bill. Otherwise, I would add power to my noble friend’s elbow to pursue his course, if necessary in the same way as was done last year. So, not today.

I start by thanking the noble Lord, Lord Fowler, for his amendment. He is absolutely right: we had some discussion of this issue during the passage of the previous Pensions Bill. I do not have a totally shared recollection of the enthusiasm with which we accepted it; my arm is still hurting. I shall come back to changes since then.

Before doing so, I turn to Equitable Life, which the noble Lord, Lord Skelmersdale, touched on. The Parliamentary Ombudsman has invited the Government to consider issues raised in her report and to reflect on what their response should be. The Government recognise that the ombudsman’s report raises issues that are of concern to all interested parties. The length and complexity of the report mean that the Government will need to consider it carefully before giving their response to the House of Commons in the autumn.

Last year, we were awaiting the Government’s response to the Law Commission’s report on post-legislative scrutiny. In March this year, my right honourable friend the Leader of the House of Commons published a Command Paper setting out our response to this report and establishing a systematic approach for the post-legislative scrutiny of Bills that achieved Royal Assent from 2005 onwards.

This has, for the first time, put a system in place that will ensure that post-legislative scrutiny is the norm. Departments will have to publish a memorandum—it should be submitted in the first instance to the relevant committee in the other place but will be available to Parliament as a whole—on the provisions of an Act within three to five years of Royal Assent. This memorandum will allow Parliament to make an informed decision on whether full scrutiny is necessary.

We have begun informal discussions with the Clerk of the Work and Pensions Select Committee about the submission of memoranda for the Pensions Act 2007 and for this Bill. Due to the variety of measures in this Bill, it is highly likely that we will need to publish more than one memorandum. For example, the noble Lord’s amendment to the Pensions Act 2007 resulted in a requirement for the Secretary of State to report on the operation of provisions of that Act in 2014. It may be prudent to cover some provisions in the Bill that relate to the 2007 Act, such as simplification of a second state pension, in the same report. However, we may identify measures in the Bill that can be reviewed before 2014. We have already agreed with the Select Committee that the position on contribution limits and transfers in and out of personal accounts will be reviewed in 2017. We will have further discussions, but it may not be sensible to submit a memorandum on the operation of the employer duty provisions before then, not least because the phased implementation of these duties will continue until 2015.

We are in a very different position from when we considered the noble Lord’s similar amendment to the Bill of last Session. The Government are now committed to a systematic approach to post-legislative scrutiny that is thorough and proportionate. Alongside existing plans to monitor and evaluate progress, we will ensure that Parliament has adequate opportunities to review all the provisions of the Bill. I hope that this satisfies the noble Lord.

The Minister has given an interesting reply. I am extremely glad that, at long last, we have accepted the principle that post-legislative scrutiny should become part of the normal legislative process. There is no question but that, with any legislation, many expensive mistakes are made under all Governments after a Bill has been enacted, not because it has been badly drafted but because it has been badly administered or managed. I am grateful that the Government have accepted the principle of post-legislative scrutiny. I will study carefully what the Minister has said and take other soundings to check that this process, which seems to be all apple pie and goodness, is just that. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 115 [Orders and regulations]:

moved Amendments Nos. 136B to 138:

moved Amendment No. 138A:

Credit where credit is due—“for once”, the noble Lord might think. As with a previous amendment, I congratulate the Government on accepting the recommendations of one of your Lordships’ most powerful committees.

On Question, amendment agreed to.

[Amendment No. 139 had been withdrawn from the Marshalled List.]

Clause 115, as amended, agreed to.

Clause 116 [Orders and regulations: supplementary]:

moved Amendments Nos. 139ZA and 139ZB:

moved Amendment No. 139ZC:

moved Amendment No. 139ZD:

moved Amendments Nos. 139ZE to 139E:

moved Amendments Nos. 140A to 141:

moved Amendments Nos. 141A to 141D:

moved Amendment No. 141DA:

I am glad that the Minister added that last tiny paragraph. I, too, express my gratitude and that of my noble friend Lady Noakes—who was here very briefly, but has now vanished again—to both Ministers for their tolerance over eight days. Of course, we have not really had eight days; I estimate that we have probably had about six and a quarter days, but I have not done the sums. I extend my thanks to all Members of your Lordships’ House who must have felt at various moments that when they came into the Chamber they were watching paint drying. I assure them that our discussions on this Bill have been very serious and have had profound effects, as will the remaining stages.

Perhaps I may also say, on behalf of my colleagues, how grateful we are to the Minister. He has endless patience and is always willing to assist—where he can. That is an important subclause to that sentence. I am lost in admiration at the way that he deals with voluminous briefs; in another life, he will have a career as a speedreading tutor. Finally, the accessibility and professionalism of the Bill team is much appreciated by all and that has made the past eight days a positive pleasure, as far as these things can ever be a pleasure. I thank the Minister and his team.

On Question, amendment agreed to.

moved Amendments Nos. 141E to 141H:

moved Amendments Nos. 142 to 143: