House of Lords
Thursday, 17 July 2008.
The House met at eleven o'clock: the LORD SPEAKER on the Woolsack.
Prayers—Read by the Lord Bishop of Exeter.
Economy: Monetary and Fiscal Policy
My Lords, monetary and fiscal policy are conducted within a clear and transparent framework. The Government set the Monetary Policy Committee’s operational target and the fiscal rules. In addition, there is a regular exchange of information between the Treasury and the Bank of England.
My Lords, I thank the Minister for that reply. Is it not painfully obvious that giving the Bank of England independence and a target to control inflation with only short-term interest rates as a weapon cannot work unless fiscal policy is used as well? If we are to continue with the charade of the Governor having to write to the Chancellor of the Exchequer to say why he has failed, should there not also be letters to the Governor of the Bank of England from the Chancellor explaining why he has made the Governor’s task impossible? Is not fiscal policy out of control, with massive increases in borrowing, subsequent to the Budget, due to changes in tax and expenditure policy? How much has borrowing increased above the amount projected at the time of the Budget, and will this be funded from the public, not the banks?
Well, my Lords, borrowing will of course be funded from the public, but the International Monetary Fund passed a judgment on the Budget and considered it to be fully operational and effective against what we all recognise to be a difficult international situation. Importantly, the Bank of England has responsibility for inflation. That is a very difficult task, given the pressure of world prices at present, and we will go through a period—a short period—in which inflation will be above the target rate. However, it is quite clear from our predictions and those of independent forecasters that in 2009 the policies being pursued will return inflation to within the framework, where it has been for a decade under this Government.
My Lords, is it not wrong to pretend that massive increases in oil and food prices will not mean a cut in living standards? Would it not be better and easier to co-ordinate fiscal and monetary policy if there were either a cut in public expenditure and/or a tax increase? I am not sure that that is what the noble Lord, Lord Higgins, or the Opposition Front Bench are suggesting, but no doubt they will tell us.
Of course there is a challenge at present; the whole world recognises that. The difference is that the British economy is almost uniquely well placed to meet this challenge. We start off with a low inflation rate. I note that one or two noble Lords opposite are regarding these comments with less than the approval I would seek. Let me make it clear that our inflation rates both now and predicted are below those in Germany, France and the United States, and historically, even at their highest, they are only half of what was the norm under the previous Administration in the 1980s.
My Lords, does the Minister agree that the slow-down will inevitably lead to a fall in tax revenues and an increase in expenditure, particularly on unemployment benefits? On their current policies, the Government are set to break their own fiscal rules. Do they intend to follow the advice of the noble Lord, Lord Barnett, by raising taxes or reducing expenditure elsewhere, or do they accept that they simply have to break the rules?
My Lords, the noble Lord, as ever, accurately identifies the difficulties. He will have to wait to see what our solutions to these difficulties are. We will again look at these matters and comment further on them in the Pre-Budget Report, which is not asking the noble Lord to wait a great deal of time in parliamentary terms. There are challenges to the public finances at this stage, but the noble Lord will recognise the mass of contradictions that could emerge from all sides. One side will suggest, as he does, a substantial cut in government revenues, while the other will suggest that there are windfall benefits from the higher oil price. The Government will reach a judicious position in due course.
My Lords, the noble Lord will recognise that the Government’s liquidity position with the banks is being adopted by all significant economies. He will be all too well aware of the extent to which the United States Government have been greatly concerned to increase liquidity for their banking structure as well. I recognise that the noble Lord is very much in favour of transparency —probably more so when this Government are in office than when his own side might be. Let me emphasise on the issue of transparency that the concern is to preserve confidence in the banking structure when we all recognise that there are significant shocks both internally and externally. He will know the magnitude of the problems that the American economy is wrestling with. I am not sure that his preferred remedy of complete transparency meets the seriousness of the situation.
My Lords, does the Minister agree that the oil price increases need to be dealt with over a fairly shortish period? That means that there must be either some reduction in public expenditure or tax increases, maybe for a limited time only, but it is a solution that may be available to us.
My Lords, of course, my noble friend is wise in these matters, and he is right that that may be one of the solutions available to us. The strength of the British economy means that the methods that we have to adopt will be considerably less drastic than they would be if we were operating with significant deficits and high unemployment. My noble friend will have to join the noble Lord, Lord Newby, and the whole House in awaiting the Pre-Budget Report, which is not too far distant.
asked Her Majesty’s Government:
What guidance they have issued to internet service providers on when and how they can intercept their customers’ website use; and what information they have made available to the public about the privacy issues involved.
My Lords, the Home Office provides guidance about lawful interception conducted under warrant for law-enforcement purposes. This is separate from advice provided by the Department for Business, Enterprise and Regulatory Reform on the relevant business facing legislation. ISPs may, with the consent of the consumer, use information about consumers’ internet use for the provision of value-added services. The Information Commissioner provides information to the public on privacy issues.
My Lords, the Minister will be aware that my Question was prompted by the recent trials between BT and Phorm, which were conducted without the permission of subscribers. Does he agree that at the very least the British public must be offered an opt-in system when such trials or the scheme itself is put online? Furthermore, is he aware that in the US, Congress has asked that this scheme be put on hold while the privacy implications are examined? Will he do the same?
My Lords, the noble Baroness has a particular interest in this issue and she raises some very important and good points. Before I looked into it as a result of the Question, I certainly had not addressed it. The Home Office, BERR and the Information Commissioner were not aware of the two tests conducted by BT, which was not good. I know that the Information Commissioner’s Office and BERR are now investigating that very issue, which is very appropriate. Since then, BT has approached all three authorities about a trial with around 10,000 broadband subscribers.
The right measures are in place to look at that, but we possibly need a test case to see whether this is interception or not. I am not clear in my own mind on that yet and I will take away that task to see whether it is. If it is, it will be covered by a chunk of the regulation of investigatory powers legislation. If it is not, we will need to think about how we will deal with it. I was aware that the Americans have an issue with it. At the moment, the Information Commissioner has given advice to people and we are protected.
My Lords, in view of the concern expressed by the noble Baroness about privacy, will the Government withdraw their plans for a communications data Bill to set up a database logging every private phone call and e-mail? There has been enormous opposition to the idea, including that from the Information Commissioner.
My Lords, the noble Viscount is referring to the IMP. It is very early days as to where we go on this and it relates to entirely new methods of how telecommunications firms will transmit and move data. It is also early days to see how this will impact on any aspects of intercept. We have come to no decisions on any of that. It is still being looked at. It is too early to make any statement.
My Lords, last year, in a Science and Technology Committee report of this House on internet security, the committee recommended that a system of kite marks be established that identified respectable behaviour from ISPs. That recommendation was rejected by the Government. In a follow-up report, the noble Baroness, Lady Vadera, said that the Government would look into this proposition. How is that going?
My Lords, I do not know the detail of that. I know that in the Data Sharing Review, published in July, the Information Commissioner, Richard Thomas, and Dr Mark Walport came up with a series of proposals. Perhaps I may get back in writing on that point.
My Lords, following my noble friend Lady Miller’s Question and the use of this technology, especially by Virgin Media, to write to 800 customers warning them about this downloading, is it not a real cause for concern that this can be used to infringe on a person’s privacy in this way?
My Lords, we have to be careful because very often people do not realise how much data are used by these various firms—they know your URLs, they know your name and they know when you log on and log off. All of these data are there already. It is quite legal, for example, if I go on to Google and say that I am a sailor and interested in ships, that when my web page comes up the adverts that appear on it tend to deal with ships and shipping. They already do this. What they are now asking to do through Phorm is to go further. That is why we have to monitor this issue closely. The ICO needs to get involved much more than he is. He has issued advice on Phorm on his website and we are keeping a close eye on this. I have made the point about whether this reaches into the regulation of investigatory powers legislation and whether we need a trial case to establish that. Otherwise we are covered. I used to say to my people in the Navy that more people look at your internet information than look at a postcard when you write it. People tend to forget that. The data are used for quite legal purposes.
My Lords, perhaps I may first wish the noble Baroness a happy birthday. I go back to what I said. A lot of information is available to the internet service providers through headers, URLs and so on. There is no doubt that the driver for Phorm is the cut-throat market. Providers are finding it difficult to make the profit margins they want and wish to charge advertisers more. They can do this by promising that they will target precise adverts to people. That is the driver to it. There are concerns about individual privacy and so on. The noble Baroness is right: it is a worldwide system. Internet service providers have access to such details, but they have to put safety measures in place; and that is what the ICO is meant to ensure happens.
Criminal Records Bureau
My Lords, the quality control procedures at the Criminal Records Bureau are geared to achieving the highest level of accuracy. The CRB carries out a post-disclosure accuracy check, which analyses all aspects of the disclosure application and its issue. This is based on a statistical sample of disclosure applications, from which it can be ascertained that the accuracy rate for 2007-08 is 99.98 per cent.
My Lords, I thank the Minister for that Answer, but I am afraid that it does not accord with public perception. The much vaunted system of Criminal Records Bureau checks seems to have descended into farce and chaos. Will he at least ensure that, where there are allegations that a criminal record has been incorrectly attributed to someone, the appeal is determined within 14 days rather than the nearly three months that it takes at present?
My Lords, I do not agree with that characterisation of the CRB, which has been hugely successful. Obviously our foremost priority is to help to protect children and vulnerable adults by assisting organisations in doing these checks. We understand all the difficulties and the effect that they can have on people but, over the past 12 months, 3.4 million record checks have been carried out, of which 680 were slightly wrong. There is a clear method for resolving disputes. Compared with the old system, where no one knew what was being said about them, one of the benefits of the new system is that people who had been refused jobs for years were suddenly able to find out, because they had sight of their record, the reason why they were being refused. They were able to challenge it and, on a couple of occasions, they have been able to resolve it. This has been a good move. On timescales, we would like to do better. I think that we are down to 21 days now rather than the figure that was quoted, but obviously we would like to make it less. Overall, however, what has been achieved has been very impressive.
My Lords, the Minister mentioned timing. I am sure that nobody would dispute the need for accuracy in this matter, but one of the unfortunate by-products is that a large number of volunteers who wish to be involved in work with children find that inordinate delays in the process prevent them from coming forward for the work. That must be of considerable concern to the organisations that need those people. What steps are being taken to speed up the process, particularly in an area where there is such a demand for the work?
My Lords, the noble Lord raises an important point. What is good is that we do this with no charge, as it is important to encourage and help people going voluntarily into a number of areas, such as the cadet forces. I do not have detailed answers on timescales and problems. I know that one of the problems with getting volunteers into this area is that some of them feel that the checks that are made on them are rather more than they feel that they should have when they are volunteering. That is a difficult issue, but we have to conduct these checks. I will get back to the noble Lord in writing on the specifics of timings and any details of exactly what we are doing on that.
My Lords, there is a vast variation between police forces in the time that they take to get back to the CRB with the data required. The CRB is supposed to be helping those forces that are not meeting the target times. Does the Minister think that that help is sufficient?
My Lords, the noble Baroness is right. I think that the answer is probably yes. Of course there is a variation between standard disclosure and enhanced disclosure. For enhanced disclosure, where somebody is going to have personal one-on-one contact with a child or with someone who is vulnerable, we go into more detailed information with local police forces. That clearly takes longer, so the time does vary between cases.
My Lords, does the noble Lord realise that it is not only the cadet forces that are affected? He mentioned them because he knows about them, but many thousands of young people are not able to join the guide and scout movement because leaders are simply not prepared to be put through the mill in this respect. People are extremely worried about this and the whole thing is completely out of proportion.
My Lords, I understand what the noble Baroness is saying. I referred to the cadet forces because I know about them. I have dealt with a lot of volunteers in these areas and I understand that sometimes they can feel a bit offended that they are being checked so carefully, but it is incumbent on us to make sure. We cannot put volunteers in these positions if there is a risk of them being a danger to people. It is difficult, but we have to do it. I understand from both sides what the issue is. We have some remarkably good people who are willing to give up their time. I understand how they feel but, my goodness, we have to be sure.
My Lords, following my noble friend’s question, are the Government fully aware of the real crisis in the voluntary sector, where many people, particularly those volunteering, are refusing to undertake any work with children because of the onerous and time-consuming need for a CRB check?
My Lords, I had hoped that I had covered that. The answer is yes and it is something that we will have to work at. Often one does not give enough credit to the people who give up time. I declare an interest in that I am involved with vocational qualifications for cadets and instructors. We are able to give degrees through this system to instructors, which encourages them and shows that we value them. I believe that what they do is crucial for our society. It is one area that helps in so many ways to change how people behave, particularly youngsters.
My Lords, I am pretty certain that I can confirm that, but I will make absolutely certain and write to the noble Lord. He touches on an interesting area: getting details and information about people in these areas who are not British. We are in a lot of negotiations at the moment to ensure that we can get the same accurate coverage as we have of British people.
My Lords, for the past few months, we have been developing knife-referral schemes that will enable young people caught in the possession of knives to face up to the consequences of their actions. Schemes could include weapons awareness workshops, where information is given on what happens when someone is stabbed and the consequences for them, their families, the victim and the community are brought home.
My Lords, I am grateful to the Minister, but do the Government recognise that knee-jerk reactions to serious issues are not helpful? Will the Minister reassure us that even the Home Secretary’s adjusted and diluted position on this matter will not entail doctors’ valuable time being used to give pep talks to knife thugs? Does he accept that knife violence is a role model problem that correlates directly with the grandeur of drug barons and their ruthless henchmen on estates and in our prisons? Will the Government consider whether it is time for these drug barons to be isolated and put in a special prison, where their ability to corrupt other young people is not so great?
My Lords, the noble Lord is absolutely right that one should not have just knee-jerk reactions. That was why I pointed out in my first Answer that this has been developing for some months. On 5 June, the Prime Minister stated that anyone over the age of 16 caught in possession of a knife could expect to be prosecuted on the first offence. We also announced the eight areas in which we will do particular programme work. Interestingly, according to the crime statistics today, 66 per cent of knife incidents happen in those eight areas. We have produced a whole raft of measures with the Youth Justice Board to find ways of resolving these issues. It is no good just banging these people up all the time. That does not help, although it must be there as one of the things that can be done.
The noble Lord touched on a few things such as drugs. This issue goes far wider than just carrying knives. It is a much greater issue, and we have to tackle every aspect of it.
My Lords, I did not gather from the Minister’s first Answer whether he was saying that the Government intend to allow people who have committed attacks to visit in hospital the people whom they attacked. If they do intend to do that, does he think that the people will like meeting the people who have stabbed them, and might the nurses also enjoy meeting those kinds of people in hospital?
My Lords, the intention has never been to trail in people to see some poor chap, whom they have attacked with a knife, lying in a bed surrounded by his family. This got distorted somehow over the weekend. It is not something that we would do. It would be extremely counterproductive and might lead to rather more violence. It would not be a good thing to do. However, in certain targeted ways, there is sometimes merit—depending on the person involved; let us say that he is under 16 and has not actually used the weapon—in the person being able to talk to people who are experts on these things so that he can see what the impact is when a knife is used. There is a benefit in that in some cases. It is part of a whole package of measures. One noble Baroness asked why we did not put them in a mortuary and padlock them to the body overnight. That is probably more than we need to do, but we need to consider all possibilities, some of which may fade away and some of which will be of great use.
My Lords, the Minister talks about criminals meeting their victims, which of course is what restorative justice is about, but does he realise how much frustration there is in the police forces that are successfully using the scheme to turnaround criminals’ minds? As restorative justice currently does not count as a sanctioned detection method, those forces’ performance against their targets looks poorer than it is, even though they are implementing such a good scheme.
My Lords, is the Minister aware of the report, Who is My Neighbour?, which was recently published by Churches Together in England? Addressing the issue of knife and other violent crime, it emphasises that what is really needed are long-term strategic partnerships between churches, community groups, the police, criminal justice partners and local authorities. How will the range of initiatives to which the Minister referred be truly integrated into such a long-term strategic approach to this very difficult problem?
My Lords, the right reverend Prelate is absolutely right: it needs to involve all of those. I cannot easily give an answer on exactly how it will happen, but we are undoubtedly putting in place a raft of measures that ranges, as I say, from putting people in prison, to using many more search wands and search arches at places such as Streatham station—where they suddenly appear and people are asked to walk through—to applying various so-called softer measures that have the same impact. This has to involve all the groups that the right reverend Prelate talked about, and although I cannot easily say exactly how that will be done, it is the intention. This is a long-term programme and will take time, but we have been thinking and working on it for months. The first announcement was on 5 June. There may have seemed to be some knee-jerk reactions this weekend—I do not like knee-jerk reactions—but the next phase has clearly been on the board, and these things will be done as well.
Powers of Entry etc. Bill [HL]
Read a third time, and passed, and sent to the Commons.
Housing and Regeneration Bill
My Lords, I have it in command from Her Majesty the Queen and His Royal Highness the Prince of Wales to acquaint the House that they, having been informed of the purport of the Housing and Regeneration Bill, have consented to place their Prerogative and Interest, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.
Read a third time.
1: Clause 2, page 2, line 8, at end insert—
““good design” includes design which has due regard to the needs of elderly persons and disabled persons,”
The noble Baroness said: My Lords, on Report the noble Lord, Lord Dixon-Smith, spoke to an amendment to include in the Bill a duty on the Homes and Communities Agency to be aware of accessible housing. There was support for this across the House. I certainly supported it, and it was obvious that the House was united on this important matter, so I am delighted to bring this amendment forward. I agree with the noble Lord, Lord Dixon-Smith—and, indeed, my noble friend Lord Howarth, who has played a sterling role in this—that accessibility is a subset of good design. We have tabled an amendment to make my understanding explicit in the Bill.
The noble Lord, Lord Best, also added his support to the amendment and he certainly influenced me when he said:
“I had not quite appreciated that the Homes and Communities Agency may find itself under pressure, if not to renege on the progress we have made so far, not to make rapid progress to the final stages of incorporating all the lifetime home standards into new developments”.
He went on to say:
“Strengthening the arm of the Homes and Communities Agency to resist any diminution in the existing strength of feeling for greater accessibility would be of great significance”.—[Official Report, 7/7/08; col. 544.]
I agree with the noble Lord, particularly since, as we have observed many times in this House, we are living in a rapidly ageing society but one that has higher aspirations and is looking for better standards of living and accommodation. So I hope that by giving the HCA an object of contributing to the achievement of “good design”, and now making it explicit in the Bill that good design includes design that,
“has due regard to the needs of elderly persons and disabled persons”,
I am indeed strengthening its arm against any such pressure.
This amendment seeks to emphasise the imperative for the HCA to consider the needs of older people and disabled people when acting in support of its fourth object, which is to contribute to sustainable development and good design across all developments, whether residential, industrial or infrastructure projects. Although the amendment refers specifically only to the needs of older and disabled people, I am sure that by catering for the needs of these groups, everyone will benefit. We will be looking to the sorts of design that will enable, for example, young families to enjoy easier access with their buggies, and will aid those with short-term health conditions. The whole community will benefit. I am grateful to the noble Lord for his original amendment and I hope that he will accept that we have responded in a better way than simply adding the word “accessible” to the Bill. I beg to move.
My Lords, I am immensely grateful to the noble Baroness. We have argued this case gently for a long time. It affects a particular sector of the community that is never out of mind but is sometimes not sufficiently focused on. Over time this provision will bring relief to all sorts of families. As the noble Baroness said, one occasionally has temporary periods of incapacity after, say, major surgery or an accident. It is not just for the elderly, whom we are all becoming, and it will improve the utility of our homes across the whole spectrum of provision for the community. This is a generous concession by the Government for which, again, I am grateful.
My Lords, I, too, appreciate my noble friend’s willingness to table this amendment in response to the excellent earlier amendment moved by the noble Lord, Lord Dixon-Smith, and supported so extensively across the House. After her early reservations in Committee, which were understandable enough, my noble friend has taken to embroidering Clause 2 with enthusiasm. I think that all of us who have been engaged in these debates greatly appreciated the latest of her letters, sent on 15 July. She is without a doubt my favourite correspondent. She brought us much good news about how the Government intend to ensure that good design genuinely is promoted by the Homes and Communities Agency and by the Government themselves in their broader strategy. She responded very constructively and helpfully to that tiresome but, I hope, pertinent list of questions that I put to her when welcoming the amendment to Clause 2(1)(d). In her letter she said that that amendment had strengthened the legislative framework, and this new amendment would strengthen it further. She also said:
“Having put the framework in place, we must now ensure that the policy is effectively implemented”.
She went on to say that she would be looking to local planning authorities to assist the Government and the HCA in this strategy, which brings us again to the question of skills. I am pleased to be informed by her about CABE’s programme to train officers of local planning authorities in the Building for Life methodology. It is also important that the Government, along with CABE, should pursue energetically making design review available in all the regions of the country—I understand that there are two regions where it is not yet available—and ensuring that it is of a high standard and works well.
This amendment, which addresses the needs of the elderly so usefully, encourages us to think that the Government will indeed achieve their targets of ensuring that publicly funded housing matches lifetime home standards by 2011, and that they are serious about the target to ensure that those standards are attained with new developments in the private housing market by 2013. However, that will undoubtedly be much more difficult. I was pleased that the Minister insisted, in her letter, that she would expect the HCA to use its leverage on the private and public sectors. How will the issue of minimum space standards, which some of the relevant agencies and professional bodies are examining, intertwine with the question of achieving lifetime home standards?
Will the Minister also comment on building regulations? In her letter, she mentioned that the current review of those is focused on reducing burdens and costs on businesses. That is, indeed, a good thing: we do not want businesses to be faced with any unnecessary burdens and costs, but in building homes we also need to be focused on the needs of those who will dwell in them. Will she confirm that that review is intended to ensure that building regulations themselves support good design?
Where the needs of disabled people are concerned, ensuring that new build matches the best design standards is one thing; ensuring that we are able to refurbish or adapt existing homes to make their design appropriate for disabled people is much more difficult. The Minister has told us how the requirement on local authorities to provide match funding of 40 per cent for disabled facilities grants has been relaxed, and expressed optimism that local authorities would none the less continue to prioritise adaptation of homes in their communities. She argued that they would, rationally, realise that they would be saving costs on social services budgets and other budgets. Yet we cannot always be entirely confident either that local authorities will act rationally and far-sightedly or that they will, by any means, have the resources to do all that a rational and far-sighted authority would want. Will she assure us again that she will be invigilating the attitude and progress made by local authorities on adapting homes for disabled people?
Disabled facilities grants are, of course, only part of the story, as the Minister’s letter reminded us. Will she ensure that an adequate share of the £1 billion in the regional housing pot is indeed made available for adaptations, and move to clarify the respective responsibilities for disabled facilities grants of housing associations and local authorities? I ask my litany of questions again only because it is extremely important—and I know that the Minister agrees with me here—that we push these good intentions through into a really worthwhile, practical reality. I have no doubt whatsoever that my noble friend is determined that we should.
My Lords, I add further thanks to the Minister for this important amendment. I hope that it means that the Homes and Communities Agency will be able to lend its support not just to hastening us towards the day when the lifetime home standards of accessibility and adaptability can be applied to all private homes as well as to housing association homes, but that that powerful HCA may be able to play its part in ensuring that building regulations are actually enforced as well as simply being amended to good effect. I greatly welcome and appreciate this amendment.
My Lords, I am glad that noble Lords think we have achieved so much of our shared objective. It is a credit to the House that we have continued on this issue, and I think we have got it right.
In response to the detailed questions from the noble Lord, I am afraid that our correspondence is not yet over. Space standards are a complex issue; he will understand that. The ebb and flow of space standards and regulation go back over many years, and that is not something I can address at the Dispatch Box. I will update him in a letter on how we are thinking about it with regard to all these other things.
We have to strike a balance between simplifying building regulations—making them easier to enforce, frankly—and updating them. With regard to lifetime homes we are working with a team—a BRAC review, in fact—on considering building regulations and how they might accommodate different changes. The noble Lord is quite right when he talks about our ambition that all housing should meet lifetime homes standards by 2013. That is assisted by the changes we have made in the Bill.
On the noble Lord’s specific questions about the disabled facilities grant, I think removing the 40:60 split is a positive move because it will give extra flexibility to local authorities to borrow across funding and policy boundaries. It is a mandatory grant. I have worked with local authorities; I go out sometimes with the DFG teams to see how these adaptations are being designed and implemented, and I know the seriousness with which those local authorities look at the need for DFG. They will make good use of that flexibility.
We will be vigilant in ensuring that we secure, in a tight spending round, a significant increase for the disabled facilities grant. In our ageing strategy we made it clear that we are investing £35 million in a handyman service to ensure that the rapid repairs service, which is offered for people with disabilities and elderly people particularly, reaches more people to a higher standard and is more effective. It is one of the best things we do to help keep people independent in their own homes. I assure the noble Lord of my commitment to that.
All that will be assisted by our debates. When it comes to the regional housing pot, we advise the regions that they must care for these particular priorities of vulnerable people.
On Question, amendment agreed to.
2: Clause 2, page 2, line 34, leave out “section” and insert “sections 19(4A) (financial assistance), 44 (local government involvement) and”
The noble Baroness said: My Lords, this group of amendments covers a number of different issues. I will start with Amendment No. 2 because I hope it will bring particular joy—I put it as highly as that—to the noble Lord, Lord Dixon-Smith, who was anxious that, having achieved the serious ambition to flag up the partnership, the principle and the psychology of a relationship with local authorities, we should put it in a place in the Bill where everyone would see it. Unfortunately, because of the logic of the architecture, it is stuck at Clause 44. However, the creativity of my officials knows no bounds, and they came up with a linking mechanism: Amendment No. 2 amends Clause 2, which will draw attention to Clause 44—so it is right at the front of the Bill. Any reader of the Bill will understand that the clauses that are mentioned, including Clause 44, relate to the objects of the agency and give them added prominence.
The amendment also draws attention to new subsection (4)(a) to Clause 19, concerning financial assistance. We shall discuss that amendment in more depth shortly. A reference to that appears here, as a new subsection could modify the objects of the agency in certain limited circumstances relating to the provision of financial assistance.
Although there are more than five amendments here, they cover five separate issues that were raised by the noble Baroness, Lady Hamwee, to which we have given further consideration. On the first set of issues, I still dispute the noble Baroness’s assertion that the Secretary of State’s powers to designate an area and confer planning functions upon it are now centre stage in the Government’s proposals for the HCA. We have had many debates about the relative prominence of the designation powers. They are no more central to our plans for the HCA than they were for English Partnerships, and the noble Baroness herself described them as being there in the background for that organisation. However, I have accepted her reasoning that any situation in which such powers are likely to be used will be capable of being analysed, broken down, defined and articulated, and their relative purpose and functions and the kinds of development could and would be spelt out in a designation order. I have tabled Amendments Nos. 3 to 9 to reflect that.
Amendments Nos. 3 to 7 restrict the ability of the Secretary of State to determine that the HCA should be the local planning authority for all permitted purposes under the Act, for all kinds of development, and in respect of all relevant functions. The amendments restrict the Secretary of State from making the blanket statement that all should apply.
It would still be open to the Secretary of State to provide that, for example, the HCA should be the local planning authority for all permitted purposes, but she could do so only by an explicit reference to each permitted purpose. The changes made at Report ensure that these are properly consulted on—that is in the Bill—and that the Secretary of State’s thinking is clear and understood for each case. I am content with that because the noble Baroness persuaded me—she is very persuasive—that this is a useful provision. It may make the act of designating an area somewhat more complex, but we have repeatedly said that this will be an exceptional occurrence. Much debate has focused on the ability to confer plan-making powers on the HCA. This amendment ensures that, should we ever propose to do so, full and fair consideration will be given to each of the powers transferred to the HCA.
As regards the second issue, Amendments Nos. 8 and 9 also respond to the noble Baroness’s concerns. Amendment No. 8 provides that where the HCA has powers and functions conferred on it in relation to permitted purposes and kinds of development, enactments relating to local planning authorities and functions will apply to it. The amendment will remove the power to disapply any enactment. Amendment No. 9 removes the ability of the Secretary of State to amend definitions of “planning related provisions” or “relevant functions” in relation to the HCA.
In respect of Amendments Nos. 8 and 9, on Report the noble Baroness argued that Sections 14(6) and 14(8) were a step too far in relation to recognising the unusual circumstances of the HCA becoming a planning authority. She stated that applying enactments and modifying them to reflect particular circumstances might be acceptable, but that disapplying them was of a different order and therefore excessive, and that any consequential amendments should be made by the appropriate primary legislative vehicle. On reflection, we think that making these amendments will be compatible with our overall premise that the HCA as a planning authority should not be especially advantaged or disadvantaged when exercising the role, so I am happy to bring them forward, and consider that they are proportionate.
As regards the third issue, the noble Baroness, Lady Hamwee, asked whether sufficient parliamentary scrutiny would be afforded to any designation order by the negative resolution procedure. As noble Lords know, Clauses 13 and 14 in this Bill were initially modelled on the similar provisions in the Leasehold Reform, Housing and Urban Development Act. Section 170 of that Act stated that a designation order,
“shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament”.
Because of those origins, and in the interests of consistency, we felt it was appropriate that the same parliamentary procedure should be used to make any designation orders under the powers in this Bill. However, having thought about the exceptional nature of the case if there were to be a designation order, I believe she is right that we should justify each order on those rare occasions that we make them. Therefore, Amendments Nos. 16 and 19 require any order to be made by the affirmative procedure.
On the fourth issue, in Amendment No. 18 we have also sought to prevent any designation order from being treated as a hybrid instrument. The potential for hybridity arises from the fact that designating an area and conferring planning functions on the HCA, although of general interest, would have the potential to affect the interests of specific individuals and organisations. If a designation order were to be subject to the hybrid procedure, this could add significant delay to any designation. It is, for example, possible to petition against hybrid instruments. Accepted petitions are considered by a Select Committee. We did not want to make that additional complication. We also thought that delays would be unwarranted because we made explicit and extensive changes to the consultation procedures. Those requirements are now in the Bill. We hope that we have dealt with that.
Finally, on Amendment No. 21, the noble Baroness spotted that this important area had not been previously covered in our legislation. It was always our intention that the HCA, when exercising functions conferred in a designation order, would be under the same requirements as any local planning authority in giving access to papers and meetings. Yet that was not provided, hence the amendment. This means that, in the event of an HCA acting as a local planning authority, its meetings would be open to the public, in the same way as for the local planning authority normally.
I hope that the noble Baroness will feel she has made a significant difference to the Bill in these respects. I am pleased to move these amendments and think they improve the Bill. I beg to move.
My Lords, the noble Baroness knows that I do not like the powers going to the HCA but I know when I have got as far as I can reasonably go. I am grateful to her not just for bringing forward the amendments but also for her willingness to discuss the issues. When during the course of this Bill the noble Baroness offered meetings, she must have wondered when on earth she would get them into her diary. I daresay her private office’s collective hearts sunk each time she offered that facility to Members of your Lordships’ House. She has been extremely generous with her time and willingness to engage in debate. We are all grateful for that.
I can hardly object to most of these amendments. They are in language I used at the last stage, though I would never have spotted the hybridity point. My only comment, as the noble Baroness anticipated, is on the amendment to apply the arrangements for local government access to information and meetings. When I moved an amendment that was one or two lines rather than two pages I said I hoped it was a probing amendment. I am mildly shocked that it took a noble Lord on the Opposition Benches to point this out but never mind—that is what we are here for. We now have two pages making it perfectly clear that the HCA has got to live up to those standards. Again, let me express my thanks.
My Lords, I, too, thank the noble Baroness. I congratulate her on her ingenuity in making the concession in such a way that she has not been forced to concede the point—if I can put it that way. She has maintained the architecture of the Bill which is apparently important to some but has generously allowed us to have the recognition we thought important that local government should be recognised from the start of the Bill.
I congratulate the noble Baroness, Lady Hamwee, on adding better clarity and certainty to Clause 13 through her pressure for amendments. This whole section of the Bill is now much better than it was when it first arrived with us. I am most grateful.
On Question, amendment agreed to.
Clause 13 [Power of Secretary of State to make designation orders]:
3: Clause 13, page 5, line 21, leave out “for all permitted purposes or”
4: Clause 13, page 5, line 23, leave out “all kinds of development or”
On Question, amendments agreed to.
Clause 14 [Contents of designation orders]:
5: Clause 14, page 6, line 37, leave out “for all permitted purposes or”
6: Clause 14, page 6, line 38, leave out “all kinds of development or”
7: Clause 14, page 6, line 44, leave out “all relevant functions, or”
8: Clause 14, page 7, line 13, leave out paragraph (c)
9: Clause 14, page 7, line 32, leave out subsection (8)
On Question, amendments agreed to.
Clause 19 [Financial assistance]:
10: Clause 19, page 10, line 35, at end insert—
“(4A) The objects of the HCA are not to be read as preventing the HCA from exercising functions in relation to financial assistance (whether under this section or otherwise) which—
(a) are transferred to the HCA from the Housing Corporation by virtue of this Act, or(b) would supersede functions of the Housing Corporation, in ways corresponding to those in which the Housing Corporation could have exercised its functions.”
The noble Lord said: My Lords, these amendments, which are largely minor and technical, relate, in essence, to Schedule 5 to the Housing Act 1985. They will ensure that financial assistance to the HCA given under Clause 19 will not cause the right to buy to arise in respect of any property that it owns.
Amendment No. 25 is extremely minor. Paragraph 10(3) of Schedule 9 repeals Section 10(2)(e) of the Housing Associations Act 1985. That section deals with exceptions to the requirement on unregistered housing associations to obtain the Housing Corporation’s consent—or the consent of equivalent authorities in Scotland and Wales—to dispose of grant-aided land.
The amendments make it clear that in certain limited circumstances, the Homes and Communities Agency will not be prevented from exercising certain functions in relation to financial assistance that have either been inherited from the Housing Corporation or that would be superseding Housing Corporation functions.
Amendments Nos. 10 and 12 will ensure that the HCA deals with a limited but important set of circumstances relating to Welsh tenants of English registered social landlords. Certain elements of housing legislation follow the location of the registered landlord rather than the property and, with the objects of the HCA related firmly to England, there are a few places where this can cause cross-boundary difficulties.
As an example, Section 450A of the Housing Act 1985 provides that where a tenant of a registered social landlord has exercised the right to buy, they have a right to a loan in respect of service charges. Currently, this means that the Housing Corporation would have a duty to give a loan to a Welsh tenant of an RSL registered in England. Logically, the position after this Bill becomes an Act would be that the duty to provide a loan will pass to the HCA. However, the HCA’s objects are strictly limited to England and to the needs of people living in England. Giving such a loan might therefore require the agency to act outside of its objects.
These are rare occurrences—there have been only 20 or so loans in both England and Wales combined in the past 16 years—and we do not expect this provision to have any great effect. However, we do not want to remove rights that tenants currently enjoy, particularly in times when loans may be becoming increasingly difficult to obtain. These amendments will ensure that in some very rare cross-boundary cases, the HCA will be able to act to assist Welsh tenants of English RSLs.
I turn to perhaps the more important amendment in this group, Amendment No. 11. This is a direct response to the points made by the noble Baroness, Lady Hamwee, in Grand Committee and at Report about Clause 30, which relates to the HCA’s ability to provide community services. She rightly raised concerns about the ambiguity of some of the language in this clause. Our amendment will delete the “list” of activities that caused concern and replace it with a new clause, which gives a general power to the HCA to provide such services for communities as it considers appropriate or facilitate the provision of those services. This is largely based on an excellent suggestion put forward by the noble Baroness in an amendment at Report.
I now turn to Amendments Nos. 23 and 24, which are minor and technical amendments to Schedule 11 and which deal with tolerated trespassers. They amend the definition of “commencement date” in paragraphs 14 and 25. The effect is to exclude from the definition the order-making powers in Part 2 of Schedule 11. These amendments are necessary to allow for the order-making powers to be exercised before the main tolerated trespasser provisions in Schedule 11 are brought into force.
There is one important instance where it will be necessary to do this. The main provisions in Part 2 restore tenancies on commencement to all tolerated trespassers where the landlord has not changed since they became tolerated. On Report, we introduced an order-making power that allows us to restore tenancies in the same way to those tolerated trespassers whose landlord has changed. This will be done by secondary legislation, rather than by the Bill, since we propose to consult on the issue before final decisions are made. However, our intention is that the secondary legislation would come into force at the same time as commencement of the tolerated trespasser provisions in the Bill. To do otherwise would leave a period when there was only one class of tolerated trespassers. The House will accept that this would be unsatisfactory and unfair. We therefore need to exercise the order-making power before the rest of the provisions come into force. This amendment ensures that we can do that.
Finally, I look in more detail at Amendments Nos. 22 and 25, which are very minor. Amendment No. 22 amends Schedule 5 to the Housing Act 1985. It ensures that financial assistance to a housing association given under Clause 19 of the Bill will not cause the right to buy to arise in respect of property it owns. Amendment No. 25 is an extremely minor amendment. Noble Lords may be aware that Schedule 9(10)(3) already provides for the repeal of Section 10(2)(e) of the Housing Associations Act 1985. This section of the Act deals with exceptions to the requirement for unregistered housing associations to obtain the Housing Corporation’s consent to dispose of grant-aided land. Amendment No. 25 merely adds the reference to Schedule 16, which lists all the repeals of existing legislation that are made by this Bill.
I hope that these amendments will find your Lordships’ favour, and in particular the favour of the noble Baroness, Lady Hamwee, who I think has much to be delighted with. I beg to move.
My Lords, the Minister writes—in officials’ language, I expect—a very long letter, in the middle of which he says that if noble Lords can find a different way of expressing it, the Government will be very interested to hear it. Well, I could not resist the challenge and I am grateful for this amendment.
On Question, amendment agreed to.
Clause 30 [Community services]:
11: Clause 30, page 13, line 36, leave out from “may” to end of line 15 on page 14 and insert “provide such services for communities as it considers appropriate or facilitate the provision of such services”
On Question, amendment agreed to.
Clause 58 [Index of defined expressions: Part 1]:
12: Clause 58, page 28, line 28, column 2, after “2” insert “, 19(4A)”
On Question, amendment agreed to.
Clause 79 [English bodies]:
13: Clause 79, page 38, line 13, after “England,” insert—
“(ca) a community land trust which owns land in England,”
The noble Lord said: My Lords, Amendments Nos. 13 and 14 are an important move forward in defining community land trusts as English bodies in Part 2 of the Bill. I am sure that later generations of students of Hansard will be able to decipher what that means with ease. However, to assist them, I will take us through the story.
The Government have been clear from the outset that we are committed to helping the development of community land trusts that are well managed and financially robust. We have supported 14 pilot projects across the country through the Housing Corporation, which has also offered funding to community land trusts to deliver affordable housing for both sale and rent. In April, we also committed to consulting on how barriers to the development of community land trusts could be removed. At that stage, the intention was to consult on whether there should be a legal definition of “community land trusts”. However, in view of the concerns raised by Members of your Lordships’ House, and the support for taking advantage of this opportunity, we have brought forward this amendment to give a definition of community land trusts. It is accepted by the community land trust movement that a legal definition would bring clarity and certainty to stakeholders and partners about the nature of the CLT sector.
In drafting the amendment, we have worked closely with the community land trust movement. We have gone for a broad definition, which captures the aims and distinctive characteristics of the community land trust sector. In particular, we have tried to ensure that the definition is robust enough to ensure that community-led projects benefit the wider community in the community land trust’s area.
The definition does not of itself bring access to funding or support, nor does it set in stone government policy about how this sector can best develop or about the framework within which that should happen. As I said last week, we would have preferred to wait until after our planned consultation this year to give all stakeholders the opportunity to contribute to the debate, including on some of these wider issues.
However, in taking forward the CLT debate, we will want to consider some important questions, such as what the criteria for financial support might be and how to maximise the chances of the development of a viable and well managed sector. Another factor in the debate is that the regulator will need to consider the criteria for the registration of community land trusts. We will also wish to consider the role that the trusts might play in both the urban and rural contexts and how perpetuity of community benefit can be ensured for the benefit of future generations. There is still much work to be done.
We have a consensus that community land trusts offer potential for communities to put their weight and energy behind housing development. In Committee and on Report, we heard from noble Lords who were keen to keep the momentum of support moving along. I hope that we can draw a line under where we have got to at present and that noble Lords will continue to support the Government in their efforts to transform the innovative ideas and exciting prospects and opportunities of the community land trust movement into practical results. I look forward to support for the amendment. I beg to move.
My Lords, I rise with deep gratitude to my noble friend Lady Andrews, and especially to her advisers, for having listened, reflected and produced an answer to the basic issue, which was the need for a definition. That gratitude is unalloyed; it is clear and I am very grateful indeed. The Minister has demonstrated over recent weeks that she listens carefully and that, when there is a proposition that needs her reflection and advice, she takes it away. Today, we have the product of that. I warmly congratulate her and her colleagues.
As with everything else, there is a “but”, an “if” and an “if only”. I understand that the amendments are as far as the department and the Minister can go. I echo the noble Baroness, Lady Hamwee, who said some minutes ago that she knew how far she could go and that this was it. I accept the same; there is no question of muddying the water. We have gone as far as we can go.
However, there has been intense discussion, particularly about defining who should be members of the trust. Amendment No. 14 defines a local community as,
“the individuals who live or work, or want to live or work, in a specific area”.
There is no objection to that, but everyone understands that a community is more than individuals; a range of other bodies is part of the community. I want the Minister to reflect on that and, I hope, to say that she and her advisers share my understanding. When amendments refer to “members” and “individuals”, there may well be a legal reason for those words—I do not quibble with that—but how wide should the interpretation of those terms be? For instance, a community includes voluntary organisations, parish councils, local councils, civic society organisations, schools, local health service organisations, key local employers and local shops. I understand the difficulty in putting something in the Bill that is all-embracing, so I seek an understanding that, when a trust is established, the beneficiaries from the product of the trust’s work can include the examples that I have given. I simply want an understanding.
Perhaps I may help the Minister with the following illustration as a practical example. The local community land trust for one of the 14 national pilot projects supported by the Government is on the former Cashes Green Hospital site in David Drew’s constituency in Stroud, Gloucestershire. He is a personal friend and is sponsored by the Co-operative movement, in which I declare an interest. The CLT would like to encourage a local GP to provide health services to the village of Cashes Green by using some of its land to facilitate the provision of a health centre. Although it is part of the National Health Service, a GP practice is technically a privately run business owned by the doctors who are partners in the practice. Another local community land trust might want to provide premises for a local shop that is also run as a commercial enterprise. Such uses of a CLT’s assets benefit,
“individuals who live or work, or want to live or work, in a specified area”,
but that is an indirect, rather than a direct, benefit.
I am not nitpicking and I am not being too pedantic, but such provision would enormously put the icing on the cake of what we have achieved. The main benefit of a CLT, as the Minister knows, is,
“furthering the social, economic and environmental interests of a local community”,
through working with or benefiting organisations,
“by acquiring and managing land and other assets”.
It would be satisfactory if my noble friend were able to say—I am not putting words into his mouth—that his understanding is that the bodies that I have listed could be embraced by that definition.
I take this last opportunity to thank Members of all parties around the House. The Minister took on board the fact that this was not a party matter but a House matter, a housing matter and a community matter, which has been reflected in the Minister’s willingness to act. I am grateful for what has been achieved and, with the possibility of clarification, I am delighted with the amendments.
My Lords, the noble Lord is generous in his congratulations and I can tell that he is delighted with the progress that has been made. I am pleased about that. Like the noble Lord, I am a firm “co-operator” and I suppose that I should declare that interest. I see the establishment of community land trusts as an important part of that movement.
The noble Lord seeks some clarification. It comes down to this: how can the community land trust use its assets and make use of its profits and surplus and, in doing so, how can it benefit community organisations, even if such organisations have a private interest as well? Of course local people can be members of the community land trust, but that does not mean that only local people are eligible for membership. Others may become members, which will depend very much on how the community land trust defines its own rules of governance. These rules of governance can extend to cover local organisations—those listed by my noble friend would certainly be covered. As long as there is a benefit to those individuals who are members, I do not think that there will be a difficulty with the understanding that my noble friend has. That is certainly how we envisaged it working when we came back with this definition.
I hope that that helps my noble friend Lord Graham. It is certainly intended to. This will enable community land trusts to have that broader social community role that noble Lords have argued for in our debates. I hope that we can agree to the amendments.
My Lords, my noble friend has been enormously helpful. As I sat behind him listening, he clarified that the words in the Bill envisage that there will be more than individuals as members of the trust. The actions taken by the trust will be the members’ decisions. If the bodies that are members are locally based, they will be able to influence the decisions of the trust and to be beneficiaries of and subject to the trust. I am enormously grateful to my noble friend for that clarification. I do not want him to alter a word of what he said, so I shall sit down and be quiet.
On Question, amendment agreed to.
14: Clause 79, page 38, line 19, at end insert—
“(2) In subsection (1)(ca) “community land trust” means a body corporate which satisfies the conditions below.
(3) In those conditions “local community” means the individuals who live or work, or want to live or work, in a specified area.
(4) Condition 1 is that the body is established for the express purpose of furthering the social, economic and environmental interests of a local community by acquiring and managing land and other assets in order—
(a) to provide a benefit to the local community, and(b) to ensure that the assets are not sold or developed except in a manner which the trust’s members think benefits the local community.(5) Condition 2 is that the body is established under arrangements which are expressly designed to ensure that—
(a) any profits from its activities will be used to benefit the local community (otherwise than by being paid directly to members),(b) individuals who live or work in the specified area have the opportunity to become members of the trust (whether or not others can also become members), and(c) the members of the trust control it.”
On Question, amendment agreed to.
15: After Clause 113, insert the following new Clause—
“Registration of local authorities
(1) The Secretary of State may by order—
(a) repeal section 113, or(b) amend it so as to permit the registration of specified classes of local authority.(2) The Secretary of State may by order require the regulator to register—
(a) a specified local authority, or(b) a specified class of local authority.(3) Registration under subsection (2)—
(a) takes effect in accordance with any provision of the order about timing or other procedural or incidental matters,(b) does not require an application for registration, and(c) may apply to a local authority whether or not it is eligible for registration by virtue of subsection (1).(4) If the Secretary of State thinks it necessary or desirable in connection with the registration of local authorities, the Secretary of State may by order—
(a) provide for a provision of this Part or any other enactment not to apply in relation to registered local authorities;(b) provide for a provision of this Part or any other enactment to apply with specified modifications in relation to registered local authorities;(c) amend a provision of this Part or any other enactment.(5) In this section—
(a) “local authority” means an authority or person to whom section 113 applies or has applied, and(b) “registered local authorities” means authorities or persons who are registered, registrable or to be registered as a result of an order under subsection (1) or (2) above. (6) Before making an order under this section the Secretary of State shall consult—
(a) any authority or person likely to be affected by it, and(b) such other persons as the Secretary of State thinks fit.”
The noble Baroness said: My Lords, I agreed on Report that we should table an enabling power to allow us to deliver the provisions necessary to support cross-domain regulation through secondary legislation. We had a wide-ranging debate on this at every stage of the Bill, and given the widespread support across the House for doing it in this way, our offer was well received. I am very pleased about that.
As I pointed out in the debate, we need a broad power that is flexible enough to allow us to make the necessary changes to legislation. It would be extremely unfortunate, as I think everyone would agree, if we were to forgo the opportunity of a Bill in the next Session only to find that we had drafted an enabling power too tightly to allow us to proceed as we ideally would. We would very much regret that, and I believe that the House is happy with the breadth of the amendment.
That is why we seek to introduce a power that allows the Secretary of State to amend or modify as necessary or desirable Part 2 of this Bill or any other relevant legislation so as to enable the Tenant Services Authority to regulate local authorities. I have not sensed a significant degree of concern at taking this broad approach. I trust that the enthusiastic support is such that noble Lords certainly accept that it is fit for purpose.
In taking a broad power, our intention is that it would be used sensibly and only where there is a clear rationale for making a change in support of effective cross-domain regulation. I have already committed to offering a full public consultation on regulations made under the power, which is obviously right. The work of the Cole advisory panel has shown that much can be achieved from engaging in an open and inclusive process. Everyone around the House has paid tribute to the work of Professor Ian Cole. In our eagerness to consult in terms of ongoing dialogue and a more formal consultative process I hope that we will satisfy those noble Lords, particularly the noble Lord, Lord Dixon-Smith, who had expressed a preference for super-affirmative procedures.
The enabling clause is fairly simple. In addition to allowing us to amend, modify or not apply any piece of legislation as required, it also allows for the registration of local authorities. It allows the Secretary of State to register, by order, a specified local authority or a class of authority. In so doing, the order may make provision about how the registration should operate; that is, the process on which we will consult as part of the wider regulations.
Having debated the complex nature of these regulations, it is something of an anti-climax to be discussing a clause which is rather simple in its description. We can now make a welcome shift to considering the substance rather than the process of delivering a cross-domain regulator, and to doing those things that will meet the social concerns recognised by the noble Lord, Lord Best; for example, creating a coherent culture to ensure that the benefits of the Bill reach every tenant, as defined.
This is the last group of amendments. Very kind things have been said about my ability to find time in my diary for meetings. It has been a great pleasure to work with noble Lords across the House and not just a necessity. I believe that we should have an open process and debate on this Bill. It was a good Bill when we introduced it, but it is much better now, which is to the huge credit of noble Lords who have taken part. It would be invidious to single out anyone, but I have been gratified to have the authority and support of my noble friends Lady Ford and Lady Dean on my side, as well as the assiduous nagging of my noble friends Lord Howarth, Lord Graham and Lady Whitaker. They have put in sterling work, as have my noble friends Lord Filkin and Lady Jones.
I pay tribute to the noble Lord, Lord Best, who has been a real sheepdog on the Bill and has ensured that we have made the position of the tenant very clear. He has played an excellent role, as have noble Lords on both Front Benches. The noble Viscount, Lord Eccles, has kept us up to the mark on the management of the Bill. On behalf of all noble Lords, I thank the Bill team for their extraordinary talent. They have been exceptional in their creativity as well as in their assiduous response to the will of this House, which was shown in the expert way in which they have come back with voluminous correspondence and the sensitive way in which they have interpreted what the House has wanted. With that, I hope that we can bless the Bill in its form. I beg to move.
My Lords, again I give deep thanks to the Minister for listening to the representations made and for bringing forward this important amendment. I also thank all colleagues on all Benches in supporting a potentially lonely Cross-Bencher who alone can do very little. I know that this amendment will be much appreciated by the organisations representing tenants and landlords, including the Local Government Association, the Chartered Institute of Housing, the National Federation of ALMOs, the Tenant Participation Advisory Service and the National Consumer Council. It means that council tenants can enjoy the same protections and support from the regulator as housing association tenants without the need for another Act of Parliament. It will prevent anomalies and complexities as tenants move between council housing and housing association homes. All will have a similar service. It will ensure that council tenants will not be treated as second-class citizens. It will also enable the new Tenant Services Authority to establish a coherent culture, as the noble Baroness has said, to recruit a board and to engage staff on the basis of certainty that 4 million, not 2 million, tenants will be covered without waiting for a new Bill.
If the Minister could give an idea of timetabling for consultation and action in taking forward the extension of the Tenant Services Authority’s role to cover council tenants, that would be appreciated. But that can await another day. I know that things will move forward as expeditiously as possible. I thank the Minister for this amendment, which I heartily support.
My Lords, when I was fairly new in this House, Lord Longford stood back to let me go through a Division Lobby first and then apologised and said, “I am sorry, we do not do things that way now, do we?”. I, too, should like to add my thanks.
I apologise for lowering the tone, but I have a question. Under the new clause proposed in Amendment No. 15, subsection (2) allows registration of,
“a specified local authority, or … a specified class of local authority”.
That puzzles me. I had not anticipated that it might be necessary to differentiate between authorities. I gave the noble Baroness almost no notice of this question and I do not know whether she is able to explain why that is necessary.
My Lords, I was grateful for the notice that I was given. We have yet to publish Professor Cole’s report, but, given that it has been circulated, I am not breaking any confidences in relating that it will recommend that only those local authorities which own stock should be subject to consultation. Specifying the local authorities gives us flexibility. The clause allows us to register such a class and gives us the ability to specify a particular authority. We will of course have to consult on this, along with the way in which we propose to handle registration of local authorities, when we bring forward draft regulations.
My Lords, if I am out of order, I apologise and I hope that the House will understand. I need to add my thanks, first, to everyone in the House who has taken part in this Bill. There is no question that the Bill will leave this House in a far better state than it arrived, which is the result of the work of so many people besides ourselves. I owe thanks to all those who have briefed us. They sometimes swamp us with information, but, as a consequence of that, we are much better informed when we study these Bills and are able to bring improvements forward.
I am particularly grateful to the noble Baroness, who has been remarkably resistant to change and yet remarkably flexible at the same time, which is quite an achievement. If I have one regret, I have one only. The Bill was 32 pages longer this morning than when it arrived here. As a result of this morning’s work, it is probably 35 pages longer. Those out in the field who have to study the Bill in order to work will have to dig even further and mine even longer shafts in order to receive the nuggets they need on which their work is based.
On Question, amendment agreed to.
Clause 319 [Orders and regulations]:
16: Clause 319, page 149, line 41, leave out “14(8)” and insert “13”
17: Clause 319, page 149, line 41, after “14(8)” insert “, (Registration of local authorities)”
18: Clause 319, page 150, line 10, at end insert—
“( ) If a draft of an instrument containing an order under section 13 would, apart from this subsection, be treated as a hybrid instrument for the purposes of the standing orders of either House of Parliament, it is to proceed in that House as if it were not a hybrid instrument.”
19: Clause 319, page 150, line 15, leave out “13 or”
20: Clause 319, page 150, line 15, leave out second “section” and insert “sections (Registration of local authorities) and”
On Question, amendments agreed to.
Schedule 8 [Amendments of enactments: Part 1]:
21: Schedule 8, page 195, line 20, at end insert—
“Local Government Act 1972 (c. 70)The Local Government Act 1972 is amended as follows.
(1) Section 100J (application of Part 5A of the Act to new authorities, Common Council, etc.) is amended as follows.
(2) In subsection (1) after paragraph (f) insert—
“(g) the Homes and Communities Agency so far as it is exercising functions conferred on it in relation to a designated area by virtue of a designation order.”(3) After subsection (2) insert—
“(2A) In its application by virtue of subsection (1)(g) above in relation to the Homes and Communities Agency, a reference in this Part to the offices of the council (however expressed)—
(a) is to be treated as a reference to such premises located within the designated area as the Homes and Communities Agency considers appropriate, and(b) in the application of section 100A(6)(a) above to a case where the meeting is to be held at premises other than those mentioned in paragraph (a) above, includes a reference to those other premises.”(4) After subsection (3) insert—
“(3ZA) In its application by virtue of subsection (1)(g) above in relation to the Homes and Communities Agency, section 100E above shall have effect as if—
(a) in subsection (2), paragraph (c) was omitted, and(b) in subsection (3), for paragraphs (a) to (c) there were substituted—“(a) a committee established under paragraph 6(1) of Schedule 1 to the Housing and Regeneration Act 2008 for the purpose of exercising functions conferred on the Homes and Communities Agency in relation to a designated area by virtue of a designation order; or(b) a sub-committee of such a committee established under paragraph 6(2) of that Schedule to that Act for that purpose.”(3ZB) In its application by virtue of subsection (1)(g) above in relation to the Homes and Communities Agency, section 100G(1) above shall have effect as if paragraph (a) was omitted.”
(5) After subsection (4A) insert—
“(4B) In this section “designated area” and “designation order” have the same meanings as in Part 1 of the Housing and Regeneration Act 2008.”
In section 100K (interpretation and application of Part 5A) in the definition of “committee or sub-committee of a principal council” at the end insert “(and see section 100J(3ZA)(b) above)”.”
22: Schedule 8, page 199, line 29, at end insert—
“Housing Act 1985 (c. 68)In Schedule 5 to the Housing Act 1985 (exceptions to the right to buy) in paragraph 3, at the end insert “, or
section 19 of the Housing and Regeneration Act 2008 (financial assistance) which was a grant made on condition that the housing association provides social housing (and “provides social housing” has the same meaning as in Part 1 of that Act).””
On Question, amendments agreed to.
Schedule 11 [Possession orders relating to certain tenancies]:
23: Schedule 11, page 219, line 2, at end insert “for purposes other than the purposes of the Secretary of State or the Welsh Ministers making orders under Part 2 of this Schedule”
24: Schedule 11, page 223, line 29, at end insert “for purposes other than the purposes of the Secretary of State or the Welsh Ministers making orders under this Part of this Schedule”
On Question, amendments agreed to.
Schedule 16 [Repeals and revocations]:
25: Schedule 16, page 250, line 42, column 2, at beginning insert—
“In section 10(2), paragraph (e) and the “or” before it.”
On Question, amendment agreed to.
Terrorism Act 2000 (Proscribed Organisations) (Amendment) (No. 2) Order 2008
rose to move, That the draft order laid before the House on 2 July be approved.
The noble Lord said: My Lords, the international terrorist threat to the United Kingdom and its interests abroad, and to our international partners, remains severe and sustained. The Government are determined to do all they can to minimise the threat, including using proscription to prevent terrorist organisations from operating in the United Kingdom by inviting support, raising funds or otherwise furthering their objectives.
The purpose of the order, if this House and the other place so approve, is to add to the list of 45 international terrorist organisations that are already proscribed. We propose to do so by substituting the existing proscription of the Hezbollah External Security Organisation with a new listing covering its entire military wing. This is the seventh proscription order made under the Terrorism Act 2000.
Section 3 of the Terrorism Act 2000 provides a power for the Home Secretary to proscribe an organisation if she believes it is concerned in terrorism. This is achieved by adding the organisation to Schedule 2 to the Terrorism Act 2000, which lists the proscribed terrorist organisations. The Act specifies that an organisation is concerned in terrorism if it: commits or participates in acts of terrorism; prepares for terrorism; promotes or encourages terrorism, including the unlawful glorification of terrorism; or is otherwise concerned in terrorism.
The Home Secretary may proscribe an organisation only if she believes it is concerned in terrorism. If the test is met, she may then exercise her discretion to proscribe the organisation. When considering whether to exercise this discretion, a number of factors are taken into account, which were first announced to Parliament in 2001. They are: the nature and scale of an organisation’s activities; the specific threat that it poses to the United Kingdom; the specific threat that it poses to British nationals overseas; the organisation’s presence in the United Kingdom; and the need to support other members of the international community in tackling terrorism.
Proscription is a tough but necessary power, and its effect is that the proscribed organisation is outlawed and is unable to operate in the United Kingdom. The consequence of proscription is that specific criminal offences apply in relation to a proscribed organisation. These include membership of the organisation, the provision of various forms of support, including organising or addressing a meeting, and wearing or displaying an article indicating membership of the organisation. Further criminal offences exist in relation to fundraising and various uses of money and property for the purposes of terrorism.
Given the wide-ranging impact of proscription, the Home Secretary exercises her power to proscribe an organisation only after thoroughly reviewing all the available relevant information on it. This includes open-source material as well as intelligence material, legal advice and advice reflecting consultations across government, including with the intelligence and law enforcement agencies. Decisions on proscription are taken with great care by the Home Secretary, and it is also right that both Houses must consider the case for proscribing new organisations.
The Hezbollah External Security Organisation, a unit of the military wing, was proscribed in 2001 because of its involvement in terrorism outside Lebanon. We now have evidence that further parts of the organisation are directly concerned in terrorism, and this is why the entire military wing, including the External Security Organisation, is specified in this order. I am sure that noble Lords will appreciate that I am limited in what I can say about the evidence in support of this belief, as much of it is intelligence material and of a sensitive nature. I can, however, say unequivocally that Hezbollah’s military wing is providing active support to Shia militant groups in Iraq, including Jaish al-Mahdi (JAM), which has been responsible for attacks on both Iraqi civilians and coalition forces. This includes providing training in the use of deadly, explosively formed projectiles used in roadside bombs.
Although I am unable to go into the detail of the evidence, I can inform noble Lords that Hezbollah’s support for insurgent groups in Iraq was confirmed when coalition forces captured a senior Hezbollah operative, Ali Musa Daqduq, in Iraq on 20 March 2007. Daqduq is a Lebanese national who served for 24 years in Hezbollah. In 2005, he was directed by senior Lebanese Hezbollah military commanders to train Shia groups in Iraq. Hezbollah’s military wing is also providing support to Palestinian rejectionist groups in the occupied Palestinian territories, including Hamas and Palestinian Islamic Jihad.
The proscription of Hezbollah’s military wing will contribute to making the United Kingdom a hostile environment for terrorists and their supporters. It will signal our condemnation of the support that Hezbollah provides to those who attack British and other coalition forces in Iraq, as well as Iraqi civilians. It will support our international partners in disrupting terrorist activity in the occupied Palestinian territories, and it will also send a strong message that the United Kingdom is not willing to tolerate terrorism either here or anywhere else in the world.
Noble Lords will be aware that, alongside its military operations, Hezbollah performs a legitimate political, social and humanitarian role in Lebanon. Proscription is not targeted at, and will not affect, these legitimate activities, but it sends a clear message that we condemn Hezbollah’s violence and support for terrorism. We continue to call on Hezbollah to end terrorist activity, abandon its status as an armed group and participate in the democratic process on the same terms as other Lebanese political parties.
As a final point, I have already said that the Government recognise that proscription is a tough power that can have a wide-ranging impact. Because of this, there is an appeal mechanism in the legislation. Any organisation that is proscribed, or anyone affected by the proscription of an organisation, can apply to the Home Secretary for the organisation to be deproscribed. If this is refused, the applicant can appeal to the Proscribed Organisations Appeal Commission, POAC, a special tribunal which reviews whether the Home Secretary has properly exercised her powers to refuse to deproscribe the organisation. POAC is able to consider the sensitive material that often underpins proscription decisions, and a special advocate can be appointed to represent the interests of the applicant in closed sessions of the commission.
Given the evidence of the military wing of Hezbollah’s direct support for terrorism in Iraq and the occupied Palestinian territories, it is right that we extend the existing proscription of the External Security Organisation to cover Hezbollah’s entire military wing. I commend the order to the House. I beg to move.
Moved, That the order laid before the House on 2 July be approved. 25th Report from the Joint Committee on Statutory Instruments.—(Lord West of Spithead.)
My Lords, Part 2 of the Terrorism Act 2000 contains a procedure for proscribing organisations that the Secretary of State believes to be “concerned in terrorism”. As the Minister stated, this covers any organisation which,
“commits or participates in acts of terrorism, prepares for terrorism, promotes or encourages terrorism, or is otherwise concerned in terrorism”.
The list of proscribed organisations is set out in Schedule 2 to the Terrorism Act 2000. The Secretary of State has the power, by order, to add to, remove or amend a name on the list.
Sections 11 and 12 of the Terrorism Act 2000 create a wide range of offences dealing with membership or professed membership of proscribed organisations, the promotion of them and meetings in support of them. Moreover, the grounds for proscription have been widened by the recent Terrorism Act 2006. Under Section 21 of that Act, organisations which “glorify” the commission or preparation of acts of terrorism can also be proscribed.
On 2 July, the Government laid before Parliament this order seeking to proscribe the military wing of Hezbollah in its entirety, including the jihad council and all units reporting to it. If the order is approved by Parliament, it will be a criminal offence to belong to, fundraise and encourage support for the military wing of the organisation.
The Explanatory Memorandum to the order states inter alia:
“Hizballah is actively involved in terrorist related activities. These activities include, but are not limited to, the provision of training and logistical and financial support to terrorist groups in Iraq and Palestine. The military wing of Hizballah is involved in supporting Shia insurgent groups in Iraq to carry out attacks, including against Coalition forces”.
During Prime Minister’s Questions on 2 July, the right honourable gentleman the Prime Minister told the House:
“To help bring about more general peace in the Middle East, we have been considering what we can do. We have today laid an order before Parliament extending proscription to cover Hezbollah’s entire military wing, solely on the grounds of new evidence of its involvement in terrorism in Iraq and the occupied Palestinian territories. Proscription will not affect Hezbollah’s legitimate political and social wings, but we continue to call on Hezbollah to end its status as an armed group, to participate in the Lebanese democratic process, and to do so on the same terms as other political parties”.—[Official Report, Commons, 2/7/08; col. 860.]
The Government have emphasised that this order will not affect Hezbollah’s political, social and humanitarian activities. Introducing the order, the Home Office Minister, the right honourable Tony McNulty, said that proscription of Hezbollah’s military wing would not affect the legitimate political, social and humanitarian role Hezbollah plays in the Lebanon but would send out a clear message that the Government condemn Hezbollah’s violence and support for terrorism.
With respect to that observation, can the Minister explain how this distinction will work in practice? Can the group be simultaneously legitimate and a terrorist organisation? This suggests two entirely separate wings of Hezbollah that operate independently from each other. Is the Minister confident that this is really the case? In particular, to what extent does Sheikh Nasrallah, Hezbollah’s recognised leader and in overall charge of Hezbollah’s military activities, have control over Hezbollah politicians within the Lebanese Cabinet?
Will the United Kingdom seek the proscription of Hezbollah’s military wing by the European Union? Does the Minister not agree that if the United Kingdom designation is to have any real effect, it needs to be extended to the Union as a whole?
Does the Minister not agree that this move to ban the military wing must be linked to steps to achieve the group’s disarmament, without which it will remain an unacceptable threat to Israel and to the security of the region?
What evidence does the Minister have of Hezbollah’s fundraising activities in the United Kingdom, and if none, what measures are being taken to identify such activity? The Government’s measure falls short of proscribing the whole organisation. Will that not increase the risk of fundraising, supposedly for political and humanitarian purposes, being diverted to Hezbollah’s military activities?
In announcing the decision to proscribe the whole military wing of Hezbollah, the Prime Minister said the move was based,
“solely on the grounds of new evidence of its involvement in terrorism in Iraq and the occupied Palestinian territories”.—[Official Report, Commons, 2/7/08; col. 860.]
Does the reference to terrorism in Iraq include any specific threat to United Kingdom personnel?
The proposed policy towards Hezbollah contrasts with the Government’s approach towards the Tamil Tigers and the Kurdish PKK, both of which are fully proscribed. The right answer, surely, is for the order to impose a complete ban on Hezbollah in the United Kingdom; otherwise, it will continue to be able to raise funds which, and recruit members who, can then be diverted for terrorist purposes.
My Lords, we on these Benches support this order, although we would certainly not join with the Conservatives in supporting a complete ban on Hezbollah in the United Kingdom. We have spent many years, all of us involved in United Kingdom politics, accepting the rather artificial distinction between Sinn Fein as a political movement and the Irish Republican Army as a military operation. We recognised at the time that it was important to maintain that there was a distinction, even though that distinction was never entirely clear.
We all accept that the threat from terrorist organisations in the United Kingdom and elsewhere is real but that, as an open and democratic country, political movements operating in and outside Britain have legitimate functions to fulfil and, furthermore, in our very diverse society, that charitable activities in the United Kingdom to support suffering in other countries are legitimate. I do much of my politics in Yorkshire and I am conscious that the issue of charitable activities to support humanitarian projects in other countries can on occasions be quite controversial. Nevertheless, we have to maintain those clear distinctions. We also recognise that one man’s terrorist activity outside Britain is another person’s armed resistance.
One of the questions one has to ask about the proscription of the political wing of Hezbollah is whether this is primarily about Iraq or the Palestinian territories. As the Minister is well aware, my party has never supported the full weight of western intervention in Iraq. Armed resistance in Iraq is not always necessarily legitimate. Hezbollah is now a political actor in the Lebanon and a member of the Government—not entirely an attractive member of that Government, but we all have to deal with movements of which we disapprove. Hamas, similarly, is a very unattractive body in many ways but a necessary partner in negotiating to move away from the Israel/Palestine conflict. Many of us intensely disliked negotiating with Sinn Fein but, again, recognised that it was necessary.
I ask the Minister how the additional criteria come in. The specific threat posed to the UK seems thin. As I understand it, Hezbollah does not intend under any circumstances to operate within the United Kingdom. We are talking about activities in the occupied Palestinian territories and in Iraq. It is probably difficult for the Minister to outline the extent of the organisation’s presence in the UK, but, as I understand from the order, this is not itself a major issue. The two primary justifications among the additional criteria are: the specific threat posed to British nationals overseas—by which we mean British troops still in Iraq so long as they are there—and the need to support international partners in the fight against terrorism. Some of us wish to distinguish between the British definition of the fight against terrorism and the Bush Administration’s definition of it, and are not sure that the Government should always support 100 per cent the latter. However, would the Minister confirm that the need to support international partners is one of the major motivations for this order?
My Lords, I am somewhat puzzled by the timing of the order introduced by Her Majesty’s Government. As someone who is concerned about the use of terrorism in various parts of the world, I have viewed with interest and encouragement, albeit with some impatience, the moves by Hezbollah towards the democratic process.
Some years ago, I was asked to start meetings with Hezbollah on the development of a peace process in the Middle East and specifically how it could address the question of its weapons, which at that stage was a major international issue for it. I had a series of meetings with it at that time. There are a few requirements when dealing with weapons and the decommissioning of weapons. First, there is an alternative political process for dealing with difference and political disagreement. Secondly, those who are being invited to decommission must not feel that they are under a threat that requires them to retain their weapons. Thirdly, there should be a mechanism for them to do this.
The great difficulty that arose in those conversations was the increasingly obvious move that led eventually to the south Lebanon war. There was no prospect of persuading people to deal with their weapons if they felt that they might be invaded, and indeed when there was clear evidence that they had been invaded. The question of dealing with the weapons has therefore had to be postponed. The question of a peace process in the Middle East is fraught and difficult. Nevertheless, there have been a number of interesting developments in the last little while, almost none of them involving the United Kingdom or the United States. I am thinking of the discussions involving Syria and Israel, assisted by Turkey; the discussions between Israel and Hamas, facilitated by Egypt; and the recent agreement, facilitated by the Germans, for Hezbollah to hand over the two IDF soldiers and, in return, for Hezbollah operatives to be returned.
In all these situations, it is clear that negotiations are possible. Indeed, there have already been some negotiations. As I say, there has been an indication in the past few days that Israel is prepared to enter into talks with Hezbollah and with those in Hezbollah who have military responsibility, and with Hamas using the interlocutors of Egypt. It is therefore a puzzling time to send the message, whatever the legalities of the thing—other noble Lords have already questioned the clarity of the order in this regard—not so much that we are hostile to terrorism, because frankly there is nothing new there, but that we are hostile to and do not welcome the opportunity to win people over to the democratic process and encourage them in that regard, and that we want simply to appear antagonistic to them and all that they stand for.
I am puzzled to know how a political development of that kind assists those of us who are trying to persuade people in Hezbollah that there are alternative ways of dealing with difference and political difficulty. The West in general, of which we are a part, is eager to facilitate that, but at the point at which there are moves towards discussion of these very issues, there seems on every occasion to be some kind of military or security development that sends the message that such discussion is not very welcome. That is absolutely how it is perceived. When there are talks about decommissioning weapons, next there is a war that makes that impossible, and when people start to become involved in the democratic process by being elected, in the case of Hamas and Hezbollah, the message is not, “Now we can start to engage you and persuade you to go the full way in committing yourself to democracy”, but, “We have to isolate the whole community that has voted for you”, because we do not particularly welcome the result of their election.
The timing is puzzling, and I would be interested to hear the Minister say how he believes the order will facilitate the political process to persuade people to give up military force and instead follow a fully democratic path, and whether this development makes life more difficult practically, legally and politically for those of us who do not believe that there is a military solution to the difficulties in the Middle East. There is a military role, but there is no military solution to any of them. How will the order facilitate moves toward political dialogue and political exchange, and how far do Her Majesty’s Government feel that a development of this kind and at this time makes a difference to terrorism and in any way facilitates political progress?
My Lords, I shall speak briefly on a different issue in which the Minister was involved. The PMOI, after a long and complicated legal process in the British courts, was cleared of being a terrorist organisation. I recall the Minister making a statement about this in this House. He, and certainly the Minister in another place, indicated that the consequence of the case would be a change of attitude in the European Union Council of Ministers. This has not happened, and I would like to know why and what attitude the British took.
My Lords, I thank noble Lords for this considered debate on the proposals, and I appreciate the views expressed by colleagues in this House on the wider concerns that are affected by the order. There have been some thoughtful and helpful interventions, and I will try to deal with them.
The noble Lord, Lord Kingsland, articulated very clearly our reason for going down this route. He asked how confident one might be about differentiating between the different parts of Hezbollah, particularly in collecting money and moving it. I agree that this is extremely difficult. The police and the Charity Commission will have to look at the arrangements that cover money flowing out of the country. Generally, it is incumbent on the person who gives money to something to check exactly whom it is going to, but I accept that this is difficult. The police and the Charity Commission will have to look very carefully at this, which is not easy to do. Will we ask the EU to proscribe this? We will take this to the EU and see how that goes with the committee that reviews this.
The noble Lord, Lord Russell-Johnston, asked why our position on the PMOI has not changed. I will touch on this in the context of the EU. The EU addressed this, but I am afraid that some of the other nations in the EU did not feel the same way as we did. Therefore, the issue is slightly in limbo at the moment and is still on the EU’s list. I am not sure how this will go forward, but that is where it stands at the moment.
The noble Lord, Lord Kingsland, talked about disarmament. We would like to link this to disarmament, but it is extremely difficult to do so. Again, we will have to see how this can be done. It is not easy, but it is extremely important that we show that we differentiate between these two things. The issues that made us change our mind and review all this have been going on for many months, and we have had to have a lot of discussions with a lot of people, sift all the intelligence and look at all the evidence. The end result was that we were very clear that this was having an impact on our troops in Iraq. There was also the issue of the Palestinian territories. The noble Lord, Lord Wallace, asked whether we could differentiate between the two. The answer is no. The threat to coalition forces, which inevitably include our own troops, is very great. We have lost 136 of our people there, and it is very important that we show that this is totally unacceptable not only so far as terrorism is concerned but unacceptable full stop. We have reached that position, which is the reason for the timing of the order.
The noble Lord, Lord Alderdice, asked about the timing of the order. He has great experience of conflict resolution, and we all think very highly of it. He knows a lot about it, and he made some very important points. I touched on the issue of disarmament. It is absolutely true that it is almost impossible to get anyone to disarm if they feel that they will be attacked, and that is quite understandable. One has to get beyond that before anything can be done. In an ideal world, the timing, as with so many things in this area, might not be quite like this. As I said, however, there is a very real threat to our people—136 have been killed, many of them by these very clever improvised explosive devices. We know now that Hezbollah is linked to this as terrorists. We had to move on this to give a signal.
Is this absolutely the best moment to do that? It is important to show that we understand the good things that Hezbollah is doing within Lebanon. Our ambassador in Lebanon has talked to the various people involved there. We think that it would be wonderful if Hezbollah became a proper political party. It is rather important to show that we differentiate between the two. That is why the timing might seem a little strange. I am afraid that it takes a long time for these things to flow through and to do all the checks. We have arrived at that stage now. There is no nefarious plan. It has not been done as a clever move to send a particular message. I agree that it might not be the best moment, but it is important to make it absolutely clear that we are unwilling to let terrorists act in the way that they do, particularly when they injure and kill our people who are operating in Iraq. A number of speakers have rehearsed the possibility of going further than we have. I believe that there is a difference between the two wings, and have already touched on the issue of how easy it is to differentiate them in the UK. It is difficult to do that, but we should try because it is important.
I hope that I have touched on most of the points raised. If I have not, I will, if I may, write to noble Lords afterwards. As I said, this is an issue of great importance. A number of noble Lords asked whether the threat from this group is specifically within the UK. I have to say that it is not; it is within Iraq and the Occupied Territories. The threat is not to the UK but to our interests abroad and to those who are serving us abroad. It is therefore important that we do this. It will contribute to our efforts to make the United Kingdom a hostile environment to those who support terrorism. It will send a clear message of our condemnation of Hezbollah’s support for terrorism while at the same time showing it that there is a way forward by becoming a proper member of the community and doing all the good things that it does in supporting its own community. As such, I commend this instrument to the House.
On Question, Motion agreed to.
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.]
130FG: Before Clause 107, line 31, after “Regulator,” insert—
“( ) persons representative of pension trustees,”
The noble Lord said: The provisions for consultation in Amendment No. 130EW seem excessively narrow. That is why I have moved this amendment and the two that go with it. I beg to move.
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 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.]
134: Before Clause 107, insert the following new Clause—
“Announcement regarding link with earnings
Within six months of the coming into force of this Act, the Secretary of State shall announce to Parliament his intention as to the timing of the implementation of section 5 of the Pensions Act 2007 (c. 22).”
The noble Lord said: This amendment, which would insert a new clause into the Bill, hides for me a real dilemma. For many years we have had annual uprating orders whereby the state pension has been increased by the rate of inflation pertaining in the previous October. The noble Lord has done several, and I did many more. Section 5 of last year’s Bill, now enacted, states that the Secretary of State would introduce an order for state pensions to be increased instead by the increase in the average wage. This concept was intrinsically linked in the Pensions Commission’s report with the introduction of what we now call personal accounts. The Government have said that they will be introduced in 2012, though recent statements by the chief executive of PADA have thrown some doubt on this. It seems to be merely an objective, not a promise. Furthermore, we do not yet know whether the Government regard the tying of this to the introduction of personal accounts as essential or not.
The Government have been extremely vague about great chunks of the Bill. It is in essence a framework Bill, and the Minister’s attitude, as I said on Amendment No. 130EW, has been one of, “Let’s have it in the Bill, and if necessary we’ll change it by order”. That is no way to legislate. If the Government are unsure of the final format for a particular clause in Committee, they should allow themselves time to think and bring the subject back on Report. As for this amendment, I believe that the Government need to be pinned down on the start date of restoring the link with earnings. For us on these Benches, to allow flexibility is one thing, but it does not extend to a vague promise to change things by the end of the next Parliament. Six months after the passing of this Bill, the Government should know when restoring the link will be possible. Indeed, if my great party had won the 2005 election it would have already happened, as we promised in our election manifesto. So it is time, or rather will be in eight or so months, for the Government to stop their dithering and come to a decision. On this matter at least, it is time for the Government to govern. I beg to move.
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.
[Amendment No. 134ZA not moved.]
134ZB: Before Clause 107, insert the following new Clause—
“Trivial commutation limit
(1) The trivial commutation limit shall be raised as prescribed and shall not fall below a minimum level of £25,000.
(2) All pension sums trivially commuted shall not be included in the assessment of capital, income or notional income for income related benefits.”
The noble Baroness said: I declare an interest as a trustee of TPAS, The Pensions Advisory Service, which tells me that this is a regular problem on its helpline and one that it is concerned about. The amendment is obviously a probing one, unworkable and unaffordable as it stands.
I had intended, but time does not permit it, to raise other interconnected issues such as risk, means-tested benefits and trivial commutation and, in particular, to press my noble friend on the issue of stranded pots. In brief, the risk is that older, poorer women may not have a big enough pot to float them off means-tested benefits. For them, as the PPI has identified, it may not pay to save. The best way to overcome that risk is to help her to increase the size of her pot, ideally to cover her earnings below £5,000, but also to consider increasing the annual or lifetime sum so that it can go into personal accounts. One other option, the purpose of today’s amendment, is to allow the transfer of small pots into personal accounts or, if the personal account is the small pot because there are only a few years of savings in it, to allow a transfer out into a larger alternative existing pot.
I know that the industry is concerned about destabilising the existing annuity market, but the effect on it would be trivial and would overcome the very real injustice—I might go so far as to say “theft”—of small stranded pots. Take the hairdresser who has been self-employed and more recently employed, perhaps over the past decade, in a larger salon, who, along with her employer, is now paying into a personal account. She ends up with a personal account pot of, let us say, £18,000. That is too large to trivially commute because it is above the £16,500 limit, so she must annuitise.
However, that hairdresser also has three small personal pensions of £2,000 each, with different providers from different times in her life when she was self-employed and thought that she had enough resources to build up some modest savings for retirement. If she acquired those three small pots as an employee working in a salon for another employer, and therefore with an employer’s contribution so that she had paid in only half, she would be able to cash them in; since last year’s Budget, such pots are going to be ignored by HMRC, which is a sensible and generous provision.
If, instead, those three little £2,000 pots are personal pensions, then although she has paid for every penny in those pots without an employer contribution, she cannot trivially commute them because her personal account is above the trivial commutation limit. They are too small to be annuitised, as pots below £5,000 are too small for the industry to bother with. I am told that the industry will not normally bundle them up if they are from different providers. She is not allowed, for at least five years and maybe not even then, to transfer them into her personal account and build her pot. So what happens? She cannot access those three £2,000 pots at all. They are stranded. They are in limbo. One-quarter of her lifetime savings is completely lost to her.
Why are those pots not ignored, like small occupational pots with an employer contribution? Because of HMRC’s fear that large personal pots could then be fragmented and the system manipulated. We could avoid that by capping the total sums. I get fed up sometimes with our apparent willingness to accept that in order to avoid one rich person’s theoretical manipulation of the system, 100 people will lose their savings, like our hairdresser. That money is lost: £6,000 of £24,000 is gone; it is inaccessible. That is shocking and unacceptable. Incidentally, that £6,000 in the little stranded pots might have been the extra personal savings that sprang her clear of means-testing. Instead, the money that she has saved goes not to her but to other members in her scheme and she might perhaps fall back on the taxpayer instead. So it is not only shocking but stupid.
I hope that my noble friend will get agreement from the industry that in this situation, where the industry does not want to annuitise, it will raise no objections to the transfer in of those small pots to personal accounts and that, likewise, if the personal account is the smaller pot, it could be transferred out so that the PA pot is not lost. That might take place at retirement only, although it would be more attractive if it could be done earlier when the pot might seem more worth while. I hope that my noble friend can come back, either today or on Report if we need amendments—perhaps he could tell me if that is the case—with a way forward on this. If he does not, I shall—with your Lordships’ support, I hope—return to the matter.
I had been proposing on this amendment to raise the issue of trivial commutation. If the cap were raised from £16,000 to £25,000, that would also help the problem of stranded pots by providing more headspace for trivial commutation. All such proposals have implications for pension credit, however, and, given the pressures of time, I do not propose to explore those issues today. If, instead, we could move forward to resolve the issue of the hairdresser’s stranded pots, I would be content and I suspect that your Lordships would be as well. I beg to move.
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 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.
134ZBA: Before Clause 107, insert the following new Clause—
“Publishing of reports by Pensions Regulator
In section 89 of the Pensions Act 2004 (c. 35) (publishing reports etc.) after subsection (3) insert—
“(4) The Regulator shall publish its determinations, including Clearance Statements issued under section 42 or 46 together with the reasons for that determination within 28 days of the determination being made.
(5) The Regulator may, at the request of the directly affected parties, anonomise a determination published under section (4) above.
(6) The Regulator shall publish its policy on the exercise of its determinations in order that the exercise of them is consistent and transparent.””
The noble Lord said: I shall also speak to Amendment No. 134ZBB. Amendment No. 134ZBA would encourage the regulator to be more open about his determinations than he has been hitherto. Although he published the clearances given by the determinations panel, he has not published anything about those given by staff. Given the context of the broader discretion that he is likely to have as a result of the forthcoming regulations, it is important that he should be encouraged to build up in public a body of precedent which will guide people who might be subject to his ire in the future as to what his attitude is likely to be. It could only assist if he was more helpful than at present.
The second amendment slightly redresses the balance in situations where the Pensions Regulator is actively pursuing a case against an individual or business. At the moment there is no way for the accused to know the full breadth of information in the case against them and in particular whether mitigating material exists that the Pensions Regulator has but has not disclosed. This is not a clear and proper basis for natural justice; both sides ought to know. There ought to be full disclosure in principle. This amendment is to explore a way of achieving that, so that parties being prosecuted by the Pensions Regulator are in the same position as they would be were they up against a different kind of tribunal. I beg to move.
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 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.
134ZC: After Clause 108, insert the following new Clause—
“Payments to employers
In section 37 of the Pensions Act 1995 (payment of surplus to employer) after subsection (1) insert—“(1A) But this section does not apply in the case of any of the payments listed in paragraphs (c) to (f) of section 175 of the Finance Act 2004 (authorised employer payments other than public service scheme payments or authorised surplus payments).””
The noble Lord said: This amendment corrects an omission in the Pensions Act 2004. It introduces an exemption from the strict conditions that must be satisfied before the trustees of a trust-based occupational pension scheme can authorise a payment to the sponsoring employer from the funds of the scheme.
These conditions are set out in Section 37 of the Pensions Act 1995, and they are commonly referred to as the surplus rules. There was, however, an exemption from this rule for administrative and certain other payments, allowing the trustees to make them without reference to the surplus rules. Unfortunately, this exemption was inadvertently not carried forward when Section 37 was substantially revised by the Pensions Act 2004. It was not our intention to remove this exemption, and an equivalent provision should have been carried forward.
This amendment corrects the position through the introduction of an exemption that refers to payments listed in Section 175 of the Finance Act 2004; namely, compensation payments, authorised employer loans and scheme administration employer payments. It also refers to a regulation-making power that enables HMRC to extend the scope of authorised employer payments in particular circumstances.
It has been necessary to update the precise wording of the exemption because Section 37(7) referred to tax legislation that has now been replaced as part of the major changes to the taxation regime for pension schemes introduced by the Finance Act 2004. This amendment will restore the longstanding position that was inadvertently removed by the Pensions Act 2004. I beg to move.
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.
Clause 109 [Appointment of trustees]:
134A: Clause 109, page 51, line 13, leave out paragraph (a)
The noble Lord said: This is a probing amendment; whether it will remain so in the Bill’s future stages depends very much on the Minister’s answer. It would delete paragraph (a) from Clause 109(1).
We have already had an important debate on the powers of the Pensions Regulator. Compared with the extensive powers proposed in the Government’s new clause before Clause 107, the extension of the powers of the regulator in Clause 109 is much less significant, but we should still debate the need for the alterations proposed in that clause. Under the Pensions Act 1995, the Pensions Regulator can remove trustees when it thinks that it is “necessary” to do so. Clause 109 changes that test to one that is “reasonable”; my amendment deletes that change.
Trustees are the bedrock of the pensions system in the United Kingdom and they operate in trust law to act for the benefit of members. We are concerned that this change will act to undermine the foundations on which private sector pension provision is based. Pension schemes can have a mix of trustees, ranging from the completely independent and professional trustees through to employer-nominated and member-nominated trustees. There is an exception to this general rule, which we will come to shortly. This general rule reflects the fact that it is useful to bring to bear different perspectives.
I acknowledge that there can be difficulties with boards of trustees in practice, if only because trustees are human and their abilities and knowledge can vary hugely. The average trustee—this includes professionals as well as non-professionals—can struggle to cope with the complexities of modern investment strategies and the strength of the employer covenant when corporate restructuring is proposed. They are also severely tested when issues such as buyouts confront them; we have debated that subject extensively over the past few days. That is why we can see that the Pensions Regulator should have a reserve power to change the trustees when it is necessary. To extend that power to where the regulator thinks that it is “reasonable” risks undermining the whole model. Why does the 1995 Act need to be changed?
The existing power was perfectly adequate, for example, to allow the regulator to appoint independent trustees in the case of Telent and the Pensions Corporation. The regulator has the power conferred by Section 33 of the 2004 Act to issue prohibition orders in respect of trustees who are not considered to be “fit and proper”. Furthermore, Clause 109(1)(d) extends the circumstances in which the regulator may appoint trustees for the protection of the interests of the generality of the members. Can the Minister describe the circumstances in which a combination of the existing powers and those in paragraph (d) would not be adequate? As I said, the powers were used effectively, and even upheld on challenge, in the Telent case. What could be more challenging than that?
We do not believe that it is appropriate to confer powers on the regulator unless there is a clear need for them. Using the criterion of reasonableness could allow the regulator to start to impose his own judgment on the abilities and competence of trustees. That would go in the wrong direction from a regulatory standpoint.
The appointment of trustees goes to the heart of the operation of pension schemes. A power based only on reasonableness would be a step on the road to making our defined benefits system almost state-controlled rather than state-regulated, which is an enormous difference. I beg to move.
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.
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?
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.
134C: After Clause 110, insert the following new Clause—
“Delegation of powers by the Regulator
(1) The Pensions Act 2004 (c. 35) is amended as follows.
(2) In paragraph 21 of Schedule 1 (regulations relating to delegation of the Pensions Regulator’s functions), for sub-paragraph (e) substitute—
“(e) permitting the Regulator to authorise prescribed functions to be exercised on behalf of the Regulator by such persons, in such circumstances, and under such arrangements as the Regulator may determine.”(3) Omit paragraph 28 of Schedule 1 to that Act (payment of expenses).”
The noble Lord said: I shall speak also to government Amendments Nos. 141 and 141D. These amendments relate to the regulator’s ability to contract out its functions. The Government are committed to ensuring value for money when planning and delivering large-scale public sector projects and to using the skills, expertise and capacity of the private sector where appropriate. The regulator currently has the ability to contract out functions under the Pensions Act 2004, which states that the Secretary of State may make regulations for the regulator to delegate prescribed functions to prescribed persons.
The purpose of these amendments is to ensure that the Pensions Regulator has the flexibility to secure the best value for money if it decides to contract out any compliance functions. As the legislation currently stands, the regulator would have to identify preferred suppliers—the prescribed persons—to include in regulations before finalising contracts. In reality, the process of choosing the best functions to contract out, exploring the market for suppliers, identifying preferred bidders and then making a choice of supplier, requires careful planning. Amendments Nos. 134C and 141D will therefore place the emphasis on the prescribed functions that the regulator can contract out and remove the need to name the provider in the regulations.
In practice, that will mean that the regulator can undertake a more flexible procurement process with potential suppliers, and therefore be better placed to identify the best value-for-money approach. Over time, it will also make it easier and simpler for the regulator to change suppliers, again making it more likely that the regulator will secure the best value for money. In addition, under Section 6 of the 2004 Act, the Pensions Regulator currently has the power to do anything which is,
“calculated to facilitate the exercise of its functions”,
“incidental or conducive to their exercise”.
That is subject to the provisions of Schedule 1 to the Act. Paragraph 28 of the schedule makes specific provision for the regulator to make payments for expenses and fees for advice, as the Secretary of State may determine.
This provision was originally intended to enable the Secretary of State to set the limits within which the regulator would work. This power has never been used. We are therefore proposing, via Amendment No. 141, a repeal of this unnecessary provision, to ensure that there is no confusion about the regulator’s ability to spend money on contracting out. As I said, we are committed to enabling the regulator to ensure value for money and to use private sector expertise where appropriate. I hope that noble Lords will feel able to support the amendments.
On Question, amendment agreed to.
Clause 111 agreed to.
[Amendment No. 135 had been withdrawn from the Marshalled List.]
[Amendment No. 136 not moved.]
[Amendment No. 136ZA had been withdrawn from the Marshalled List.]
136ZB: After Clause 111, insert the following new Clause—
“Parliamentary pension scheme member-nominated trustees
(1) After section 241 of the Pensions Act 2004 (c. 35) (requirement for member-nominated trustees) insert—
“241A Parliamentary pension scheme: member-nominated trustees
(1) This section applies to a scheme which is set up under section 2 of the Parliamentary and other Pensions Act 1987 (power to provide for pensions for Members of the House of Commons etc).
(2) The requirements of section 241 shall apply to the trustees of such a scheme subject to the following modifications.
(3) Section 241(2) shall be read as if for paragraph (b) there were substituted—
“(b) are selected as a result of a ballot in which all the eligible scheme members are given the opportunity to vote.””(2) Regulation 2(i) of the Occupational Pension Schemes (Member-nominated Trustees and Directors) Regulations 2006 (S.I. 2006/714) is revoked.”
The noble Lord said: These amendments have been given some marvellous numbers. I declare an interest as a member of the Parliamentary Contributory Pension Fund.
Parliament passes Bill after Bill on pensions. Since 1997, we have had the Welfare Reform and Pensions Bill, the Child Support, Pensions and Social Security Bill, the State Pension Credit Bill, the Income Tax (Earnings and Pensions) Bill, the Pensions Bill of 2003, the Armed Forces (Pensions and Compensation) Bill of 2003, the Pensions Bill of 2006 and the Pensions Bill that we are discussing today. As I think that list establishes, we are very willing to place obligations on other people and on outside schemes. Indeed, in an earlier intervention, the Minister talked on the vital role of trustees and the obligations that we place on them. But when it comes to the Parliamentary Contributory Pension Fund, we do not follow the rules laid down for others or for schemes in the outside world.
I concede immediately that my mind and the minds of others have been concentrated by errors that the parliamentary fund has made concerning many members of the fund and their pensions. However, I do not want to detail all that in this debate. Suffice it to say that the pension fund made an error and that pensions have been paid incorrectly for several years to about 50 or 60 members. There has been an overpayment and a mistake concerning the guaranteed minimum pension. There is no dispute whatever that the parliamentary fund made the mistake. There is also no doubt that the error has led to financial demands to pay back and new reduced pensions.
Although those errors are not insignificant factors, they have simply spurred this amendment. They are a part of that case, which will be decided in other ways, and I do not want to go into individual cases at this point. But I am told that the fund made the error because it relied on the advice of HM Revenue and Customs. One might think that the fund must have had its own skilled pensions advice available to it, but the truth is that it did not. I am told that, until very recently, the fund employed no professional pensions expertise. As extraordinary as it might seem, the fund was run by the Fees Office. As the Treasury took the view that the cost of professional pensions expertise was unnecessary, no such expertise was available. It is to the credit of the pension fund chairman and the other trustees that that position has changed. However, it has changed only recently.
It is impossible not to come across further anomalies in the detail of the arrangements for the fund, including the arrangements for trustees, to which this amendment relates. As the Minister knows, the rules that generally apply mean that pension schemes have to ensure that at least one-third of trustees are nominated by the members. The trustees must make arrangements for the selection of member-nominated trustees, and there are a couple of stages to that appointment process. First, the trustees must ask at least the active and pensioner members for nominations. A member can nominate any other scheme member whom he believes is fit to act as a trustee of his scheme, and the nominated person must obviously give his consent. Next, the trustees have to decide on the selection process. Either a selection committee decides or, if a ballot is arranged, details of the nominated persons are put to all eligible scheme members. The members are asked to vote for whoever they believe is fit to act as a trustee. Those with the highest number of votes are thereby elected as member trustees.
That is the general view. The Parliamentary Contributory Pension Fund, however, is one of a number of funds to which an exemption has been given. That should come as no surprise, because it relates to the purpose of my amendment. This fund is exempt from the trustee requirements of a normal pension scheme. No pension trustee is nominated, let alone elected, by the members. Trustees are, in effect, appointed by the House of Commons Whips—I was going to say the usual channels—whose pensions knowledge is encyclopaedic and renowned; it is only their vow of silence that prevents them holding forth on the technicalities of the guaranteed minimum pension and other such subjects. In so far as the trustees answer to anyone, they seem to answer to the Leader of the House, who may or may not have some knowledge of pension matters.
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.
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.
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.
136A: After Clause 114, insert the following new Clause—
“Disclosure of information relating to state pension credit recipients
(1) The Secretary of State may by regulations make provision authorising the Secretary of State, or a person providing services to the Secretary of State, to supply relevant persons with social security information about persons in receipt of state pension credit.
(2) In this section “relevant person” means—
(a) a person who holds a licence under section 6(1)(d) of the Electricity Act 1989 (c. 29) or section 7A(1) of the Gas Act 1986 (c. 44) (supply of electricity or gas to premises), or(b) a person providing services to the Secretary of State or to a person within paragraph (a).(3) Regulations under this section must specify the purposes for which information may be supplied by virtue of subsection (1), which must be purposes in connection with enabling the provision of assistance to persons in receipt of state pension credit.
(4) Regulations under this section may authorise the supply of information by a relevant person to the Secretary of State or another relevant person—
(a) for the purpose of determining what information is to be supplied by virtue of subsection (1), or(b) to enable information supplied to a relevant person by virtue of subsection (1) to be used by that or another relevant person for purposes within subsection (3).(5) Regulations under this section may—
(a) make provision as to the use or disclosure of information supplied under the regulations (including provision creating criminal offences);(b) provide for the recovery by the Secretary of State of costs incurred in connection with the supply or use of information under the regulations.(6) In this section—
“social security information” means information held by or on behalf of the Secretary of State and obtained as a result of, or for the purpose of, the exercise of the Secretary of State’s functions in relation to social security;
“state pension credit” has the meaning given by section 1(1) of the State Pension Credit Act 2002 (c. 16).”
The noble Lord said: I shall speak also to Amendment No. 141E. Amendment No. 136A would allow the Secretary of State to make regulations to share data on pension credit recipients with energy suppliers. It also allows energy suppliers to share customer data in order to identify people to whom they can provide assistance with the cost of their fuel bills. These powers would come into force on Royal Assent so that the required regulations can be introduced soon after. These regulations will be subject to full parliamentary scrutiny.
Energy supply companies have, for some time, been asking for the Government to provide them with benefits data to enable them to target their social offerings on the people who most need them. Recently, Sam Laidlaw, the chief executive of Centrica, said in an Energy Select Committee debate on 24 June:
“What we have been keen to do with DWP is match our computer systems with their computer systems, to ensure that we really have good targeting”.
The Government have been keen to respond to that call.
We recognise that this is an important new step in the use of government information. The amendment would legitimise for the first time the supply of DWP information to multiple private commercial bodies. The Government recognise that this naturally gives rise to concern and I can assure noble Lords that we have not acted hastily. We have involved all the major stakeholders and have their support. The Fuel Poverty Advisory Group has strongly advocated the sharing of government data with energy suppliers. We have also gained support for a beneficial data share from organisations representing older people such as Help the Aged, Age Concern and the CAB, and from those representing energy consumers such as energywatch, National Energy Action and uSwitch. They recognise that the sharing of government data is not to be taken lightly but, on balance, welcome this as an important development in getting to people direct help with their fuel bills.
In addition to the legal safeguards already available through the Data Protection Act 1998, the amendment allows the Secretary of State to provide in regulations for a new criminal offence to penalise anyone who unlawfully discloses these data. We have also involved the Information Commissioner in our proposals and we will continue to work closely with his office on the detail to ensure that all practices are fully compliant with the highest standards of data handling, including their security.
We will be working closely with energy suppliers, BERR and Defra over the coming months to ensure the detail of the use of the data and to make sure these agreements are sound and enforceable. We say to energy suppliers that it is up to them to make this work and we have started discussions with them on the detail of their offer of assistance to pension credit recipients. It may reassure noble Lords that we will share our customers’ information only when we are satisfied that what is on offer from the energy suppliers is good enough to warrant data-sharing. The offer must be proportionate and customers must be offered a guaranteed benefit. We recognise there may be some concerns that once the suppliers have the information, they may use it for purposes other than awarding help with fuel costs, but each supplier will receive data only on their existing customers and these data may be used only for purposes in connection with enabling the provision of assistance to persons in receipt of state pension credit. Noble Lords will remember that last year the Government secured, by voluntary agreement, extra spending from energy suppliers to help vulnerable groups. This amendment builds on that and allows energy suppliers to identify and offer help with fuel bills to some of the poorest pensioners. I beg to move.
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”.
“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 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.
136AA: After Clause 114, insert the following new Clause—
“Pre-1948 insurance affecting German pension entitlement
(1) This section applies where the conditions in subsections (2) and (3) are satisfied.
(2) The first condition is satisfied if it appears to the Secretary of State that a person (the “pensioner”) is, or was immediately before death, a person—
(a) whose German pension entitlement is (or was) reduced by one or more periods of pre-1948 insurance, or(b) who would have (or would have had) a German pension entitlement, but for one or more periods of pre-1948 insurance.(3) The second condition is satisfied if—
(a) the insured person entered the United Kingdom as an unaccompanied child directly or indirectly from Germany, Austria, Czechoslovakia or Poland in the period beginning with 2nd December 1938 and ending with 31st May 1940, or(b) the Secretary of State otherwise considers it appropriate to give a direction under subsection (4).(4) At the request of the pensioner or (where the pensioner is dead) any other person claiming to be affected, the Secretary of State may direct that, on the giving of the direction, subsection (5) takes effect in relation to the period or periods of pre-1948 insurance.
(5) On this subsection taking effect in relation to any period—
(a) the insured person is deemed not to have been, not to have been deemed to be, and not to have been treated as being, insured for that period under the Widows’, Orphans’ and Old Age Contributory Pensions Acts 1936 to 1941 or under any provision of Northern Ireland legislation corresponding to those Acts, and(b) any contribution mentioned in section (Pre-1948 insurance: supplementary)(2)(b) or (c) is deemed not to have been credited to the insured person.(6) The Secretary of State may give directions specifying how any request for the purposes of subsection (4) must be made.
(7) Where subsection (5) has taken effect in relation to a period or periods of pre-1948 insurance, the relevant authority may pay to any person an amount not exceeding any amount that would, but for subsection (5), have been payable to that person in respect of—
(a) a benefit specified in section 20(1) of the Social Security Contributions and Benefits Act 1992 (c. 4) (contributory benefits), or(b) a benefit specified in any provision of Northern Ireland legislation corresponding to that provision.(8) In this section—
“child” means a person aged under 18;
“German pension entitlement” means entitlement to benefits arising under insurance with the Deutsche Rentenversicherung, or any other entitlement that appears to the Secretary of State to be relevant for the purposes of this section;
“insured person” is to be read in accordance with section (Pre-1948 insurance: supplementary);
the “relevant authority” means—
(a) in relation to a benefit within subsection (7)(b), the Department for Social Development in Northern Ireland;(b) in any other case, the Secretary of State;“unaccompanied” means unaccompanied by an adult family member.”
The noble Lord said: I wish to speak also to government Amendments Nos. 136AB, 141F, 141G, 142CA and 142CB. The purpose of these amendments is to remove an anomaly that has arisen as a result of the interaction between the pre-Beveridge UK pension arrangements, European Community law and German pension provision. These amendments seek to help individuals who came to the UK as children to escape the Nazi persecution in their home countries between 2 December 1938 and 31 May 1940. This operation became known as Kindertransport.
There is no question but that coming to Britain was the best outcome for these children, but there was a tremendous variation in the fortunes of those who came. Some had benefactors who ensured that they received an excellent education and every advantage. Others were less lucky and were obliged to work in manual jobs straightaway, or as soon as they reached minimum school leaving age. Only the latter group would have been insured under the social insurance scheme as it existed before Beveridge’s reforms took effect in 1948. People insured under the old scheme were credited into the new national insurance scheme at that time and thereby have rights in the present UK state pension scheme.
For most people this made little or no difference; for a minority it was advantageous. However, uniquely for certain of the Kindertransportees it transpired to be disadvantageous. When Germany opened its state pension schemes to the Kindertransportees in the early 1990s, some of them opted to take back their German nationality and to pay a voluntary contribution to join one of the schemes. These people were credited with German contributions for the period from 1939 to 1949. Those in manual occupations found that, under European Community regulations designed to prevent duplication of provision in the case of cross-border workers, their pre-1948 UK credits took precedence over the German credits, resulting in a reduced or, depending on their age, significantly reduced German pension. By way of comparison, those Kindertransportees who were not insured under the pre-1948 arrangement in the UK because they were in education or salaried non-insured occupations at the time were able to gain the full value of their German credits for this period. Understandably, the Kindertransportees were, and remain, much aggrieved by this disparity of treatment.
These amendments enable a Kindertransportee who has a German pension entitlement that is reduced or extinguished by a period of pre-1948 insurance to request that they are deemed not to have had such insurance. I believe that it is right that we should seek to remedy this unfairness. I beg to move.
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.
136AB: After Clause 114, insert the following new Clause—
“Pre-1948 insurance: supplementary
(1) In section (Pre-1948 insurance affecting German pension entitlement) a “period of pre-1948 insurance” means any period ending before 6th April 1948 to which subsection (2) applies by reference to any person (“the insured person”).
(2) This subsection applies to a period which is one of the following—
(a) a period for which the insured person at any time was, was deemed to be, or was treated as, insured under the Widows’, Orphans’ and Old Age Contributory Pensions Acts 1936 to 1941, or under any provision of Northern Ireland legislation corresponding to those Acts;(b) a period for or in respect of which contributions of any class were credited to the insured person in accordance with the provisions of the National Insurance Act 1965 (c. 51) or regulations made under that Act, or in accordance with any provision of Northern Ireland legislation corresponding to that Act or such regulations;(c) a period for which contributions are credited to the insured person by any provision of the Social Security (Widow’s Benefit, Retirement Pensions and Other Benefits) (Transitional) Regulations 1979 (S.I. 1979/643), or by any provision of Northern Ireland legislation corresponding to a provision of those regulations.”
On Question, amendment agreed to.
136AC: Before Clause 115, insert the following new Clause—
“Review of operation of Act
(1) The Secretary of State must, before the end of 2014, prepare a report on the operation of the provisions of this Act.
(2) The Secretary of State may prepare subsequent reports on the operation of the provisions of this Act.
(3) The Secretary of State must lay a copy of any report prepared under this section before Parliament.”
The noble Lord said: Amendment No. 136AC is an exploratory amendment to find out the Government’s attitude. Precedent would suggest that they will accept the spirit of what is set out here, if not the detail. It is a familiar point. We debated it during our consideration of the last Pensions Bill. On that occasion, the amendment was accepted by the Government, for which I am grateful.
The point is that post-legislative scrutiny is just as important as pre-legislative scrutiny. You could make an argument, particularly in relation to pensions legislation, that post-legislative scrutiny is rather more important, because all the mistakes appear to take place afterwards in the administration of the scheme. Things are missed out. Mistakes rarely occur because the legislation was set out badly. In my experience, they have often been the result of administrative error. Errors of this kind take place and no one should be totally surprised about them. The only trouble is that, if errors take place in pensions, the costs are substantial.
That is basically the case. I will not set it out again, because the Minister has heard all my arguments previously. He has only to look them up and read them from 12 months ago and he will see the case all set out. I am basically asking for some kind of checking mechanism that the purposes of the Bill amount to the reality in the later Act and how it goes into effect.
As I am sure the Minister has discovered, the words in this amendment are taken exactly from the words of the last Pensions Act. The Minister was enthusiastic at the time in accepting that clause and those exact words. One would think, therefore, that the argument is fairly strong. This pensions legislation is a twin measure of two Bills: one Act already, another Act to come. It would be odd to have a post-legislative scrutiny clause in one part of it but not in the other. As the Minister so obligingly agreed last time to the detail of and exact way in which this amendment is formulated, for once the case that I am putting is totally unanswerable. I beg to move.
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]:
136B: Clause 115, page 53, line 41, after “power” insert “conferred on the Secretary of State”
136C: Clause 115, page 54, line 1, leave out “an order or regulations under this Act” and insert “such an order or regulations”
137: Clause 115, page 54, line 4, leave out “to which subsection (4) or (5)” and insert “or regulations to which subsection (4)”
138: Clause 115, page 54, line 6, leave out from first “order” to “has” and insert “or regulations to which this subsection applies may be made unless a draft of the order or regulations”
On Question, amendments agreed to.
138A: Clause 115, page 54, line 8, leave out subsection (5) and insert—
“( ) Subsection (4) applies to—
(a) regulations under section 15(2)(c), 16(1)(c), 85, (Persons working on vessels), (Power to amend provisions of Pensions Act 2004 relating to contribution notices etc.) or (Disclosure of information relating to state pension credit recipients);(b) the first regulations under section 3(2) or (5B), 5(2) or (5B), 6(4)(b) or (5B) or 8(3)(b);(c) an order under section 58 or 61(5); (d) an order under section 117 amending or repealing any provision of an Act;(e) an order under paragraph 9(7) of Schedule 4.”
The noble Lord said: Clause 115 provides that any power under the Bill to make an order or regulation is exercisable by statutory instrument. It also sets out the parliamentary procedure that will apply to such secondary legislation. We are approaching the end of the Bill and this important amendment ensures that regulation-making powers in some sections that we have debated are subject to the appropriate level of parliamentary scrutiny. For example, this amendment requires regulations relating to the sharing of pension credit customer data with energy companies to be subject to the affirmative procedure, thereby giving both Houses an adequate opportunity to scrutinise these measures. In this clause, we have also complied with a number of helpful recommendations made by the Delegated Powers and Regulatory Reform committee. In short, this important amendment ensures that secondary legislation under the Bill will be subject to appropriate parliamentary oversight. I beg to move.
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]:
139ZA: Clause 116, page 54, leave out line 12 and insert—
“( ) This section applies to an order or regulations made by the Secretary of State under this Act.
( ) An order or regulations may include—”
139ZB: Clause 116, page 54, line 21, leave out “under this Act”
On Question, amendments agreed to.
Clause 116, as amended, agreed to.
Clause 117 [Power to make further provision]:
139ZC: Clause 117, page 54, line 42, after “Part 1” insert “or section (Contracting-out: abolition of all protected rights)”
On Question, amendment agreed to.
Clause 117, as amended, agreed to.
139ZD: After Clause 117, insert the following new Clause—
(1) The Secretary of State may by order make such modifications of enactments within subsection (2) as in the Secretary of State’s opinion facilitate, or are otherwise desirable in connection with, the consolidation of any of those enactments.
(2) The enactments are—
(a) the Pension Schemes Act 1993 (c. 48);(b) the Pensions Act 1995 (c. 26); (c) Parts 1 to 4 of the Welfare Reform and Pensions Act 1999 (c. 30);(d) Chapter 2 of Part 2 of the Child Support, Pensions and Social Security Act 2000 (c. 19);(e) the Pensions Act 2004 (c. 35);(f) the Pensions Act 2007 (c. 22);(g) this Act;(h) enactments referring to any enactment within paragraphs (a) to (g).(3) No order may be made under this section unless a Bill for consolidating the enactments modified by the order (with or without other enactments) has been presented to either House of Parliament.
(4) An order under this section, so far as it modifies any enactment, is not to come into force except in accordance with provision made for the purpose by the Act resulting from that Bill.
(5) An order under this section must not make any provision which would, if it were included in an Act of the Scottish Parliament, be within the legislative competence of that Parliament.”
The noble Lord said: I shall speak also to Amendments Nos. 140B and 142D. The amendment will help to facilitate the consolidation of private pensions legislation. Work is in progress, in conjunction with the Law Commission, to consolidate that legislation, which is currently contained in six different Acts. Presuming Royal Assent to this Bill, that number will rise to seven. As noble Lords will no doubt be aware, strict rules on consolidation mean that no changes can be made, even to correct clear unintended errors, to omit spent or unnecessary provisions, or to remove anomalies or ambiguities. The existing law must be reproduced “warts and all”.
Such issues can, however, be addressed by way of a pre-consolidation order, provided that no change is made to the policy enacted by the legislation. Section 321 of the Pensions Act 2004 provides the power to make a pre-consolidation order. However, as currently drafted, the power extends only to legislation that was in force at the time that the 2004 Act was passed. That means that an order made under the power in Section 321 cannot include any amendments that may be needed in respect of subsequent legislation, specifically the Pensions Act 2007 or the Bill, when enacted.
The amendment will ensure that any changes needed in respect of the more recent primary legislation can be addressed though a pre-consolidation order in the same way as for the earlier pensions legislation. I beg to move.
On Question, amendment agreed to.
Clauses 118 and 119 agreed to.
Schedule 9 [Repeals]: