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Public Bill Committees

Debated on Tuesday 3 November 2020

Environment Bill (Eighth sitting)

The Committee consisted of the following Members:

Chairs: † James Gray, Sir George Howarth

† Afolami, Bim (Hitchin and Harpenden) (Con)

† Anderson, Fleur (Putney) (Lab)

† Bhatti, Saqib (Meriden) (Con)

† Brock, Deidre (Edinburgh North and Leith) (SNP)

† Browne, Anthony (South Cambridgeshire) (Con)

† Docherty, Leo (Aldershot) (Con)

† Furniss, Gill (Sheffield, Brightside and Hillsborough) (Lab)

† Graham, Richard (Gloucester) (Con)

† Jones, Fay (Brecon and Radnorshire) (Con)

† Jones, Ruth (Newport West) (Lab)

† Longhi, Marco (Dudley North) (Con)

† Mackrory, Cherilyn (Truro and Falmouth) (Con)

† Moore, Robbie (Keighley) (Con)

† Pow, Rebecca (Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs)

Thomson, Richard (Gordon) (SNP)

† Whitehead, Dr Alan (Southampton, Test) (Lab)

† Zeichner, Daniel (Cambridge) (Lab)

Anwen Rees, Sarah Ioannou, Committee Clerks

† attended the Committee

Public Bill Committee

Tuesday 3 November 2020

(Morning)

[James Gray in the Chair]

Environment Bill

May I start by welcoming the Committee back to the interrupted consideration of the Environment Bill and give you a few little parish notices? First, I start from the position of being a very traditional chairman. Chairmen come in different shapes and sizes, and I am at the traditional end of things and, therefore, try to use the procedures and practices we have in the main Chamber, although there may be some variations.

Secondly, we should be extremely careful about social distancing. The idea is to sit at the chairs with a blue tick, so the central row is not used, by and large. I think that is a matter for Members’ discretion, but perhaps people can make a point of keeping their distance throughout the process of the Bill. On social distancing, instead of passing notes to Hansard, which we would normally do, would Members kindly send by email any speeches they might make. I know that the Hansard Reporters would appreciate that.

Most members of the Committee are very experienced, but for those who might not be that experienced, the principle of what we are doing is that, having agreed the principle behind the Bill on Second Reading, we now consider the detail of the wording of the Bill, to make it a good Bill, no matter what we thought of the principle behind it. We can do that by considering the Bill line by line. The means by which that happens is that members of the Committee, whether Opposition or Government—or indeed people who are not members of the Committee, by means that I will describe in a moment—put down amendments to the Bill. Those amendments are then grouped for debate in a convenient way, bringing together topics that are similar.

Only members of the Committee may argue for amendments. However, hon. Members who are not members of the Committee may lay amendments if they can persuade a member of the Committee to move them, and I think one or two examples of that may occur during the Bill. Amendments must be laid by the rise of the House on Thursday for discussion on Tuesday and by the rise of the House on Monday for discussion on the Thursday. That is all I have to say by way of introductory remarks.

On a point of order, Mr Gray. I welcome you back to the Committee after our long break. It is a pleasure to serve under your chairmanship. I also welcome Committee members back to our proceedings.

Because of the particularly long break we have had, a number of events have occurred since the last sitting in the earlier part of the year, which those with a long memory will dimly recall. Those events are twofold. First, the Government decided during the period in which the Committee was in abeyance to table a large number of new amendments, particularly concerning the operation of the Office for Environmental Protection, which, certainly in the Opposition’s view, considerably alter how that office works.

Secondly, in the period between our original deliberations and now, the Government also brought forward a planning White Paper, which looks as though it will cut across many of the provisions of the Bill relating to environmental improvement and action areas, which depend on planning zones for their operation.

Both those developments fundamentally alter some structures of the Bill. Through the usual channels, we made representations that we should have new evidence sessions at the beginning of this Committee period so that the Committee is informed of those new developments, which would help to ensure that our deliberations are carried out in the best way possible. Unfortunately, that has not found favour, and we begin our proceedings this morning without the benefit of any new information that might allow the Committee to consider those developments.

Would it be possible, Mr Gray, to accommodate a statement from the Minister on those two issues, on which she could be questioned, so that the Committee can have some elucidation before it continues its proceedings? Whether that statement should be made immediately upon the resumption of the Committee this morning, or could be accommodated as early as possible in the Committee’s proceedings, is clearly a matter for discussion, but we strongly hope that such a statement could be agreed.

I am grateful to the hon. Gentleman for that point of order, which is more of a point of information than anything else. The changes that have occurred since the Committee last sat will be considered via amendments submitted by Opposition and other Members during our proceedings. There is no facility for making a ministerial statement to the Committee, but the Minister will have ample opportunity to answer the points that the hon. Gentleman wishes to raise during the debates that we will have between now and 1 December, which is the agreed out date. If there were extra evidence sessions, that would delay the out date. Although it cannot be done, the hon. Gentleman has made a valid point and the Committee has heard it. I know that the Minister will seek to answer those points during the debates that lie ahead of us.

On a point of order, Mr Gray. As it is fairly warm in the room, would you mind if Members removed their jackets?

It goes completely against my natural instincts and my absolute principles, but of course, gentlemen may remove their jackets if they wish during our proceedings. There is no need for a new point of order on every occasion. I assure the Committee that I will not be taking my jacket off.

Ordered,

That the order of the Committee of 10 March be varied as follows—

(1) In paragraph (1)(d), leave out “and 2.00pm”.

(2) In paragraph (1), leave out sub-paragraphs (e) to (l).

(3) After paragraph (1), insert—

“(1A) the Committee shall (in addition to its meeting at 9.25am on Tuesday 3 November) meet—

(a) at 2.00 pm on Tuesday 3 November;

(b) at 11.30 am and 2.00 pm on Thursday 5 November;

(c) at 9.25 am and 2.00 pm on Tuesday 10 November;

(d) at 11.30 am and 2.00 pm on Thursday 12 November;

(e) at 9.25 am and 2.00 pm on Tuesday 17 November;

(f) at 11.30 am and 2.00 pm on Thursday 19 November;

(g) at 9.25 am and 2.00 pm on Tuesday 24 November;

(h) at 11.30 am and 2.00 pm on Thursday 26 November;

(i) at 9.25 am and 2.00 pm on Tuesday 1 December;”.

(4) In paragraph (4), leave out “5 May” and insert “1 December”.—(Rebecca Pow.)

We now move to line-by-line consideration of the Bill. The selection list of amendments arrived in the Committee Room a few moments ago. I hope that everyone has a copy. It shows how the amendments have been grouped, starting with clause 7.

One point that I omitted to make during my earlier remarks is that amendments are grouped for convenience of debate. However, if a decision has to be made on them, that decision comes at the point in the Bill to which the amendment refers. In other words, we may have an amendment to clause 7 and an amendment to clause 25 considered together, but the amendment to clause 25 will be moved formally at the time when we discuss clause 25.

Clause 7

Environmental improvement plans

I beg to move amendment 88, in clause 7, page 5, line 7, leave out subsection (4) and insert—

“(4) The environmental improvement plan must include, as a minimum—

(a) measures which, taken together, are likely to achieve any targets set under sections 1 or 2 and will ensure that the next interim targets included in the plan are met;

(b) measures that each relevant central government department must carry out;

(c) measures to protect sensitive and vulnerable population groups (including children, older people, people with chronic illnesses and outdoor and transport workers) from the health impacts of pollution;

(d) a timetable for adoption, implementation and review of the chosen measures, and the authorities responsible for their delivery;

(e) an analysis of the options considered and their estimated impact on delivering progress against the relevant targets; and

(f) measures to minimise, or where possible eliminate, the harmful impacts of pollution on human health and the environment.”

This amendment looks to strengthen Environmental Improvement Plans by connecting them to; measures which are proportionate to targets set out in the bill, departmental action, vulnerable people, a timetable and analysis.

With this it will be convenient to discuss amendment 112, in clause 7, page 5, line 7, leave out subsection (4) and insert—

“(4) An environmental improvement plan must set out the steps Her Majesty’s Government intends to take in the period to which the plan relates, which the Secretary of State considers will—

(a) enable targets set under section 1(1) and that meet the conditions at section 6(8) to be met, and

(b) make a significant contribution to meeting the environmental objectives irrespective of whether targets are in place to cover all matters relating to the environmental objectives.”

This is potentially an important amendment. What we would expect to happen in a Bill is that as the legislation moves through its narrative, one part of the narrative connects to the next one in a coherent way. One of our criticisms of this Bill, although we have said that it is a good Bill in its own right in what it seeks to achieve, is that it fails to add to its coherence as the narrative of the Bill proceeds. What I mean by that is that the Bill tends to set itself out in a number of chunks, a little like an early picaresque novel, rather than a more recent novel that includes the present, the past and the future. I am not suggesting that the Bill itself is a novel, but others may have views on that.

The amendment seeks to bridge the narrative gap in the Bill by ensuring that the measures in this clause relate back to the targets at the beginning of the Bill, which we discussed, as hon. Members with long memories will recall, when our proceedings started earlier this year. Those targets, which we agreed—indeed, we agreed not only the targets, but the mechanism by which they would be decided on—are very important in relation to the environmental improvement plan that will arise from the Bill. If we have an environmental improvement plan that does not relate to those targets and, indeed, has a narrative on environmental improvement that is actually a descriptive arrangement rather than an action arrangement, it is vital that the connection is properly made in the Bill itself and that the environmental improvement plan, essentially, is instructed to organise itself along lines that do relate to those targets in the first place.

As we discover when we go through this clause, an environmental improvement plan is, in effect, already in existence—or rather, this Bill will bring that environmental improvement plan into existence. The Bill describes the process by which an environmental improvement plan can be developed and put in place, and then the Bill says, “Oh and by the way, it so happens that there is an environmental improvement plan already in existence that we can adopt for the purpose of the Bill”—and that is “A Green Future: Our 25 Year Plan to Improve the Environment”. People will see that, in the legislation, it is specifically referred to as being the present environmental improvement plan, the one in front of us.

However, that improvement plan—as, again, I am sure hon. Members will know—was actually adopted in 2018. To show people how far back that goes, I point out that it has a “Foreword from the Prime Minister”, the right hon. Member for Maidenhead (Mrs May), and a “Foreword from the Secretary of State”, the right hon. Member for Surrey Heath (Michael Gove). Neither of them is in the same role at the moment, so it is quite an old document. Among other things, it does not address itself to the structure of the Environment Bill; it says a lot of very interesting things, but it certainly does not address itself to how those things should take place. I want to talk later in the debate about some of the issues in the environment plan, “A Green Future: Our 25 Year Plan to Improve the Environment”.

For the time being, suffice it to say that there appears to be a problem of connection, as far as the Bill is concerned. The amendment seeks to rectify that by clearly stating on the face of the Bill:

“The environmental improvement plan must include... measures which, taken together, are likely to achieve any targets set under sections 1 or 2 and will ensure that the next interim targets included in the plan are met”.

It therefore makes a direct connection between this part of the Bill and the first part. It states that the environmental improvement plan must include

“measures that each relevant central government department must carry out… measures to protect sensitive and vulnerable population groups… a timetable for adoption, implementation and review of the chosen measures… analysis of the options considered and their estimated impact on delivering progress… and measures to minimise, or where possible eliminate, the harmful impacts of pollution on human health and the environment”.

The amendment therefore comprehensively makes those connections.

I am sure the Minister will say that none of that is necessary, because everything is okay—it all works all right. However, I hope, at the very least, that, in explaining why that is the case, she will also explain why it is not necessary to make that link between this part of the Bill, the environmental improvement plan and the targets that we set out and agreed in previous sittings.

I thank the hon. Gentleman for his opening words. It is an absolute privilege to be back with the Committee. [Hon. Members: “Hear, hear.”] It is more than seven months since we had to adjourn, very unusually, and we all know why that occurred. Sadly, we are still in a tricky situation with the coronavirus pandemic, but I am pleased that we are able to carry on with this hugely important piece of legislation, which will change the way we think about our environment forever. We are all involved in a very significant piece of work, and it is a delight to have you in the chair, Mr Gray.

Despite the fact that we are in these very tricky times with the pandemic, we need to look ahead as a Government and as a country. As we build back, as the Prime Minister has said, we want to base the recovery on solid foundations, including a fairer, greener and more resilient global economy. I want to touch on a few of these issues before we carry on, because it has been such a long time since we reconvened.

On the points made by the shadow Minister, we took expert evidence before. Everyone is entitled to take their own evidence as we go along to inform anything that we do. Written evidence is also submitted to back up the Bill, and that is always welcomed. The hon. Gentleman mentioned planning issues, and I absolutely assure him that we will address those when we get to the right part of the Bill and particularly the nature chapter. I think the Chair covered the issue of a statement comprehensively, and I fully support your words, Chair.

Order. I think “Mr Gray” is the right thing; otherwise, we will get mixed up between Chair and Chairman. Also, in passing, I know you are all pleased to serve under my chairmanship, but you do not need to say so—[Laughter.]

To touch on those wider issues, we are mindful of the situation that the country is in at the moment, but we need to look ahead. Those much bigger global challenges have not gone away, including climate change, biodiversity and all the things we have heard so much about, including the crash in species. The Government remain committed to being a world leader on tackling environmental issues. We will ramp up our work on ambitious legislation. As I have touched on, that will be done through this landmark Environment Bill.

Although the Bill has been paused, the work that Government have been doing has not paused, as was touched on by the shadow Minister. The Government have continued to work on implementing the Bill’s measures, including publishing our targets policy paper in August and launching a call for evidence to help identify which public bodies will be required to work with local authorities to reduce air pollution.

We have also launched a recruitment campaign for the chair of the Office for Environmental Protection, and have launched five local nature recovery strategy pilots in Cornwall, Buckinghamshire, Greater Manchester, Cumbria and Northumberland to test how the strategies will support development of wider environmental objectives. I see my hon. Friend the Member for Truro and Falmouth grinning, because one of the pilots is in Cornwall. I am pleased that those pilots have been launched, and I think they are going to give us some really interesting and useful data.

Sadly, we have to wait a bit longer to play our part as the host of COP26, but work has continued on that wider environmental agenda as well. The Prime Minister has committed to protect 30% of our land by 2030, which was a really serious commitment. We played a key part in the leaders’ pledge for nature, recently endorsed by 76 world leaders at a United Nations event.

We consulted on an obligation for companies trading in forest risk commodities to carry out due diligence on their supply chains. I very much hope to update the Committee on that matter in the coming weeks. Indeed, it was raised by many members of this Committee, including Opposition Members, in an earlier sitting. I will reporting on that as we proceed.

We have set out our plans to cement the UK’s position as a world leader in wind power. Inhabitants of these isles often complain about the weather, but it is a great natural asset and it will really help in our journey to net zero by 2050. That is why we have set out our plans for wind to power every home in the country by 2030, and to double capacity for renewable energy generation through the contracts for difference mechanism. I mention those measures, as well as others too numerous to go into today, the Chair will be pleased to hear, because they are all relevant to the Bill as background.

Order. Sorry to interrupt the Minister, who is speaking extremely well, but I intend to be very tough with the Committee to make sure that we address the amendments in this group. I think it is right to offer a reasonable reply to the hon. Member for Southampton, Test and the point of order he made regarding things that have occurred since we last met. However, I think the Minister is tending towards a Second Reading speech, and perhaps she could address more particularly the amendment in front of us.

Thank you Chair, I get your point and I beg your forgiveness. I will not include everything, but I wanted to update the Committee because so much has happened since we stopped our consideration of the Bill. People think we have gone on hold, but absolutely we have not.

We will be doing much more work, and we will discuss our statutory EIPs, which will drive up environmental improvement, in the next few days alone, as well as how we will continue to protect the environment from damage by embedding environmental principles at the heart of Government policy.

Turning to the amendments, which is what you really want me to do, Mr Gray, I appreciate the desire of the hon. Member for Southampton, Test to strengthen the EIPs—that is what clause 7 is all about. I am delighted that he has raised the 25-year environment plan because I was at the launch of that plan. Although colleagues who filled those important posts are in different roles now, I was there as Parliamentary Private Secretary in this Department.

I am utterly delighted to introduce this—perhaps the shadow Minister failed to address this—as the 25-year environment plan is actually the first EIP. That is what this is all about. What we are doing with the EIPs is triggering what is set out in the excellent plan. The Bill’s statutory cycle of monitoring, reporting and planning is designed to ensure that the Government take early, regular steps to achieve long-term targets and are held to account through regular scrutiny by the Office for Environmental Protection and by Parliament.

The Bill creates a statutory triple lock, which we will hear about a great deal as the Bill progresses, to drive short-term progress. First, the Government must have an environmental improvement plan setting out the steps they intend to take to improve the environment and to review it every five years. When reviewing it, they must consider whether further or different measures should be adopted to achieve interim—five yearly—targets and long-term targets. When we review the EIP in 2023 we will update it as necessary to include the steps that we intend to take to achieve the targets that we set. That will be five years after the launch of the first plan in 2018.

Secondly, the Government must report on progress towards achieving targets every year. Thirdly, the Office for Environmental Protection will hold us to account on progress towards achieving targets. Each year it will comment on the progress towards targets reported in the Government’s EIP annual report and can flag early on whether it believes there is a risk of the Government not meeting their long-term targets. It may make recommendations on how progress could be improved, and the Government have to respond. Ultimately, the OEP has the power to bring legal proceedings if the Government breach their environmental law duties, including the duty to achieve long-term targets.

In requiring that EIPs set measures to deal with pollution, amendment 88 would single out aspects of the environment ahead of others. EIPs are defined as plans significantly to increase the natural environment. Measures on air quality, with corresponding benefits to human health, are already within the scope of EIP, so it is not necessary to place duties on particular matters in the EIP, which could undermine consideration of other important environmental goals.

The Bill includes a duty to set a legally binding target for PM2.5, the air pollutant with the greatest impact on human health, in addition to a further long-term air quality target. The introduction of measures to meet the air quality target will reduce exposure to harmful pollutants and deliver significant improvements to human health. Other targets that meet the criteria set out in clause 6(8) already have their own statutory regimes, including any appropriate requirements to set out plans and measures to achieve them. It is therefore unnecessary to require that EIPs include measures to achieve them.

Amendment 112 would explicitly link the measures in the EIP to “meeting the environmental objectives”, and I address this with the assumption that the environmental objectives are to achieve and maintain a healthy and natural environment, as set out in new clause 1. The Bill’s provisions already ensure the delivery of the significant environmental improvements that the hon. Member for Southampton, Test seeks through the amendment and ensure that the Government can be held to account. Targets and EIPs have the objective under clauses 6 and 7 of delivering significant improvements to the natural environment, so I urge the hon. Gentleman not to press the amendment.

As you suggest, Mr Gray, I will not go through all the formalities. It is a pleasure to be on this Committee, although it is a little like the philosopher’s axe: which part of this Committee is still part of the preceding Committee? Many of us are new to this, and it has been a long-running process.

The Minister is notorious for her optimism—[Interruption]or has a reputation for optimism. When she talks about the 25-year improvement plan, I wonder whether that is 25 years forward or whether it is taking us 25 years back, because it is about filling the gaps left by our leaving the European Union and the protections that came from that membership. I fear, as my hon. Friend the Member for Southampton, Test explained earlier, that the heart has been ripped out of the Bill.

To turn to the amendment, as you directed Mr Gray, I listened closely to the Minister’s observations and I do not quite understand why she is not sympathetic to some of the amendment’s proposals. I particularly query her attitude to the natural environment. She will have seen the representations from the National Trust about including heritage within the ambit of natural environment, and that prompts a big question. There is no natural environment; we have been part of the environment as human beings for many, many years and we have had huge impact on it. I suspect we will pursue this matter in further discussions, but I would welcome her observations on why heritage is not included among the proposed protections.

In particular, I do not understand why the Minister does not favour the inclusion in the environmental improvement plans of proposed paragraph (b) in amendment 88, which calls for the reporting of

“measures that each relevant central government department must carry out”.

All of us involved in rural policy know that it is an endless issue, and that virtually every part of government touches on the environment of rural areas. Those policies must be included as an essential safeguard to ensure that the environmental improvement plans work properly.

The hon. Gentleman has hit the nail on the head: the natural environment is very complicated and complex. We have set out the Bill as it appears so that it takes an holistic approach to the environment, as I believe he will see as we proceed in our deliberations.

I believe that the hon. Gentleman was referring to rurality in particular, but the Bill covers everything about the environment, and not just one thing or another. It takes an holistic approach, and is a great deal more holistic than anything that the European Union has done. The environmental improvement plans are significant because there are no equivalents to them under EU law: member states were not required to maintain a comprehensive long-term plan to improve the environment significantly, but that is a key issue of the Bill. Nor was there any requirement on member states to report annually on progress towards any kind of significant improvement. EU law tends to require member states to prepare or publish plans to achieve particular targets, for example on air quality or water quality, but it does not offer the holistic approach of the Bill. By leaving the EU, we have an enormous opportunity to look at the environment in the round. I hope that helps Members.

I am sorry, but I am just not convinced. I will consider clause 7 in further detail later, but the gap that we have identified in terms of the connection between this part of the Bill and the first six clauses is egregious, and does not appear to relate at all to what is in the 25-year environment plan, interesting though that plan may be in its own right.

The amendment is important because it addresses those shortcomings and it should not be set aside on the grounds that everything will be all right, and that the Bill is quite an holistic Bill after all. For that reason, I am afraid that we will seek to divide the Committee.

Question put, That the amendment be made.

I beg to move amendment 201, in clause 7, page 5, line 10, leave out “may” and insert “must”.

This amendment would require the Government to include steps to improve people’s enjoyment of the natural environment in its Environmental Plan.

With this it will be convenient to discuss amendment 202, in schedule 2, page 127, line 11, leave out “may” and insert “must”.

This amendment would require the Government to include steps to improve people’s enjoyment of the natural environment in its Environmental Plan and is consequential on Amendment 201.

This is likely to be the shortest amendment proposed to the Bill. It simply substitutes the word “must” for “may” in clause 7, which would in turn require the Government to include steps to improve people’s enjoyment of the natural environment in their environmental plan. Why does this one-word change, which amounts to a net increase of one letter to the Bill, matter so much? The clue is in clause 7(5) and its clear intent to improve people’s enjoyment of the natural environment. The Government explicitly recognise the importance of that in the environmental improvement plan, which will set interim targets for each five-year period, and the amendment would ensure that the Bill includes people’s enjoyment in the five-year targets.

Many of us would argue that people’s enjoyment of the natural environment is always important, but it is especially so now, during the period of this pandemic. Many more of us have been enjoying green spaces during lockdown, and park visits in the UK were up 195% in the six weeks to 25 May compared with February. The amendment would put a greater legal burden on the Government to enhance access to such spaces as they set out new environmental policies in their environmental improvement plan.

The amendment acknowledges the value of parks and green spaces to all of us and all our constituents. This is a chance to appropriately fund our parks and green spaces, including the organisations that maintain them. Some of us will be aware of the Government scheme for pocket parks, which was announced by the Communities Secretary in March 2020. It was a £1.35 million fund—a very small fund by comparison with many of those that have had to be launched to support businesses, culture and many other organisations—and it created 68 new pocket parks around the country in order to transform urban spaces into green havens. They were hugely helpful, and I believe that further rounds would be both welcome and possible. They would help fund the priorities identified in the five-year targets for people’s enjoyment that should be created.

At this stage, I would like to bring as a remote witness the Ramblers organisation, which has made the point that access to, and enjoyment of, the natural environment has multiple benefits that are relevant to the aims of the Bill and to wider Government objectives. They include encouraging pro-environmental behaviours. There is evidence to suggest that people who spend more recreational time in natural settings are more likely to report engaging in a range of pro-environmental behaviours. In simple speech, that can often amount to volunteers joining litter-picking groups to ensure that our parks and green space are kept clean and are attractive to more visitors.

A survey shows that 85% of adults in England and Wales believe that being able to experience the countryside is important for children’s understanding of the environment. I think that is true in all our constituencies. In my constituency of Gloucester, we have the joy of the Robinswood Hill country park right in the middle of our small city. I believe that every child should have the experience of sitting on their mother’s or father’s shoulders for their first visit up the hill to watch the sunset over the River Severn in the summer. It is one of the most beautiful things that anyone can do, and it stimulates enjoyment and healthy behaviours.

There is also the issue of physical and mental health. More than eight out of 10 adults believe that visiting the countryside is good for their physical fitness and mental wellbeing. In a sense, we do not really need surveys to confirm that; we know it is true. People who live within 500 metres of accessible green space are 24% more likely to achieve the 30 minutes of daily physical activity that doctors constantly recommend. Access to green space is associated with reductions in long-term conditions such as heart disease and cancer, and close connections to green space are also associated with significantly less income-related health inequality, weakening the effects of deprivation on health. During the pandemic, there has been a huge increase in mental health problems, and during a lockdown period green spaces are in many ways people’s one chance of restoring some balance to their mental health.

In the current 25-year environment plan, which will be given statutory footing on Royal Assent, there are broad aspirations on engagement with the natural environment, but there are opportunities to improve them. I will turn briefly to some of the aspects that could be addressed. Evidence shows that access to nature and the outdoors is not entirely equal: for example, children in lower income areas and people from black, Asian and other minority ethnic backgrounds have the poorest access to green spaces and the natural environment. That is not always the case—in my constituency of Gloucester, the ward that is closest to Gloucester park, Barton and Tredworth, is also the area with the highest concentration of ethnic background diversity—but in general, access to the outdoors is unequal in our larger cities compared with towns or countryside.

The amendment would make a substantial difference by requiring the Government to take a strategic and coherent approach to issues of access to and enjoyment of the natural environment. Some non-governmental organisations have suggested that the amendment might put people’s enjoyment over the value of the natural environment to wildlife—that, for example, people and the environment are in competition and their goals are necessarily incompatible—but I reject that suggestion, because I believe that there are very clear examples of how people and the environment go well together.

The easiest way to shine a light on that is by talking about sensory gardens, which, as many of us know, are a frequent feature in schools that handle people with the greatest physical disabilities. Years ago, my family helped to raise funds for a sensory garden that was full of biodiversity. Not only was it a wonderful environmental joy, but it brought great joy to those with disabilities who attended the school. It is important therefore that the amendment be seen not as pro-people and anti-environment, but as pro-people and pro-environment.

Nor is the amendment intended purely to benefit urban dwellers—far from it. Aspects of it will hugely benefit the countryside as well. Research commissioned by the National Trust estimates that people across Great Britain are missing out on 500 million park visits a year because of poorly equipped facilities. Basic facility upgrades, from toilets and income-generating cafés to play areas, can help accessibility; litter collection, which I have already mentioned, is also incredibly important. Natural England has reported that insufficient footpaths in the presence of busy or dangerous roads can prevent easy access and deter their use. One in eight households has no access to a private or shared garden, a figure that rises to 21% of households in London, which highlights the importance of enjoyment of our green spaces.

Overall, parks in England deliver an estimated £6.5 billion of health, climate change and environmental benefits every year, including £2.2 billion in avoided health costs alone. It is not for me to challenge those figures; I think we can all intuitively relate to them, and I hope that as guesstimates, which are inevitably imprecise, those are as accurate as they can be. For every £1 spent on parks in England, an estimated £7 in additional wealth is generated for health and wellbeing and the environment.

These anecdotal examples of evidence, surveys and research make a strong case for making sure that the people’s enjoyment of our public spaces is included in the Bill as a “must”, rather than a “may”. In a sense, the Environment Secretary showed his support for such concepts in July 2020 in a speech announcing £4 million for a two-year pilot project to bring green prescribing to four areas hit hardest by coronavirus, saying:

“Studies across the spectrum, from health to financial risk, remind us that it is in our best interests to look after nature. We know that a connection with nature contributes to wellbeing and improved mental health.”

I could not agree more. I know that the Minister who is taking the Bill through the House, and whose whole career in the House of Commons has been dedicated to working on the environment, shares those feelings.

I draw attention to two other aspects. First, in September 2019, Julian Glover published his independent “Landscapes Review”, sometimes known as the Glover review, into whether protections for national parks and areas of outstanding natural beauty are fit for purpose. The Government have not yet formally responded to that review, but I believe they are broadly supportive. Its proposals include:

“A stronger mission to connect all people with our national landscapes, supported and held to account by the new National Landscapes Service”,

and,

“A night under the stars in a national landscape for every child”.

What a wonderful idea. Millions of children in this country have never had the chance to do that, and if this could stimulate that experience, what could be better? Also proposed is:

“New long-term programmes to increase the ethnic diversity of visitors”.

That has to be the right way forward. Different ethnic communities in my city have not had the same experiences in enjoying our national parks. We need to encourage them, and to make sure that national parks are seen as open, accessible and to be enjoyed by everyone. The proposals continue:

“Expanding volunteering in our national landscapes”,

and,

“A ranger service in all our national landscapes, part of a national family”.

All those recommendations, alongside the nature recovery network that is part of the Bill and that aims to join up green spaces and landscapes, only emphasise the value of replacing “may” with “must” in the Bill, which will help to achieve some of the recommendations.

My one-word amendment has the backing of the Conservative Environment Network, which my hon. Friend the Minister and I were founder members of. It has the support of the Ramblers, as well as the support of all the heritage organisations that come together in a group chaired by a former colleague of ours. Some of those aspects are reflected in amendment 202, which no doubt somebody else will talk to. It highlights the importance of archaeological, architectural, artistic, cultural and historical interest in our parks.

I particularly draw the attention of those listening from my constituency to the great Jurassic landscape in Robinswood Hill country park; stones that are millions of years old are sitting there on our doorstep. Having been a civil servant in another life, I recognise that no Department welcomes changes to its Bills, and that “must” implies additional responsibilities and work that is unlikely to be welcomed; however, I believe that this one-word change is a worthwhile measure. My hon. Friend the Minister is likely to have only one chance to lead a major new environmental Bill through the House. She will want it to be as strong and successful as possible. All Members on the Government Benches and, I suspect, on both sides of the House, share her ambition. I move this probing amendment in the hope that she will see this one written word as an entirely positive contribution to the spirit and intent of the environmental plan and the Bill.

I commend the hon. Member for Gloucester on bringing the amendment forward. It is an important amendment in its own right. It is also important in terms of something we did at the beginning of the Bill and which was briefly discussed during the earlier stages in the spring. The Bill is littered with “mays” where there ought to be “musts” and we drew attention to about 25 instances where there are “mays” in place and they should be “musts”.

One has to be a little careful when replacing “mays” with “musts” because there are certain indications where they are contingent on some other action. It is perfectly appropriate that the Government may do something after they were supposed to do something else. We have resisted the temptation to try and change those. However, we have put down a number of amendments where the “may” is in a primary part of a particular clause, which means that nothing needs to happen at all. The legislation is suggesting that the Government of the day might do something about that if they feel like it, but they do not have to and they have complete protection within the legislation if they do not decide to do the particular thing that is set out, because all it says in the legislation is that they may do that. If they decide they are not going to that, that is the end of the matter.

I need to give the hon. Member for Gloucester an additional piece of credit, because his was a “may” that we missed. We did not table an amendment to this “may” because we were too busy looking at “mays” and “musts” elsewhere in the Bill. I commend him strongly for spotting this “may” and bringing very cogent reasons to the Committee as to why that particular “may” should be turned into a “must”. I suggest that those cogent reasons spread themselves across the passage of the Bill. Indeed, one could make a speech—not as good and comprehensive as the hon. Gentleman’s but which is a stab in that direction—for a whole range of “mays” going through the Bill. It is an issue that the Minister ought to address in terms of the Bill’s general structure. We had a debate at the earlier stage where we raised a “may” and a “must” and we said at the time that we could make a lengthy intervention on each “may” and “must” as it went through the Bill, but we probably would not.

I am putting that to the Committee for its comfort and security. However, there is a continuing real issue in the Bill with the way in which it has been drafted with those “mays” and “musts”. While we have done part of our job by drawing attention to that and putting those amendments down, even though we are not going to pursue them in detail, it is within the powers of other members of the Committee—as happened this morning—to draw attention to the effect that a “may” instead of a “must” has on a passage as we go through the Bill. I fear that that will be, even without my intervention, a recurring leitmotif as we go through the Bill, and that hon. Members will be particularly concerned about that formation as it relates to a thing they are concerned with as the Bill goes through. They may raise that concern independent of our portmanteau amendments on “mays” and “musts”.

I hope the Minister will reflect on that. I observe that she has been assiduous in tabling amendments. It is unfortunate, that those amendments do not include any recognition that this is a particular problem with the Bill. There are amendments that could be put forward that would rectify that.

I hope the Minister will take from this exchange that there is a real concern about how that particular formulation works through the Bill, and especially in this instance. I hope she will consider, at least in some of the instances where those “mays” and “musts” collide, tabling some amendments later in the Bill’s passage to rectify or ameliorate those parts of the Bill. That piece of sunny optimism on my part perhaps goes with the Minister’s sunny optimism on many things. Let us see whose optimism gets the upper hand in this instance.

Finally, it might have been a little mischievous of us to seek to draw the hon. Member for Gloucester into supporting a vote on this clause. Out of sensitivity to his general circumstances in life, we will not seek to do that, because I think the hon. Gentleman will withdraw his amendment. I think it illustrates, however, that this concern is held not only on this side, but across the Committee, so there is an additional onus on the Minister to think about whether there are instances where those “mays” and “musts” can cease colliding and can be amended for the better purposes of the Bill as a whole.

I thank my hon. Friend the Member for Gloucester for his excellent speech. He knows that I hold him in great respect and I always listen to what he says. He collars me many a time. I have given this a huge amount of thought and talked to a great many people about it, because it has been preying on my mind—he can be absolutely sure of that. He has explained a bit about my background, so he will know that I am not making that up.

My hon. Friend painted a lovely picture of life in the countryside, especially in his lovely constituency, including in the Robinswood Hill park, which I know because I briefly worked on rural and countryside issues in Gloucester many years ago. That was one of the places people revered even then.

I am dealing with the “may” as it relates to this amendment, which I think is the right thing to do.

It is cheeky of the shadow Minister to try to widen out the “mays” and “musts” at this juncture.

Connecting people with the environment is really important to our health and wellbeing. It is a core objective of the Government’s 25-year plan, which we can all have a look at later to remind ourselves. It is written in there, I assure my hon. Friend the Member for Gloucester, that connecting more people from all backgrounds with the natural environment for their health and wellbeing is a key part of the 25-year environment plan, which is our first environmental improvement plan. When reviewing the environmental improvement plan, the Government must consider whether further measures are needed to achieve the targets. Under the Bill, long-term targets can be set out for any aspects of the natural environment or people’s enjoyment of it. As he will know, the Bill requires the Government to set out at least one target in four priority areas—air quality, biodiversity, water waste and resource efficiency—as well as the fine particulate matter target. Other targets can be set later, as we go along. There is huge scope for that.

We are already implementing many projects and schemes to connect people with nature. My hon. Friend has named a number of them already. For example, there is the children in nature programme, on which I, as the Environment Minister, link up with the Department for Education. There is the green social prescribing shared outcomes fund; he touched on the funding that has just been given. I was at the launch of the National Academy for Social Prescribing last year, when I was briefly a Minister in the Department for Digital, Culture, Media and Sport. I went with that hat on, although I had done a lot of work as a Back Bencher on green social prescribing; my hon. Friend is absolutely right about how important it is and what a difference it makes to people’s lives.

My hon. Friend the Member for Gloucester touched on pocket parks. That fund was launched last year by the Ministry of Housing, Communities and Local Government, to the tune of £1.35 million, and community groups can still bid for that now. If my hon. Friend or other hon. Members know any groups that would like to bid for that money, please encourage them to do so, as that would be worthwhile. We have also launched a £40 million green recovery challenge fund, supporting projects across the country to connect people with nature and generate jobs at the same time. So, there are a lot of ongoing projects, which will not stop. We expect public authorities to consider how to help to tackle the issue of health and wellbeing, through actions to comply with the strengthened biodiversity duty introduced later in the Bill, in clause 93.

I know my hon. Friend knows that the environmental improvement plan can set out the steps that the Government intend to take to improve people’s enjoyment of the natural environment. I have touched on that already, but that is engrained in the Bill. As my hon. Friend said, people’s enjoyment of the natural environment can, in some instances, have a negative impact on the natural environment. For example, if too many visitors go to a beach, it can negatively impact the wildlife and habitats, including through litter left behind. I am really conscious of that, because we have had some significant incidences of it over the summer. I had to engage with local authorities about it, including those in Cornwall, where it was raised as being a terribly difficult issue to deal with.

Our enjoyment of nature cannot take precedence over our stewardship of that environment for the future. That is why we do not necessarily want to give equal prominence to environmental improvement and people’s enjoyment in EIPs, as would result from these amendments. I understand that Greener UK agrees that the focus should be on improving the whole, holistic natural environment, not diverting it from its primary status. My hon. Friend the Member for Gloucester touched on that.

I highlight the link between the Environment Bill and the new environmental land management scheme, which is being brought through under the Agriculture Bill. ELMS will be one of the tools for delivery in the 25-year environment plan and one of the measures in the Environment Bill. It will pay for delivery of public goods. Listed among those public goods are beauty and heritage, as touched on earlier by the hon. Member for Cambridge, as well as engagement with the environment. That is actually listed as something that can be delivered as a public good through the Ag Bill and the new ELM system. There is a direct link with what my hon. Friend the Member for Gloucester touched on, and I hope that gives him some assurance.

My hon. Friend mentioned the Ramblers—that excellent organisation, which is doing very good work on access to the countryside through our rights of way. It is obviously concerned about rights of way that might be lost. Rights of way are a vital network that enables people to access our open spaces, and we plan to complete the legal record of rights of way in order to bring certainty to the public and landowners about who has right of way over their land. I wanted to touch on that because it was raised and has been in the press this week.

My hon. Friend also made an important point about who gets access to the countryside, and he touched on issues relating to diversity. He rightly said that the Glover review highlighted that. It came up with some interesting recommendations, and the Government have not formally responded to it yet. It made some significant suggestions about our natural parks and areas of outstanding natural beauty, and all those general aspects. That will be dealt with when the Government fully respond to the review. It touches on many of the issues that my hon. Friend raised—in particular, equality.

On access to green space, the Government are developing a national framework of green infrastructure standards, which will help all authorities, developers and communities to improve green infrastructure provision in their area, and make it more nature-friendly and accessible to people. We are mindful of every single thing that my hon. Friend touched on, and I hope that reassures him.

On amendment 202, the drafting of schedule 2 is in line with and respects the devolution settlement for Northern Ireland. The amendment would, however, have the effect of reducing the Northern Ireland Executive’s authority to determine the contents of their own environment improvement plan.

I hope my hon. Friend understands how much thought has been put into this proposal. We truly note where he is coming from, but we believe that the issues he raises are being fully addressed in this holistic approach. I therefore ask him very kindly to withdraw amendments 201 and 202.

I am very grateful to the Minister for doing detailed research to anticipate most of the points that I was likely to raise. I am also grateful for the comments of the hon. Member for Southampton, Test.

The Minister is quite right that it is appropriate at this stage to tackle the one-word change to the clause only, rather than the wider principle, which the hon. Member for Southampton, Test tempted her to pursue. I am absolutely sure that she not only understands exactly where I am coming from but is entirely with me. The question is whether she can bring me with her in the direction that we want this Bill to go, rather than come from. Everything she said only emphasised the value of bringing something more concrete to the clause. We are in wide agreement on almost every single issue, except the important net increase of one letter that I am hoping for.

I hope the Minister will reflect on some of the thoughts that I offered, particularly on the vital notion that nature and humans do not need to be in conflict. I was brought up partly in east Africa, and I have seen over my lifetime how the occasional obsession with trying to separate the role and the perfection of the environment from the role and desires of the humans living in and beside it can cause conflict unless people work hard to realise that the two can go together very well. We have seen in the most successful environmental schemes around the world how effective that can be; whether in the marshlands to the north of Hong Kong, or in the wildlife protected in India and Africa. The same can be done here, in our own country. There are opportunities to pursue, and in that spirit I hope my hon. Friend the Minister will look at this closely for the Report stage of the Bill—she is nodding. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Order. Before we move on to the next group, I would like to say that I have been very relaxed so far. We have had some very discursive contributions to the two groups we have had in the past hour and 10 minutes. We should all collectively seek to address our remarks particularly to the absolute detail of the amendments in front of us and not stray into other areas, however interesting.

I beg to move amendment 87, in clause 7, page 5, line 13, at end insert—

“(5A) It may also set out the steps Her Majesty’s Government intends to take to improve the conservation of land environments of archaeological, architectural, artistic, cultural or historic interest, including improving people’s enjoyment of them (and if it does so references in this Part to improving the natural environment, in relation to that plan, include conservation of land environments of archaeological, architectural, artistic, cultural or historic interest, including improving people’s enjoyment of them).”

This amendment invites the government to consider the historic environment in environmental improvement plans.

We are enjoined to concentrate on the amendment in front of us and how it affects the Bill as a whole. It would be useful to put to the Committee where we stand on clause 7. The clause states that the Secretary of State must prepare an environmental improvement plan. The beginning of the clause appears to suggest that the Secretary of State must sit down—presumably with a towel round his head—and work out an environmental improvement plan and present it to the House.

The clause then sets out what an environmental improvement plan is—significantly improving the natural environment in the period to which the plan relates—and that that period must not be shorter than 15 years. As the hon. Member for Gloucester mentioned, an earlier clause provides that the EIP should include

“steps Her Majesty’s Government intends to take to improve people’s enjoyment of the natural environment in that period.”

Clause 7 then takes an abrupt handbrake turn. It says that is all very well, and all those things must be done by the Secretary of State. However, in the great tradition of “Blue Peter”, here is one I prepared earlier. It states in subsection (7):

“The document entitled ‘A green future: our 25 year plan to improve the environment’…is to be treated as an environmental improvement plan”.

That is, it has already been done before the Secretary of State has to put pen to paper as provided earlier in the clause, to produce an environmental improvement plan. It then specifically states in subsection (8) of this clause:

“References in this Part…(a) to the first environmental improvement plan, are to that document; (b) to the current environmental improvement plan, are to the environmental improvement plan for the time being in effect.”

That is the 25-year environment plan—

Order. We have a very long Bill to consider, with a great deal of amendments. I therefore intend to be tough on both sides of the Committee. I know that that may upset every member of the Committee equally, but we need to make some progress. I therefore suggest that the hon. Gentleman should speak not to the whole of clause 7—he will have an opportunity to do that, if he chooses, in a stand part debate shortly—but specifically to his amendment, which refers to the conservation of land environments. Broader discussion of the clause may wait for later.

Thank you, Mr Gray. I will, of course, follow your guidance closely, but I feel it is necessary to set out what part of the clause we seek to amend, and why, in order to explain the status quo ante. By tabling the amendment, we seek to set out steps for Her Majesty’s Government to take to improve the conservation of land environments of, among other things, archaeological, architectural, artistic, cultural or historical interest, including improving people’s enjoyment of them. The clause as it stands mentions people’s enjoyment of the natural environment. The amendment would place one of the definitions of the natural environment into the context of what has happened to it over a very long period of history.

One little example of that, close to my constituency in Southampton, is the New Forest. The New Forest is not new and it is not, by and large, a forest. It is a very large and precious part of our natural environment, but it is not the natural environment it was originally. Actually, it is a spectacularly complex and superbly varied environment that has been worked on substantially by humans over 10 centuries. Substantial sections of the New Forest that were originally forest are heathland, for example, with their own habitats and precious areas of rare species within them. Those habitats have come about only as a result of human activity in the original area of the New Forest, clearing what was forest and working on, draining, changing, enriching and variegating the land. As a result, those species have colonised those areas and are now, to the human eye, indistinguishable from the natural environment as part of that forest.

My hon. Friend is making a powerful case. In the east of England, the Broads landscape is a similarly excellent example. It was long thought to be an example of the natural environment, but it now turns out to be a consequence of human intervention. The definition of what is natural is extremely important.

My hon. Friend is right. The Broads came about as a result of peat extraction by Saxon and early medieval inhabitants of the area, and an amazing interlinked lakeland and wetland environment has developed as a result. Landscapes of archaeological, environmental, artistic, cultural or historic interest are an important part of the natural environment. They should be conserved and preserved, and loved and looked after for that reason, and not because they are a variation from the original landscape that was in place once upon a time.

Turning to the 25-year environment plan, which is apparently the status quo for our considerations, I see no mention or consideration in it of that aspect of our natural environment. We are being asked to adopt a plan for the future that simply does not include that aspect. As the Minister mentioned the clean air targets that we agreed earlier, the 25-year environment plan does not say very much about that either, other than publishing a clean air strategy.

If we agree the clause without amendment, we will have put all our eggs in a basket that does not contain many of the eggs that we want to be in that basket in the first place. That is why it is very important that we agree the amendment this morning. The Minister has indicated that 2023 is the date that the plan might be up for reconsideration. We must agree the amendment to ensure that at the very least the Bill contains a clear instruction to the Secretary of State to include that when preparing a future environmental improvement plan.

If the Minister does not accept the amendment, she ought at the very least to give an indication that that is the procedure that she will adopt, among other things, for the future preparation of an environmental improvement plan for the period post 2023. We will have lost some time as a result, but if she indicates that that would be very much on her mind for any future environmental improvement plan, it would go a long way to comforting us, although ideally the measure should be in the Bill in order to properly inform this section for the future.

I want to assure the shadow Minister that the Government were elected on a manifesto that promised to protect and restore our natural environment after leaving the EU, and that is why the environment improvement plans and targets share an objective of significantly improving the natural environment.

I will whizz through my response as briefly as I can. The hon. Member touched on the fact that the natural world does not exist in a vacuum. We are in complete agreement. It is a very complicated scene. We interact with it; we use it and rely on it; and we change it, as the hon. Member referred to in many examples. It becomes part of our life, our history, our values and it is a natural heritage and inheritance that we should all be proud of. That is why the 25-year environment plan has at its heart that we will improve the natural environment and recognises that we cannot manage it in isolation.

The plan committed us to

“Safeguarding and enhancing the beauty of our natural scenery and improving its environmental value while being sensitive to considerations of its heritage.”

That is what the plan mentions, so I want to give absolute assurances. I believe the shadow Minister is not aware that this point is all part and parcel of the Environment Bill already.

I understand that those outside this House who have been calling for the amendment feel that greater confidence would be given by an explicit reference in the Bill to these particular heritage features of land. I know that lots of people have been concerned about this, so I want to reassure them that the Bill ensures that our 25-year environment plan, including its stated recognition of the connection between the natural environment and heritage, will be adopted as the first environmental improvement plan. It will set the benchmark for future plans, including how to balance environmental and heritage considerations.

The approach we took in our 25-year environment plan on heritage was welcomed by stakeholders and is expected to be mirrored in future environmental plans by the future Government. I hope that give assurances. The shadow Minister raises some serious points about heritage, but I think we are actually in agreement, so I would ask him to withdraw the amendment.

I am not sure that the Minister can point to the exact part of the Bill where those things take place in the way that she has suggested they do, although I am a little reassured by the fact that she clearly has a good understanding of the problem that we have set out today and is alive to the issue. I hope the Minister will follow up this debate with some equally assiduous work as previously, to ensure that it is a substantial feature of the next, or revised, environmental improvement plan. I hope it will give great reassurance not just to people in this House, but to those concerned with our natural heritage and the way that our heritage as a whole impacts on the natural environment and the changes that have been made within it over time. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 7 ordered to stand part of the Bill.

Clause 8

Annual reports on environmental improvement plans

I beg to move amendment 89, in clause 8, page 5, line 32, at end insert—

“and,

(c) consider biodiversity reports published by authorities under section 40A of the Natural Environment and Rural Communities Act 2006 (as amended by section 94 of this Act).”

Clause 8 is concerned with the preparation of annual reports on the implementation of the current environmental improvement plan. The amendment would additionally require the consideration of annual reports on the plan’s implementation and operation. The clause sets out a number of ways in which that should be done. By the way, I cannot resist stating that, as hon. Members will observe, subsection (1) says:

“The Secretary of State must prepare annual reports”.

The Secretary of State has no option but to do this. It is not a question of the Secretary of State “may”; rather, he “must prepare annual reports”. There is obviously some careful writing going on here.

Subsection (1) says:

“An annual report must...describe what has been done, in the period to which the report relates”

and

“consider...whether the natural environment has, or particular aspects of it have, improved during that period.”

Later in the Bill, clause 94 amends the Natural Environment and Rural Communities Act 2006 to require the Secretary of State to look at biodiversity reports, which

“must contain...a summary of the action which the authority has taken over the period covered by the report...a summary of the authority’s plans for complying with those duties... any quantitative data required to be included in the report”,

and

“any other information that the authority considers it appropriate to include in the report.”

I will not read out the entire clause—as you will be delighted to hear, Mr Gray—but it sets out a number of other things that the biodiversity report should include. Nevertheless, in terms of biodiversity reports, that appears to be fairly central to the idea of reporting, on an annual basis, what has happened to that environmental improvement plan. That is, those biodiversity reports, which are coming out on a regular basis, should inevitably be included in the annual changes that have happened, which are required to be reported on by the Secretary of State as far as the improvement plan is concerned.

However, as hon. Members can observe, there is no linkage in clause 8 with clause 94 as far as biodiversity plans are concerned. We are concerned that, without something on the face of the Bill to link those biodiversity reports and the progress of the environmental improvement plan, those reports will be set aside, not taken into account and not included in the Secretary of State’s progress reports, and will have much less effect as a result. The amendment would therefore require the Secretary of State to

“consider biodiversity reports published by authorities under section 40A of the Natural Environment and Rural Communities Act 2006 (as amended by section 94 of this Act).”

That is the important part. We are considering an amendment to the 2006 Act later in the Bill specifically to do with biodiversity reports, yet we leave them hanging elsewhere in the legislation. The amendment introduce create an important linking passage between those two issues. The Committee ought to think carefully about whether it wishes that link to be explicit on the face of the Bill, or whether the inclusion of those biodiversity reports in the Secretary of State’s update on the environmental improvement plan should be left to chance.

I thank the hon. Member for his consideration of the Bill and the amendment. However, I assure him that the amendment is not needed. Clause 8 places a duty on the Secretary of State to produce annual reports on progress in implementing the environmental improvement plan. As the current 25-year environment plan shows, EIPs have a very broad scope. We have already touched on that. The reporting requirements that the Government have proposed are equally broad in scope, describing what action has been taken to implement the plan, and considering whether aspects of the natural environment are improving. This consideration should draw upon relevant existing data. Specifying that particular reports must be considered is not necessary.

The Bill will introduce a requirement to produce biodiversity reports as part of a strengthened biodiversity duty on public authorities. These reports will provide valuable data, but are already in the scope of the existing reporting duty of the annual EIP reports. To ensure that the annual EIP reports are as robust and comprehensive as possible, we want them to be based on the best evidence. We also want to retain the flexibility to consider the most relevant evidence for a particular context.

Within that context, we should also consider that there will be several hundred biodiversity reports produced over a five-year period. They will be produced by all local authorities, local planning authorities, and other large landowning authorities. We will discuss that in more detail in the later clause. Only some of the reports will be relevant to the annual EIP reports, and it would be disproportionate to require all of them to be considered. The hon. Member’s amendment is not relevant, and is already dealt with in later clauses to do with biodiversity. The hon. Member for Southampton, Test is obviously deeply concerned about the issue of biodiversity and it is absolutely right that we should address it, but I ask him to withdraw amendment 89.

I suspect that we will be discussing the same points on a number of different amendments, but this amendment raises the whole issue of those biodiversity plans. It also raises the issue referred to by my hon. Friend the Member for Southampton Test at the beginning of today’s sitting, which is that we have seen significant changes over the summer in terms of the Government’s stated intent for the planning White Paper.

When we look at the information that goes into the environmental improvement plans, my concern is that, as my hon. Friend has suggested, the data needs to be there to make any kind of sensible judgment. It is suggested, through the links to clause 94, that local planning authorities will be providing much of that information, yet the Government now propose to create a planning system that makes that nearly impossible. We will return to that, but it points to the great difficulty for the Opposition, in that, without an evidence session to explore these points, it is difficult to have a rational discussion at this point in our proceedings. My hon. Friend’s suggested amendment very much strengthens the Government’s ability to draw up a coherent plan. If we do not have that, we will end up with a nice-looking document that is not based on any real information.

This debates also touches on a more fundamental issue: the relationship between this Bill and the Agriculture Bill. I had the pleasure of leading on the Agriculture Bill in this very room some months ago, and we raised the point then. The interaction between the two is complicated and sophisticated, particularly in relation to environmental land management schemes. The Minister mentioned that earlier. Without the relevant information, we will not be able to have the planning strength we would all like to see.

The points made by my hon. Friend the Member for Cambridge are important in the wider context of the Bill. They explain why we are finding it difficult to easily track what the various parts of the Bill are against each other. As my hon. Friend says, we will return to that in the next amendment. It is beholden on the Minister to explain a bit better how these things fit together—or indeed do not—than she has this morning. We legislate today not just for those who might be well-disposed towards the Bill and have its architecture well-embedded in their heads, and would therefore hopefully be able to move about within the Bill to put its bits together in terms of future directions. I refer to Ministers and those who are well-disposed towards its ideas—in this instance biodiversity reports. We are legislating for future circumstances where those required to carry out the terms of the Bill might not have the same enthusiasm, dedication and support for the issues as the Minister does. I am sure she will have a long reign as Minister, but she is nevertheless the present Minister.

It is important that we ensure as best we can that the legislation is malevolence-proof and that what we decide in respect of future Governments’ duties, both in this Committee and when the Bill goes through the House, really happens. The amendment is an example of something that could be included in the Bill. I accept what the Minister said about there being some measures that, with some good will, can ensure that those things happen, but they are far from the sort of long-term assurances we want. Although I will not press the amendment to a vote, I am afraid that what the Minister has said laid out this morning is very much dependent on her good will towards the Bill.

The shadow Minister is making a powerful point—we are future-proofing for generations to come. To my mind, it is important that legislation is easy to read and understand, and it must be secure and tight. Future generations will be looking to us to set an example, which is why that is so important. A year ago, nobody knew about covid, so we cannot always read the future, but we must set things down tightly in legislation. That is why amendment 201, which was withdrawn, focused on the use of “may” and “must”—wording is so important. I agree with my hon. Friend that we must make the legislation as future-proof as possible.

That is precisely my view of what we should be doing in Committee and throughout the passage of the Bill. I hope that the Minister will reflect on whether the clause is really tight enough to ensure that the provisions work, not just for her purposes but for the purposes of people in the future, and that she will look over the legislation at her leisure—there is plenty of time on Report—to see whether anything more needs to be done to ensure that that point is properly taken on board. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

I beg to move amendment 90, in clause 8, page 5, line 32, at end insert

“and,

(c) include an analysis of whether the policies and measures set out in the environmental improvement plan will ensure that any targets set under sections 1 and 2 and any interim targets set under sections 10 and 13 are likely to be met.”

This amendment is another example of the theme that we have been developing, first on the extent to which the later parts of the Bill link properly to the earlier parts, and secondly on whether provisions should be included in the Bill to ensure that those links are made when the Bill becomes law and are not just in the minds of the Minister and well-disposed civil servants.

The amendment, which also relates to clause 7(5), proposes that the environmental improvement plan should include

“an analysis of whether the policies and measures set out in the environmental improvement plan will ensure that any targets set under sections 1 and 2”,

which we have agreed to,

“and any interim targets set under sections 10 and 13”,

which we will talk about later,

“are likely to be met.”

It is important to the proper functioning of any environmental improvement plan that it is drawn up on the basis of the targets. The Minister has mentioned that this is not just a question of the targets that are in the Bill; other targets can be set on the basis of the framework in clause 1. It seems to me that if that is one of our prime mechanisms for ensuring that what happens under the Bill as a whole works, it has to be a prime function of an environmental improvement plan. The idea of setting up an environmental improvement plan to miss, subvert or undermine those targets would be anathema to us, but there is nothing in the Bill to prevent that from happening. The two clauses are just not linked together. We therefore think, as I have mentioned before, that the amendment is important to rectify architectural defects in the Bill.

Under the amendment, the analysis would be one of the things the Secretary of State was required to include when preparing an environmental improvement plan. Of course, when the environmental improvement plan that we have at present was produced, no targets were in place, no targets had been set and no targets had been considered. This is therefore an entirely new thing that would have to go into the revision of the environmental improvement plan that the Secretary of State is required to do in 2023.

I hope that the Minister will be fairly generous in considering whether to put this provision in the Bill. I think that it is an important change that needs to be made and, given that we have thought about it for a while, we will consider dividing the Committee if there is not a reasonable response to what is a serious and considerable lack of joining up between this clause and the earlier clauses.

I thank shadow Minister for his proposal that the Government annually assess the sufficiency of environmental improvement plan measures for achieving our targets. He is clearly aware, as are we and, indeed, all the people who have put so much work into the structure of the targets and the EIPs, that it is very important to keep the EIPs on track. With that in mind, I assure him that the whole system that has been set up—the Bill’s statutory cycle of monitoring, planning and reporting—is designed to ensure that the Government regularly assess the sufficiency of their actions, while allowing some flexibility in how they do so.

The EIP annual reports are intended to be a retrospective assessment of what has happened in the preceding 12 months. The five-yearly EIP review is a more comprehensive assessment in which the Government must look not only backwards but forwards and consider whether the EIP should include additional measures. If so, the EIP may be updated and a new version laid before Parliament.

The Office for Environmental Protection will comment yearly on the progress reported in each EIP annual report, providing it with the opportunity to flag early on where it believes there is a risk that the Government might not meet their legally binding, long-term targets. It may also make recommendations on how progress towards meeting targets can be improved, to which the Government must respond.

I hope that that reassures the shadow Minister that there is a step-by-step system of constant reporting, monitoring and assessing. Ultimately, of course, the OEP has the power to bring legal proceedings if the Government breach their environmental law duties, including the duty to achieve long-term targets.

The intent of the amendment already appears in the EIP cycle. I have it all written out, because there is a step-by-step process to ensure we are kept on track. Any extra or duplicative reporting is unnecessary and could divert resourcing from that needed to ensure the successful implementation of the policy, so I ask the hon. Member for Southampton Test to withdraw the amendment.

Order. The Minister has finished her remarks; the hon. Gentleman is replying to the debate.

Indeed. I am wondering in a non-specific way, Mr Gray, what the Minister might think about this issue, having responded to the debate so far.

The provision that we wish to place in clause 8(2) appears in subsection (3), so will the Minister consider including it in subsection (2), which states what an annual report must consist of, whereas subsection (3) states that the report might consider these matters. Surely those targets and interim targets are central to any annual report and are not a consideration that might arise in the report.

I do not know whether the wording is slack or whether there is a reason why the consideration of relevant targets under clauses 1 and 2 are in subsection (3) and not in subsection (2). Our amendment expresses the centrality of targets to annual reports.

I have to say that I am finding this a slightly dry discussion, Mr Gray.

I listened to the Minister carefully and I am trying to understand the amendment’s effect in the real world. For those that influence the environment—I think of water companies and transport authorities—the extra clarity offered by the amendment would make it far more likely that they would amend their planning and investment decisions at the right time, which seems to be key to what we are trying to achieve.

I thoroughly agree with my hon. Friend, although it is perhaps going a little too far for an hon. Friend to say that I am involved in dry discussions. On his suggestion, I will try to make my discussions a little damper in future.

To be honest, I do not think the Minister has given us a good reply. I do not want to press the amendment to a vote, but I want to put it on the record that we think it is important that these issues should be gathered together centrally in the annual reports and not put in the considerations about the annual reports. Again, I would hope—it is not a general reflection on this occasion, but an actual reflection—that the Minister might look at the fact that the wording applies to the documentation of the report and consider whether a drafting amendment to put subsection (3) into subsection (2) might not be a wise course of action at a future date.

Amendment, by leave, withdrawn.

Clause 8 ordered to stand part of the Bill.

Clauses 9 to 15 ordered to stand part of the Bill.

Clause 16

Policy statement on environmental principles

I beg to move amendment 91, in clause 16, page 10, line 6, leave out “proportionately”.

This amendment removes ministerial estimates of proportionality as a limitation on the policy statement on environmental principles.

With this it will be convenient to discuss amendment 92, in clause 18, page 11, line 13, leave out subsection (2).

This amendment removes the proportionality limitation on the requirement to consider the policy statement on environmental principles.

I am afraid that we might be here discussing slightly dry propositions for a little while. Amendments 91 and 92 look at the wording in the Bill that relates to the proportionality of the interpretation by Ministers of the Crown when making policy. Clause 16(2) defines what a policy statement on environmental principles is. It explains that it

“is a statement explaining how the environmental principles should be interpreted and proportionately applied by Ministers of the Crown when making policy.”

Although that appears to be an innocuous point, our view is that it is not remotely as innocuous as it looks, because it is not just talking about the statement on how the environmental principles should be interpreted. It is stating that, even after that interpretation, there is a second course of action that may be taken: Ministers of the Crown may decide to apply them proportionately. As far as I can see, there is no definition of the word “proportionately” in clause 16 or in the Bill as a whole, even though it is quite usual to place an interpretation of particular words in a Bill.

My understanding is that the word “proportionately” has to be attached to something—it is proportionate to something, or proportionately a part of something. When it is stated in the—

The Chair adjourned the Committee without Question put (Standing Order No. 88).

Adjourned till this day at Two o’clock.

Pension Schemes Bill [ Lords ] (First sitting)

The Committee consisted of the following Members:

Chairs: Mr Laurence Robertson, †Graham Stringer

† Bailey, Shaun (West Bromwich West) (Con)

† Baker, Duncan (North Norfolk) (Con)

† Baldwin, Harriett (West Worcestershire) (Con)

† Bell, Aaron (Newcastle-under-Lyme) (Con)

† Buck, Ms Karen (Westminster North) (Lab)

† Davies, Gareth (Grantham and Stamford) (Con)

† Drummond, Mrs Flick (Meon Valley) (Con)

† Eagle, Ms Angela (Wallasey) (Lab)

† Eshalomi, Florence (Vauxhall) (Lab/Co-op)

† Gray, Neil (Airdrie and Shotts) (SNP)

† Griffiths, Kate (Burton) (Con)

† Malhotra, Seema (Feltham and Heston) (Lab/Co-op)

† Morris, James (Lord Commissioner of Her Majestys Treasury)

† Opperman, Guy (Parliamentary Under-Secretary of State for Work and Pensions)

† Roberts, Rob (Delyn) (Con)

† Thomson, Richard (Gordon) (SNP)

† Timms, Stephen (East Ham) (Lab)

Kenneth Fox, Huw Yardley, Committee Clerks

† attended the Committee

Public Bill Committee

Tuesday 3 November 2020

(Morning)

[Graham Stringer in the Chair]

Pension Schemes Bill [Lords]

Before we begin scrutiny, I have a few preliminary announcements. I will stop the sitting if Members do not respect the social distancing guidance. I remind Members to switch electronic devices to silent. Tea and coffee are not allowed during sittings. If drinks have been brought in, please remove them from the desk. I know that most speeches are spontaneous, but if Members have speaking notes, please email them to our Hansard colleagues at hansardnotes@parliament.uk. That would be helpful. We will first consider the programme motion on the amendment paper. We will then consider a motion to enable the reporting of written evidence for publication. Given the time available, I am sure we can do both of those without debate.

Ordered,

That—

(1) the Committee shall (in addition to its first meeting at 9.25 am on Tuesday 3 November) meet—

(a) at 2.00 pm on Tuesday 3 November;

(b) at 11.30 am and 2.00 pm on Thursday 5 November;

(2) the proceedings shall be taken in the following order: Clauses 1 to 6; Schedule 1; Clauses 7 to 44; Schedule 2; Clauses 45 to 48; Schedule 3; Clauses 49 to 57; Schedule 4; Clauses 58 to 95; Schedule 5; Clauses 96 to 99; Schedule 6; Clauses 100 to 116; Schedule 7; Clause 117; Schedule 8; Clauses 118 to 120; Schedule 9; Clauses 121 to 123; Schedule 10; Clauses 124 to 129; Schedule 11; Clauses 130 to 132; new Clauses; new Schedules; remaining proceedings on the Bill;

(3) the proceedings shall (so far as not previously concluded) be brought to a conclusion at 5.00 pm on Thursday 5 November. —(Guy Opperman.)

Resolved,

That, subject to the discretion of the Chair, any written evidence received by the Committee shall be reported to the House.—(Guy Opperman.)

Copies of written evidence that the Committee receives will be made available in the room. We now begin line-by-line consideration of the Bill. The selection list for today’s sitting is available in the room. It shows how the selected amendments have been grouped together for debate. Amendments grouped together are generally on the same or similar issues. Please note that decisions on amendments do not take place in the order they are debated, but in the order they appear on the amendment paper. The selection and grouping list shows the order of debates. Decisions on each amendment are taken when we come to the clause to which the amendment relates.

Clause 1

Collective money purchase benefits and schemes

Question proposed, That the clause stand part of the Bill.

With this it will be convenient to discuss the following:

Clauses 2 to 6 stand part.

That schedule 1 be the First schedule to the Bill.

Clauses 7 to 25 stand part.

It is a great pleasure to serve under your chairmanship, Mr Stringer. I thank colleagues for attending today’s debate. I hope to proceed with cross-party agreement on those matters that are relatively uncontested, so that we can make progress and then focus on and debate properly those matters that are genuinely contested.

I stand to introduce clause 1 and the associated clauses up to clause 25 and to speak in support of the new form of occupational pension that we are introducing, commonly called collective defined contributions. In CDC schemes, members and employers make fixed-rate contributions to the pension fund. At retirement, members receive their regular pension income paid out of the fund each year until death. The rate or amount of the pension is not guaranteed and will be adjusted annually depending on how much money is in the fund and the projected cost of providing benefits under the scheme. CDC schemes offer the security of an income in retirement, which we know many people value, without individuals having to purchase an annuity on retirement. However, CDC schemes do not require the employer to make additional financial contributions to the scheme if the scheme’s financial position weakens. CDCs have been introduced under a cross-party approach, with great support from all parts of the House. The pioneers of the scheme are the Communication Workers Union and the Royal Mail, which have proposed a way forward.

The Bill allows us to extend CDC provision to master trusts or non-connected multiple employers through further secondary legislation when appropriate, and we look forward to working with such employers in the industry on how such provision should operate and be regulated. It is a brave man who cites Tony Blair in aid of his proposals, but I genuinely believe that this is a third way in terms of pensions, as an alternative to defined-benefit and defined-contribution schemes. It is unquestionably something that huge numbers of people have sought to bring forward, so that we can address things in the main.

The Minister talks about the third way. Will he also take a little time in his opening remarks to recognise that pensions policy is best if it is done cross-party? We are dealing with changes to the Pensions Act 2004, which was cross-party legislation that introduced opting in. Changes and tweaks to the system are far more likely to last across different Governments and across time if we have some form of cross-party consensus. It is not only a third way. The only way we will end up with a workable pensions scheme is by building in sustainability across Governments and across time. As a former Pensions Minister who put the auto-enrolment regulations on to the statute book prior to our loss of office in 2010, I am committed to cross-party working and I hope that the Minister is, too.

This is an ideal opportunity to say that I do not think that members of the Committee will have any difficulty in catching my eye, but interventions should be brief and to the point.

I endorse that approach, Mr Stringer, but I also take the opportunity to welcome the cross-party approach to so much of pensions. I am conscious that two former Ministers of the Department for Work and Pensions are sitting on the Back Benches and that they will correct me and intervene regularly. I accept entirely that pensions policy works on a cross-party basis, whether it be automatic enrolment—which was introduced by the Labour Government through the Turner commission, brought forward by way of statute under the coalition, and expanded under this Conservative Government—or such successes as the Pension Protection Fund, which was one of the great successes of Blair’s Labour Administration, and the variety of reforms that we have introduced. There are some cross-party matters, such as the increase in the state pension age, that some parties do not necessarily wish to continue to own and embrace after they have left office, but such is the way of life.

As I tweeted yesterday, this Bill has, effectively, 98% cross-party agreement and, although there may be legitimate debates on how we progress, we have worked on that basis. The hon. Member for Birmingham, Erdington (Jack Dromey) and I have worked together on a tremendous cross-party basis. My wife often comments that I text him way too much. The practical reality is that I have also engaged repeatedly with the hon. Member for Airdrie and Shotts, who represents the Scottish National party. We have exchanged emails, trying to work out where we disagreed and where we agreed, and there is a great deal of common ground. Both SNP spokesmen made that clear on Second Reading, though there is legitimate debate regarding the best way forward on other matters. I look forward to those debates.

I concur with the Minister’s remarks on cross-party working. He said that CDC schemes, which we support, would become a third way, but can he clarify whether he sees CDC schemes as replacing good DB schemes? Clearly, we would not see them as an alternative but as a fall-back for when schemes run into trouble in other areas.

We will debate DB schemes, which I think have a great future. We have gone to great efforts to support the future of DB schemes. This is an alternative way forward that some organisations—Royal Mail is the classic example, but there are others who are looking at this—will welcome. Under no circumstances should it be implied or in any way taken that the Government will do anything other than support DB schemes on an ongoing basis.

It is a pleasure to serve under your chairship today, Mr Stringer. May I thank the Minister for the collegiate way in which he has undertaken debate during the progress of the Bill and, indeed, prior to that, on the issues and decisions we are making?

I thank my hon. Friend the Member for Wallasey for her comments on the importance of a continuing cross-party dialogue on the issue of pensions. I was involved in some of the Labour’s Government’s work on addressing pensions inequality for women and the Turner commission. I also pay tribute to the hon. Member for Airdrie and Shotts for his contribution to the collegiate way in which we have all been working together and for raising important issues for debate.

I speak on behalf of the Opposition, along with my hon. Friend the Member for Westminster North. We also speak on behalf of my hon. Friend the Member for Birmingham, Erdington (Jack Dromey), who is unable to be with us this week. Before I begin, I want to thank the Committee Clerks, who are ever helpful, professional and a true credit to the House.

As the Minister well knows, we have always been clear that we support the Bill, but, as hon. Members can see, we have identified some ways in which we believe it could be made better. We will discuss those areas in detail as we progress.

I turn to the general provisions in parts 1 and 2 of the Bill, on collective money purchase schemes, which is the legislative term for collective defined contribution or CDC schemes. The provisions mark a welcome innovation. I join colleagues in congratulating the CWU and the Royal Mail on their groundbreaking agreement to pursue the creation of a CDC scheme. They have forged an exciting pathway to a better pension for around 141,500 Royal Mail employees. Members will be aware that my hon. Friend the Member for Birmingham, Erdington was closely involved in that process.

CDC schemes offer many potential benefits, as the Select Committee on Work and Pensions concluded in a 2018 report:

“Through the pooling of risk between scheme members, CDC may well…provide more generous pensions on average than standard DC saving…To offer more good choices is entirely consistent with both pension freedoms and promoting retirement saving.”

There could hardly be a more important time to focus on reducing risks to people’s pension savings. As we have seen, the coronavirus crisis poses a serious and significant risk to pension funds. Sadly, many members of defined-contribution schemes have suffered pension reductions of around 8% to 10%, due to the financial market reaction to the pandemic. In many cases, that has led to individuals deferring their retirement.

In that context, it is massively encouraging that the modelling conducted by Willis Towers Watson shows that the Royal Mail CDC scheme would have provided better outcomes for savers through this crisis than traditional DC schemes. According to the modelling, even with the severe level of market shock experienced earlier this year, there would have been no effect on current pension levels for CDC schemes. Future pension increases would have been affected, but only by 0.25% a year. That is in stark contrast to the losses that I have outlined for DC pension savers and is to be welcomed in the light of the turbulent economic circumstances we face for the foreseeable future. It is welcome, too, that supporters of CDC schemes make a wide and varied coalition, including the CBI and the TUC.

In summary, Labour supports part 1 of the Bill and the move to create CDC schemes provided, of course, that they are not used as a means of downgrading good DB schemes, a point that has already been made.

I am very pleased to be serving under your chairmanship, Mr Stringer. Like others, I very warmly welcome this proposed legislation for CDC pensions, and congratulate Royal Mail, the CWU and everyone involved on the success of their joint efforts to achieve the statutory framework that is needed to deliver them.

My hon. Friend the Member for Feltham and Heston referred to the previous Select Committee on Work and Pensions report on CDC schemes, published in July 2018. That report said that CDC schemes had the potential to “transform the pensions landscape”, and it also commended Royal Mail and the CWU on the “ground-breaking agreement” they reached at that time. It added:

“To offer more good choices is entirely consistent with both pension freedoms and promoting retirement saving.”

The Royal Society of Arts has long supported CDC provision, and I want to bring to bear on our discussion some of the points it has made in welcoming this proposed legislation. It points out, as my hon. Friend has just said, that CDC schemes are likely to provide a much higher income in retirement—at least 30% higher, it says—than the alternative of individual saving and then buying an annuity, and that that improvement is achieved by sharing longevity risk and targeting higher asset returns than an annuity provider. The RSA believes that the Bill provides a good framework for introducing CDC schemes, noting in particular that the regulator will act as a gatekeeper to ensure that only well-designed CDC schemes can open. It suggests that authorisation requirements for opening a CDC scheme and the process to verify continuing viability should not be unduly cumbersome, and that there should be a proper balance of prescription in scheme rules and trustee, actuarial and regulatory oversight.

Unlike DB schemes, a CDC scheme cannot go back to the employer and ask for more funding, so CDC pensions do need to vary if things prove better or worse than predicted. Those variations in other countries where CDC schemes are in place can generally be accommodated by raising pensions by more or less than inflation, but after the 2008 crisis the Dutch reduced their CDC pensions by 2% on average, and in one of the Dutch schemes the level of pensions being paid was reduced by 6%. Understandably, that caused a furore, so people in a CDC pension need to know what might have to be done depending on what happens in financial markets in the future.

Does the Minister agree that this places a premium on effective communications with members of CDC schemes? During stable times, CDC payments may seem pretty reliable, as had been the experience in the Netherlands, where they were uprated each year in the expected way. For many years, the Dutch system had experienced no problems with that, nor had the potential for reductions been clearly explained to pensioners, so when the reduction came—2% on average, 6% in one case—it caused a lot of anger, for understandable reasons.

My hon. Friend referred to the model put together by Willis Towers Watson, I think at the request of the RSA, to model how a CDC pension would respond to the drop in capital values over the first quarter of this year. As she said, that model showed that the Royal Mail scheme would have been pretty robust. The Bill will allow the Royal Mail proposal to proceed, and other private sector organisations to create similar arrangements, but it does not allow for unrelated companies to work together to create a single CDC pension plan. Since effective pensions require economies of scale, that in effect excludes smaller companies from the legislation’s provisions, and from the option of a CDC—at least for now.

As my hon. Friend the Member for Birmingham, Erdington has said, it would be immensely beneficial if small companies in the care sector could come together to offer a sector-wide CDC pension scheme—something that no small company could undertake on their own. Obviously, all of us are thinking a lot at the moment about the wellbeing of people working in care occupations, often on low wages, and very often without an opportunity to save much for a pension.

Clause 47 gives the Government powers to allow multi-employer CDC schemes and/or providers to offer CDC master trusts, so that small employers can overcome this constraint. A Work and Pensions Committee report from two years ago recommended that legislation governing CDCs should accommodate mutual and multi-employer schemes, as well as stand-alone schemes such as the Royal Mail one. Will the Minister give us hope that the Government intend to take advantage of the power in clause 47, and say when they might do so and make this possibility a reality?

The Minister in the other place said:

“this new type of provision and the supporting regulatory regime need time to bed in before a decision is made on whether multiple employer, sector-specific or commercial CDC provision should be facilitated.”—[Official Report, House of Lords, 28 January 2020; Vol. 801, c. 1352.]

We need to know how long the Minister thinks that bedding in will take. I hope he can reassure us that it will not be allowed to drag on too long, because there is an important opportunity here. We can all think of situations in which it would be valuable for that opportunity to be realised. Finally, will he confirm that the Government intend for the defined contribution pension freedoms, which are well established—they have been in place for five years—to be made available to CDC scheme members?

I welcome the legislation, and hope that the Minister can confirm to the Committee that it is the Government’s intention to continue to develop this provision, so that smaller employers, in particular, can take advantage of it.

Before I call Neil Gray, let me make it clear that we are not discussing clauses 27 and 47 now. I allowed what the right hon. Member for East Ham said to pass, because he referred to earlier clauses, too.

It is a pleasure to take part in this Bill Committee with you in the Chair, Mr Stringer. Like the Labour spokesperson, I pay tribute to the Minister, and to the hon. Member for Birmingham, Erdington, for the cross-party work that brought the Bill to this point. We welcome the Bill as it has arrived from the Lords, though we have concerns about some of the amendments put forward. It is an important piece of legislation, and the part that brings about CDC schemes has arrived in a good state, which is why there are so few amendments to these clauses. The Minister has obviously done a good job on the drafting from that point of view.

I thank the Clerks for their time and patience in working with me, my hon. Friend the Member for Gordon and our staff in putting forward our amendments and priorities. We greatly appreciate all their help and support.

Following on neatly from where the Chair of the Select Committee left off, we very much support the creation of CDC schemes. We pay tribute to Royal Mail and the CWU for the work that they have done with the Government to get the Bill to this stage. As I intimated in my intervention on the Minister, and as the Chair of the Work and Pensions Committee, the right hon. Member for East Ham, also intimated, the CDC schemes cannot be seen as a panacea or the right solution for everybody. It is important—I think this will be a theme of our discussions—that people are given access to as much impartial information about their pensions as possible, giving them confidence to make informed decisions about their savings.

For the reasons that the right hon. Gentleman outlined, I wish to put on the record again that although the SNP feels that CDC schemes have major benefits—certainly for some scheme members in DC schemes—we would not wish them to be seen as a replacement for good DB schemes or for people to feel that they are necessary. I look forward to the rest of the debate, which I feel may well be rather more contentious than the issues that we are discussing at this early stage of the Committee.

I echo the support for the Clerks from this side of the Committee. We had a very helpful session yesterday, and they have been very helpful throughout. I will address the four or five points that have been raised.

On communications, I utterly endorse the point made by the Chair of the Select Committee. He will, I hope, appreciate that over the last three years, one of the major things that I have tried to drive forward in the Department is communications across the level. We are using simpler statements, by taking the 10 to 43-page pension statements that very few people read—putting them in a kitchen drawer and not necessarily taking them on board—and providing a simpler two-page statement and a written version. Our pensions dashboards create an amenable version of the online version, with great, ongoing communication.

On CDCs, I totally endorse the points that the right hon. Gentleman made: it is vital that we learn the lessons from the Netherlands, and that we ensure good communication. The possibility of fluctuations in benefits will be made clear and transparent in key member communications at points throughout their pension journey, including by providing details of fluctuation risks at the point of joining, by emphasising benefit changes in both active and deferred members’ annual benefit statements, and by making clear in retirement information packs that benefits can change during retirement.

Quite simply, that point was not made clear to members in the Dutch example. Some may not have taken it on board at the start, while others perhaps did not quite understand the situation as well as they would have had it been explained to them. We hope that we have learned that particular lesson and have very much taken that on board. I know that the two organisations that are looking at CDCs are very conscious of that and, to their great credit, have held multiple roadshows around the country, talking about this and engaging with people long before the legislation was introduced.

The reality of the situation for the CWU and Royal Mail was that their endorsement of the approach would not have been possible without member engagement from the very start. They have probably engaged more with a pension scheme than anyone has ever done before, prior even to the drafting of the legislation. They very much wanted that engagement to take place.

Clearly, the changes that the Bill would make allow for pioneering in the CDCs that Royal Mail and the CWU have introduced to be put into effect. Will the Minister say a little about how other organisations —smaller employers, perhaps—might try to get into the CDC space? Clearly, Royal Mail and the CWU are an unusual combination, both in the size of the industry and their buy-ins—very few employers are of the same size as the CWU, which represents its members, and Royal Mail, which wishes to offer this particular CDC.

I agree that large employers, such as Royal Mail, which employ nearly one out of every 200 full-time working employees in this country, will look at that and say it is a potential way forward.

Before I come to the hon. Lady’s point, I want to address DB briefly and make it clear that CDC is intended to offer a further pension-saving option for employers and their workers, should they wish to make use of it: it is for the employers and the workers to decide the type of benefit they wish to have via their occupational pension scheme. That has always been the right of the employer fundamentally, but also engaging with the employee. We specifically amended the subsisting rights provisions via clause 24 to prevent existing DB benefits in the scheme from being converted into CDC benefits. I hope that I have addressed in full the DB issue, which was also raised separately by the right hon. Member for East Ham.

I am grateful for the Minister’s reassurance on communications. Will good communications be a consideration for the regulator in determining whether a proposed CDC scheme should go ahead?

To build on that, does the Minister see the engagement, which he has rightly described as one of the most extensive from an employer and an employee-representative organisation in terms of changes to pension provisions, as being the gold standard going forward, if an employer seeks to switch from a DC to a CDC scheme in the future? Is that the bar that needs to be met?

I am now straying into industrial relations and how best to manage a company to take someone’s employees with them in a complex negotiation about future pension rights. All I can say is that I have worked and sat down regularly with the leading individuals in the Communication Workers Union and the individuals who have been running Royal Mail—that has changed slightly as it has gone along. I have seen the way in which they have engaged with their workforce and had a proper conversation up and down the country in a series of roadshows. With a large unionised workforce in the modern era, that is the right way in any event. I would certainly endorse that approach. It is clear that the company and the employees have been able to work together—working with the union, working with representatives—and it seems to me that, while I would not say the phrase is “gold standard”, it is an advisable way to proceed and it is good company relations to have a proper dialogue and engagement with individual employees.

The short answer I gave to the Chair of the Select Committee was yes, but the longer answer is that there is a whole supervisory regime, which we will discuss later, under clause 27 and thereafter, which must be submitted to the regulator in order to qualify to be accepted as a CDC. The practical reality of that is that I cannot see a way in which the regulator endorses and allows a company to go down the route of a CDC without all aspects of that communication being considered. Clearly, there are secondary regulations that follow. It is not in the specifics of the Bill, as I understand it. I make the point, when I am answering questions, that I am doing this utterly blind, so it has to be from my memory because I cannot take any notes from anybody. That is the fun of a covid Committee, as the right hon. Member for East Ham will know from chairing a Select Committee.

The practical reality is that there is a supervisory regime that must be embraced as part of the application to the regulator to become a CDC. I believe that that will be comprehensively addressed and it is my intention that that should be so in the relationships that we have.

The right hon. Member for East Ham asked about clause 47 in ballpark terms and the speed and expedition. I take the point that we are not debating those matters but yes, I accept that we need to press ahead with that. I wish to do so. I have been working on the Bill for the best part of two and a half years. It has not been for lack of trying. We started it prior to the general election and had to pause and start again afterwards, so it is not for the lack of trying to progress it. Both Royal Mail and the CWU are very keen to expedite it.

One of the reasons that the Bill is this size is that the first 51 clauses are for Great Britain, while clauses 51 to 102, which are a mirror image, apply to Northern Ireland. This is not a company-specific proposal; we have made the Bill sufficiently wide so that other organisations—the obvious ones being master trusts—can come forward and be included. I totally take the point that there is great eagerness to have smaller, multi-employer schemes take part on an ongoing basis, to see how they progress.

Can the Minister raise our hopes that perhaps in the next 12 months or so, there might be regulations that allow multi-employer CDCs to be set up?

Could the Minster be brief, as that moves us into a debate on clause 47, which comes later in the agenda?

The final question that I was asked was about extensions on DCs, and the answer to that is yes.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Clauses 2 to 6 ordered to stand part of the Bill.

Schedule 1 agreed to.

Clauses 7 to 25 ordered to stand part of the Bill.

Clause 26

List of authorised schemes

Question proposed, That the clause stand part of the Bill.

With this it will be convenient to discuss the following:

Government amendment 6.

Clauses 27 to 44 stand part.

That schedule 2 be the Second schedule to the Bill.

Clause 45 stand part.

Amendment 25, in clause 46, page 36, line 41, at end insert—

“(e) require information to be made available to The Pensions Regulator relating to actions taken by the scheme to ensure diversity considerations are taken into account in the recruitment of the trustee board with regard to—

(i) age;

(ii) gender; and

(iii) ethnicity.”

This amendment is to require pension schemes to send information on the diversity of the trustee board to TPR.

Clauses 46 to 48 stand part.

That schedule 3 be the Third schedule to the Bill.

Clauses 49 to 51 stand part.

Clauses 26 to 51 complete the parts of the Bill that apply to Great Britain, but not to Northern Ireland. I will briefly address the two amendments. Government amendment 6 removes the provision put in primarily by Liberal Democrat peers in the House of Lords to incorporate a specific requirement of fairness. Unquestionably, as with much of the debate that we will have in Committee over the next two days, it is about the ways in which we proceed where the objective is agreed, and the objective is clearly one of fairness. The Government do not feel that clause 27(3) is appropriate, however, and we will seek to overturn it.

Requiring trustees to make such an assessment is likely to generate confusion unless further clarity is provided, and it may result in legal disputes. We have specifically and intentionally avoided referencing fairness in such a way in any of the CDC provisions, but I make clear to the Committee that we intend to use regulations to set out clear principles and processes that schemes must follow to ensure that different types of members are treated the same where justified.

Those requirements would form part of the authorisation process for the CDC schemes, overseen by the Pensions Regulator. Regulations under clause 18, for example, will require CDC schemes to ensure that there is no difference in treatment between different scheme member cohorts or age groups when calculating or adjusting benefits. That is a clearer, better and more effective approach to delivering fairness in practice, and it is supported by the Institute of Faculty of Actuaries.

I also pray in aid—as we have all cited our support for them—the note submitted by the Communication Workers Union and Royal Mail in written evidence to the Bill. They jointly addressed this specific point, saying:

“We welcome discussions on how to ensure the fairness of future CDC schemes. Royal Mail’s scheme is designed to address the possibility of intergenerational unfairness by not using capital buffers and explicitly preventing the trustees from favouring one group over another. The DWP acknowledged this in its 2019 consultation response. When it comes to Lord Sharkey’s amendment, we agree with Government that we should give careful consideration to how reporting on fairness might work in practice and share their concerns with the additional reporting requirements the amendment introduces. We therefore support the Government amendment which removes Lord Sharkey’s amendment from the Bill.”

I suggest that that statement is telling, and I invite the Committee to support the Government amendment.

Before we decide what to do on this amendment, I am keen to hear from the Minister. He suggested that if the clause was allowed to stay as it is— as it was amended by the Lords—it could garner legal challenge. Could he clarify where he sees that legal challenge coming from and why he thinks that is a concern?

If clause 27(3) provides specifically for fairness, it may be open to interpretation and mean different things to different people. The legal advice we have received is that it would be inappropriate to include that in the Bill, and that it is far better to address the matter in detailed regulation rather than through a single word in the confines of the Bill.

The Minister is trying to achieve fairness across cohorts, and different people will have different interpretations of that. Such schemes are reliant on the general performance of the stock market, investment and what is going on in the world economy. Does he agree that fairness is subject to all those swings and roundabouts?

Will the Minister give the Committee some idea of what he would regard as fair, given that annuities were grossly unfair for those who happened to retire at a time when the market was taking a dip? What would he regard as “fairness” in the requirement that he will put in regulations?

Having been a 20-year lawyer, whose last client was a very famous Mr Ed Balls—I had to represent him when he was Secretary of State for Children, Schools and Families, five weeks before the 2010 general election—I am loth to start defining fairness, as a Government Minister, specifically because of the problem that has been identified.

I can say that we are attempting to ensure that members are treated fairly, and that has been part of the central thrust of our work on CDCs from the outset. We have learned from the problems experienced by the Dutch model, which allows schemes to make different benefit adjustments to different groups of members. That transferred contributions from savers to pensioners. The UK system will not work in that way. We intend that regulations under clause 18 will require CDC schemes rules to contain provisions so that there is no difference in treatment between different cohorts or age groups of scheme members when calculating and adjusting benefits. If the scheme design does not do that, it will not be authorised. That goes to the whole proposal under the supervisory regime and the submission.

Further—we will come to the word “bespoke” later in our consideration of the Bill—this is an opportunity for individual schemes. The examples have been given of a small care home scheme coming together, and of the vast might of Royal Mail. Clearly, those are very different organisations. I hope that the regulator will look at them in slightly different ways with an overarching code of principles that allows it to permit such a scheme to go ahead. I will resist the hon. Lady’s kind invitation to provide the exact definition that, we submit, would be one of the problems with clause 27(3).

We are here to tease out what the Government mean in the Bill, ahead of the unamendable regulations that have not yet been written. I hope that the Minister will indulge our temerity in using the Bill Committee to ask some relevant questions.

What the Minister said earlier about the Dutch schemes is correct. By reducing the available pensions, some choices were made between existing pensioners and those who were saving. His tone suggested that he judged that to be unfair. He states that he wants to achieve fairness between cohorts in CDCs, but how will that be done in reality?

I am invited to give a view on the future consultations on the points that the hon. Lady raises. The term “fairness” can be open to interpretation and can mean different things to different people. We envisage that regulations will clearly set out the principles and processes that schemes should follow to ensure that all types of members in CDC schemes are treated the same, where appropriate. Setting the requirement in regulations will give us the opportunity to consult on the approach that is to be taken. I respectfully suggest that rather than defining that in the Bill, the appropriate way forward is to consult, and to use all the opportunities that consultation entails for submissions on what that should look like, so that detailed regulations can then be taken forward.

I thank the Minister for the further explanation, but is he saying that he does not yet know how this will work, because the regulations have not been written? Is he stating that he wants to achieve a certain principle without yet knowing how it will be achieved?

No; I can merely repeat the answer I have just given, which is that the regulations under clause 18 will require schemes to contain provisions so that there is no difference in treatment between different cohorts or age groups of scheme members when calculating and adjusting benefits. If the scheme design does not do that, it will not be authorised.

I will try to expand on that and give a better answer. There is a two-phase process. In the first phase, a company must come forward to the regulator and seek permission to go down the CDC route; that goes back to the way in which the company and the employees work. A separate set of regulations will then be the framework on which that is judged. I suggest that this is specific to individual companies, because fairness will be different for different organisations and they will be treated in different ways. There is a supervisory regime that must be gone through, and there will be a consultation on regulations regarding how it will be administered. For the present purposes, that is the best I can give to the hon. Lady.

I will now address amendment 25, which is about the actions of the regulator in relation to diversity considerations, taking into account the recruitment of the trustee board. This issue was raised in the other place as a point of debate. The Pensions Regulator is part of an ongoing discussion, and in February this year it launched an assessment of the appropriate way forward, looking at trustee board diversity across all schemes. It plans to set up an industry working group to bring together the wealth of available material and experience to help pension schemes to improve the diversity of scheme boards. I suggest it would be premature to pre-empt the outcome of the regulator’s work in this area. It has indicated to me, unofficially, that it will respond by Christmas. It is certainly the case that this Government has brought forward, on a cross-party supported basis, environmental, social and governance regulations in respect of investment. We would certainly hope that organisations that treat their investments with due account to social and governance matters would also take an appropriate way forward in that respect.

Under clauses 9 and 11, the Pensions Regulator must be satisfied that the persons involved in the CDC scheme are “fit and proper persons” to act in relation to the scheme. If the regulator is not satisfied, authorisation of a CDC scheme cannot be granted. I simply add that clauses 26 to 51 set out the full details. I particularly pray in aid clause 27, which sets out the detail of the supervisory regime.

It is a pleasure to respond to the Minister’s comments. I thank him for laying out the Government’s thinking on the clauses and amendments in this group. I will speak to Government amendment 6 and briefly to amendment 25, tabled by my right hon. Friend the Member for East Ham.

I thank the Minister again for his speech and the arguments that he has laid out for seeking to remove the amendment tabled by the noble Lord Sharkey and cross-party colleagues in the other place, which was agreed by peers in June. The Minister commented that, in his view, some of the concerns could be addressed by the implementation of clause 18. I want to come back to why I am concerned that may not go far enough; perhaps this will be an issue of ongoing debate as the Bill proceeds, and in regulations.

The amendment included by those in the other place was very considered. It spoke about

“the requirement that trustees make an assessment of the extent to which the scheme is operating in a manner fair to all members”.

I believe that is the additional wording in the Bill. It is a very considered amendment, which could only be useful in keeping on the agenda of trustees the important analysis that should take place in relation to decision-making—to be sure about the best possible input and considerations in relation to the performance of the scheme for all its members.

I alluded in my opening remarks to the considerable insecurity that we face as a nation, exacerbated by the impact of covid-19 and its disproportionate impact on different groups and different generations, in terms of the economy and levels of employment and therefore saving into pension schemes. People’s personal finances are likely to be under great strain in the coming years. Not only is there that insecurity, but it is increasingly difficult to encourage young people to save for retirement, with all the other cost pressures in life—paying off debts, for example, or the fact that, at the moment, the average age at which they will purchase their own home is around 34. There are considerable pressures on the personal finances of the next generations, as they plan ahead for their lives.

Thinking about our institutions and how we continue to consider and embed intergenerational fairness should be on Parliament’s radar in all our work. In that context, we see unprecedented public policy challenges in ensuring fairness between different groups in society—from those in hard-hit industries, such as aviation and hospitality, to those affected by the way education is being delivered in the times in which we are living, which could continue beyond the next few months into the next few years, with all that uncertainty. We have also seen that black, Asian and minority ethnic communities have been hit harder by the health and economic impacts of this terrible virus. We can look at income today, but we are really talking about income tomorrow, and the impact on tomorrow of savings today.

It is incumbent on the Government to think about fairness between generations, and how we can stop young people bearing the brunt of the uncertainty and hardship caused by the economic havoc that we are experiencing right now. The impact on them could go unchecked in the medium and longer term. Concern about intergenerational fairness was raised by many respondents to the Government’s consultation on the Bill’s provisions.

Clause 27, as amended in the other place, sought to deal with some of those concerns. It effectively acknowledges that there may be a divergence in interests between different cohorts or sets of members in CDC schemes. Importantly, it does not compel any particular kind of action, but requires trustees to consider fairness and assess the extent to which the scheme is fair to all members. To Opposition Members, that is a very sensible suggestion, and we struggle to understand why it should be controversial for the Government.

I appreciate that the Minister outlined some comments from the CWU and others about the interpretation. He also mentioned treating people in the same way and his interpretation of the current wording of clause 18, which I was just reviewing. If there are different considerations in relation to levels of savings, other ways of joining a scheme or different circumstances, it may be necessary to look differently at different cohorts. Treating people fairly may not always mean thinking of them as the same. When we are thinking about fairness, we may need to be a bit more nuanced in our consideration of different needs and circumstances, and the potential impact of a decision on all cohorts.

Perhaps a different way of interpreting the amendment that was made in the other place would be to see it as enhancing the intention behind clause 18. I repeat that the amendment did not compel any particular kind of action, but made it more explicit what trustees should consider. Baroness Stedman-Scott, the Parliamentary Under-Secretary, said in the other place:

“I welcome the sentiment behind the proposed amendment; it is something to which we want to give further consideration. We need to give careful thought to how such reporting might work in practice and would want to work with trustees, administrators and the regulator to ensure that any such requirement is proportionate, appropriate and clear. We would also want to consult on any such approach to make sure that it is effective. I reassure all noble Lords that we will give this matter careful consideration. Should we need to bring forward such a requirement in regulations, we already have sufficient powers in existing legislation to require schemes to report on fairness in CDC schemes if warranted.”—[Official Report, House of Lords, 30 June 2020; Vol. 804, c. 605.]

I hope that the Minister will continue to keep this issue under review, because we think it is very important for the sustainability of fairness and confidence in schemes. The very considered wording that was proposed and passed in the other place could help the Government in securing the intended outcomes that he described as being behind clause 18. Perhaps he can provide more detail on his plans to incentivise trustees to assess and report on the extent to which CDC schemes are operating in a manner that is fair to all.

My right hon. Friend the Member for East Ham may make a few comments on amendment 25, which is intended to require pension schemes to send information on the diversity of the trustee board to the pensions regulator. We believe in the value of this amendment, which is also supported by other colleagues—the SNP in particular. It is important to ensure that there is a diversity of voices in decision making. The debate about diversity on public and private boards comes in cycles. Diversity on public boards was considered under the last Labour Government, with quotas for diversity in recruitment. This is not a party political matter; a lot of research shows that diversity in decision making leads to better and safer sustained outcomes.

When looking at public funds, for example, the diversity of needs should be understood at the decision-making table. We do not need to rehearse the arguments for ensuring that different voices are represented at decision-making tables, whether that relates to gender, those with disabilities or those from particular minority communities.

The same is true of boards in the private sector. Research undertaken by business schools shows that diversity on decision-making boards has often led to considerably better returns on investment, and indeed shareholder returns. There is no sustained, credible argument that not having diversity on boards leads to better business outcomes.

I do not understand why this would not be an important consideration. Amendment 25 simply says that pension schemes should send information on the diversity of the trustee board to the Pensions Regulator. I am sure my right hon. Friend the Member for East Ham will share more information about how trustee boards are less diverse than other boards. That cannot be right for boards that have an increasingly important role in decisions about funds and investments, and about inclusivity and fairness.

This is not only an important consideration in terms of social justice; it is about the performance of the schemes. It is about recognising the importance of having diverse voices and voices that are representative of those within the schemes and those who may benefit from the schemes in the future. This is a matter of obvious importance that should not raise concerns, and it should be included in the Bill.

I apologise for raising clause 47 in the previous debate; I probably should have waited until now. I am glad we had that debate and I welcome the Minister’s assurance that regulations to enable multi-employer CDCs will come forward within the next year.

I will confine myself in this debate to clause 46 and amendment 25, which stands in my name on the amendment paper. I am grateful to the hon. Members for Airdrie and Shotts and for Gordon for adding their names to it, and to my hon. Friend the Member for Feltham and Heston for the important points she has just made in favour of it. I thank ShareAction for its work on this topic and for the briefing it has provided.

We are all familiar, as my hon. Friend has just reminded us, with the criticism that there is insufficient diversity among directors of FTSE 100 companies. There has been progress, but the Government targets are going to be missed and there is still a long way to go among major company boards. Some 68% of board members are male and only 7.4% are from black, Asian or minority ethnic backgrounds. That proportion falls to 3.3% in the most senior board positions: chair, chief executive and finance director. Only just over half of boards have any ethnic minority members at all.

As my hon. Friend has just pointed out, the position among pension trustee boards is a great deal worse. There are not yet any trustees of CDC schemes, which would be addressed by my amendment. I do not know whether it has been announced who the trustees of the Royal Mail scheme will be, and I certainly have not seen that list, but as we debate the ground rules for trustees of CDC schemes, there are good reasons for ensuring that we do not end up, in this part of the pensions world, in the position we are in with pension trustee boards more generally. I hope that those who are looking at the make-up of trustee boards more generally will take a leaf out of the tenor of the discussion that we are having.

I ask my right hon. Friend to confirm my understanding, which is that when we talk about diversity, we are not simply talking about it being a good thing to have a range of different experiences and backgrounds; all the evidence from across the commercial sector is that diversity increases performance because of the range of perspectives that it brings to bear.

My hon. Friend is absolutely right. She and I took part in a debate on a similar issue around 10 years ago, on the Welfare Reform Bill. She is right on this point, and that is an argument that I want to come to in a moment.

I hope the approach that I am advocating will be applied to other pension trustee boards in the UK in due course, because according to a report on diversity published in March by the Pensions and Lifetime Savings Association, which we used to call the National Association of Pension Funds, 83% of pension scheme trustees are male; 50% of chairs of trustee boards are over 60; a third of all trustees are over 60, while only 2.5% are under 30; 25% of pension schemes have trustee boards that are entirely male; and only 5% of schemes have a majority of female trustees. This is a particularly stark picture if we look at the make-up of pension scheme trustee boards at the moment.

As the Pensions and Lifetime Savings Association comments:

“It seems clear that occupational pension scheme trustee boards have generally not implemented robust diversity policies as effectively as FTSE 100 boards”.

I thank my right hon. Friend for making points that are difficult to argue against. What effect does he believe the age of pension fund trustees is likely to have on the intergenerational fairness points that I pressed the Minister on in our previous discussion?

My hon. Friend makes an important and interesting point. If we are to be confident that these new scheme trustees will make decisions that are fair to both the working members of the schemes and to pensioners, it is important that the voices of working age members should be taken fully into account in the trustee board’s decisions. She makes a good argument about why diversity, specifically in respect of age, is important in this context.

It is not as though there is no evidence that diverse trustee boards do a better job. My hon. Friend the Member for Westminster North has just reminded the Committee that there is a substantial, growing body of evidence that diverse company boards make more effective decisions than homogeneous boards. We have talked about age, but we should not forget that the gender pensions gap, which is nearly 40%, is almost twice the size of the gender pay gap. The issues here are stark.

The Pensions Regulator commented on diversity in trustee boards for the first time last year:

“Our view is that pension boards benefit from having access to a range of diverse skills, points of view and expertise as it helps to mitigate against the risk of significant knowledge gaps or the board becoming over-reliant on a particular trustee or adviser. It also supports robust discussion and effective decision making.”

Amendment 25 would require those who put boards together to report to the Pensions Regulator on steps to ensure diversity considerations are taken into account in the recruitment of the trustee board, with regard to age, gender and ethnicity. I know that the Pensions Regulator has set up an industry working group to consider this issue, as part of the consultation that the Minister referred to, and to raise the profile of it. However, to be effective, that group needs data, and this amendment would help to provide it. I think the result of the amendment would be not only greater fairness but better trustee decisions. I commend the amendment to the Committee.

It is a pleasure to serve under your chairmanship, Mr Stringer.

I will confine my brief remarks to amendments 6 and 25. I listened carefully and with interest to what the Minister said about the rationale for trying to withdraw clause 27 from the Bill. I agree that with him that in trying to come up with a legal definition of fairness, it will always be nebulous. There are clear difficulties around that, which is why I do not think the initial intention behind the clause was to provide absolute legal clarity.

I was reassured to a large extent by what the Minister said about the steps that would be taken to set up CDC schemes—by definition, schemes that are obviously unfair will not pass approval. The difficulty I have with that argument is that all that is being asked in clause 27 is that there is a requirement for trustees to make an assessment and nothing further. It is useful to have a process of self-challenge and continuous improvement, looking at aspects of the schemes that are directly under their control and that they can directly influence and alter. It is good to always have that consideration of whether the scheme is operating as fairly as possible for all present and future members and those taking benefits from it. My question to the Minister is, very simply, where is the harm? Even after taking on board all that he says, I still do not see the harm that lies in the Bill as it stands.

Moving on to amendment 25, I hear exactly what the Minister says about the requirement that already exists on trustees to be fit and proper people. My observation is that there are many potentially very fit and proper people who do not currently find themselves on boards, advisory committees or any of the governance structures around pensions, and who could nevertheless make a very good contribution to the running of those schemes.

Speaking from personal experience, prior to being elected as the Member for Gordon, I was a councillor in Aberdeenshire. Through that role, I was one of the Convention of Scottish Local Authorities nominees to the Scottish local government pension scheme advisory board, whose representation was equally split between employers’ representatives, of which I was one, and trade union representatives. The trade union representatives were all extraordinarily capable and represented quite accurately the diversity of the scheme members whose interests they were there to represent. In all honesty, the employers’ representatives perhaps did not represent that quite so well. I played my own part in skewing that representation.

The requirement to report back on the membership characteristics is a very useful tool in trying to understand whether all that is reasonable is being done to ensure that trustees and those in positions of governance on pension schemes are as representative as possible not just of the membership, but of the interests of the membership, and that we are giving as many people as possible the opportunity to fully skill up, participate and play the role that they can do. As things stand, we are missing out on the talents of many fit and proper people. Again, I do not see the difficulty in simply recording and reporting that information as part of the cycle of continuous improvement and self-reflection on whether we are achieving all that we seek to do.

I want to support, or enhance, the comments that have just been made by Opposition Members about the two issues that we are discussing in this group of amendments: amendment 25 on diversity, which was tabled my right hon. Friend the Member for East Ham, and the issue of intergenerational fairness and how it can be properly guaranteed in CDC schemes.

I hope the Minister will reaffirm on the record, in no uncertain terms, his agreement with the principles behind the amendment on intergenerational fairness that was made in the other place, even if he has issues with how one defines fairness in law. I have to say that, in social justice terms, we would have made very little progress in the whole of our society if we quibbled about the meaning of fairness in law. Just because it is difficult to define, it does not mean that we should not assert it or seek to bring it about.

The Minister’s response is a rather a technical answer to the principle that has been asserted by the change that their lordships made to this part of the Bill. His responses to my questions earlier did not fill me with confidence that he knew how the principle would be brought about if the amendment that their lordships put in the Bill was taken out. He simply seemed to say that it was a good thing to assert, and that it would be brought about by regulations that have not yet been written. He could not really give us any thoughts about how it might be guaranteed in the future, although he is asking us to take out an amendment that has actually been made to the Bill. He is asking us to exchange something that is really quite good and not damaging for something that is very nebulous and does not exist yet—it might do at some point in the future—in regulations that will be unamendable. We will have to take them or leave them when they come to the House, so I am slightly worried about that.

As is his wont, my right hon. Friend the Member for East Ham has zeroed in on the issue of diversity on boards and given us some shocking figures about what is happening on pension trustee boards. That ought to raise many alarm bells about potential group-think and about how the decisions made by trustee boards are not representing the interests of the many people who have pension savings in a way that we would find modern or appropriate.

Amendment 25 is a modest amendment. My right hon. Friend is asking only for the publication of information. He is not doing what I might do, which would be much more radical and would probably include all sorts of things, such as quotas and positive action, in order to make a real difference quite quickly. It is a modest amendment. If the Minister cannot accept that it is and does not have the good grace to support it, I will be rather disappointed.

I will try to address some of the issues raised. In respect of the approach of the regulator, the regulations for CDC schemes will require schemes to provide information to enable members to understand the unique risk-sharing features of CDC schemes. That will be underpinned by clause 15, which we have already debated. It requires the regulator to be satisfied that a CDC scheme has adequate systems and processes for communicating with members and others. Regulations will also require that scheme information is made available more widely to other interested parties, including employers, on a publicly available website. The practical reality is that we have learned from the Dutch model, which some argue had intergenerational fairness issues, and are producing a considerably fairer approach.

Perhaps I should have raised this with the hon. Member for Wallasey when she asked what we have set out, but I presume she is aware of the indicative illustrative regulations produced for the purposes of the House of Lords debate. I will ensure that those regulations, which had already been produced, are sent to her. As she will be aware, illustrative regulations produced for debate and discussion are often not the final version. They quite clearly cannot be, because the Government have to consult widely, although at speed—I accept the exhortation to produce them next year—with pension providers, employers, interested parties, lawyers, actuaries and others, before we lay the final regulations. However, it is right to draw the Committee’s attention to a point that I did not make earlier: illustrative regulations that address some of the issues raised by the hon. Lady have been available for many months. While only illustrative, the provisions give a clear indication of the policy intentions.

I have addressed the point about speed and 2021. I endorse utterly the desire for greater diversity and will try to answer a couple of the key questions asked. As I understand it, the trustees of the Royal Mail and CWU scheme have not been identified as yet. Clearly, that is a matter for them as they take that forward, but I suspect that that point is well made and well noted. Self-evidently, all of us agree that diversity is a good thing, and that larger numbers of pension scheme trustees need to be more diverse in many different ways. I take the point that the efficacy of that will benefit not only the scheme but wider society as a whole. The regulator takes this seriously and is already consulting on addressing it on an ongoing basis. It would be premature to pre-empt the outcome of the regulator’s work in this area, which, self-evidently, starts from the basis of considering not only whether the persons putting themselves forward are fit and proper persons, but the key issue of diversity.

Clauses 9 and 11, which we have already debated, mean that the Pensions Regulator must be satisfied that persons involved in CDC schemes are fit and proper persons to act in relation to the scheme. If the regulator is not satisfied, authorisation of the CDC scheme cannot be granted. In respect of that point, it is well noted that the House is concerned about ensuring that, prior to the granting of a specific CDC scheme, ongoing consideration should be given to the working group and also to the issue of diversity. On that basis, I invite the right hon. Member for East Ham not to press his amendment to a vote.

Question put and agreed to.

Clause 26 accordingly ordered to stand part of the Bill.

Clause 27

Requirement to submit supervisory return

Amendment made: 6, in clause 27, page 17, line 38, leave out from beginning to end of line 40 and insert “The notice must specify—”.—(Guy Opperman.)

This amendment would remove provision requiring a notice from the Pensions Regulator to collective money purchase scheme trustees to include a requirement to assess the extent to which the scheme is operating in a manner fair to all members.

Clause 27, as amended, ordered to stand part of the Bill.

Clauses 28 to 44 ordered to stand part of the Bill.

Schedule 2 agreed to.

Clause 45 ordered to stand part of the Bill.

Before I ask the Committee to reach a decision on clause 46, does the right hon. Member for East Ham wish to press amendment 25 to a vote?

I am very grateful for the support that has been expressed and for the points that the Minister has made. I take his point that there is a consultation under way. I very much hope that the regulator will decide to require information on diversity from the schemes that are set up, and that it will continue to do so as the trustee board develops. However, at this stage I will not press the amendment to a vote.

Clause 46 ordered to stand part of the Bill.

Clauses 47 and 48 ordered to stand part of the Bill.

Schedule 3 agreed to.

Clauses 49 to 51 ordered to stand part of the Bill

Clause 52

Collective money purchase benefits and schemes

Question proposed, That the clause stand part of the Bill.

With this it will be convenient to discuss the following:

Clauses 53 to 57 stand part.

That schedule 4 be the Fourth schedule to the Bill.

Clauses 58 to 95 stand part.

That schedule 5 be the Fifth schedule to the Bill.

Clauses 96 to 99 stand part.

That schedule 6 be the Sixth schedule to the Bill.

Clauses 100 to 102 stand part.

With respect, Mr Stringer, I propose to address all these matters together. Clauses 52 to 102 replicate the measures outlined in clauses 1 to 51 and apply them to Northern Ireland, which has a different system. This required us to replicate the measures in their entirety. In discussing clauses 1 to 51, I outlined why CDCs are the appropriate measure, and I ask the Committee to imagine that I made the same speech, at great length, in respect of clauses 52 to 102.

I will not make any further comments. I agree with the Minister.

Question put and agreed to.

Clause 52 accordingly ordered to stand part of the Bill.

I propose to put as a single question that clauses 53 to 57 stand part, that schedule 4 be the Fourth schedule to the Bill, that clauses 58 to 95 stand part, that schedule 5 be the Fifth schedule to the Bill, that clauses 96 to 99 stand part, that schedule 6 be the Sixth schedule to the Bill, and that clauses 100 to 102 stand part.

Would it be in order, Mr Stringer, for me to ask about clause 98 in this part of our discussion? It is the counterpart to an earlier clause and will introduce regulations to enable CDC schemes in Northern Ireland to be extended to include multi-employer schemes. Can the Minister reassure us that in Northern Ireland, as in the UK, the plan will be to introduce regulations to enable that within the coming year?

It is very hard to turn down such a great man as the right hon. Member for East Ham, and I fully understand why you have given him some latitude, Mr Stringer. The answer is that I cannot be precise. Clearly, it is a matter for the Northern Ireland Government and the various civil servants who will take the legislation forward, but we expect them to take a similar approach. If I am wrong, I will write to the right hon. Gentleman to correct the record, but that is my expectation.

Clauses 53 to 57 ordered to stand part of the Bill.

Schedule 4 agreed to.

Clauses 58 to 95 ordered to stand part of the Bill.

Schedule 5 agreed to.

Clauses 96 to 99 ordered to stand part of the Bill.

Schedule 6 agreed to.

Clauses 100 to 102 ordered to stand part of the Bill.

Clause 103

Grounds for issuing a section 38 contribution notice

Question proposed, That the clause stand part of the Bill.

I am grateful to you, Mr Stringer, and to colleagues for the progress we have made in respect of collective defined contributions. We now turn to part three of the Bill, on regulatory powers. The powers are, in broad terms, agreed, as I understand it, subject to debate on clause 107. It is entirely right that we have set those out in defined benefit and regulator consultations over many years and in the preparations for White Papers and Green Papers, and that enhanced powers will be given to the regulator on an ongoing basis. I recommend the regulations to the Committee.

This part of the Bill gives new powers to the regulator, so it is worth recapping the problems that gave rise to the need for them. Most of the thinking here came from the joint work of the former Work and Pensions Committee—I pay tribute to my predecessor as its Chair, Frank Field—and the Select Committee on Business, Innovation and Skills, after the awful problems at two firms: BHS and Carillion.

BHS had two defined-benefit pension schemes. They were in a combined surplus of £43 million when Sir Philip Green bought the company in 2000. The surplus gradually declined and the schemes fell into a combined deficit in 2006, following the period when large dividends had been paid to members of the Green family. By the time of the sale of BHS in 2015, the value of the schemes’ assets was almost £350 million short of their liabilities. As the schemes fell into deficit, the BHS board repeatedly resisted requests from the scheme trustees for increased contributions.

In 2012-13, there were negotiations over a deficit recovery plan and they concluded with a 23-year recovery plan. At the time, eight years was the median rate for a recovery plan and 95% of comparable schemes had a recovery plan of less than 17 years. The plan we got in the case of BHS was for 23 years. The payments under that plan barely covered the interest on the scheme’s deficit and so the deficit continued to grow even while that plan was being followed.

The two Select Committees concluded that the Pensions Regulator had acted too slowly. Having received the 23-year plan in September 2013, it did not send the first information request to the trustees until January 2014. The Committee added, however, that the onus for resolving problems was on Sir Philip Green.

In the case of Carillion, it left a pension liability of around £2.6 billion. The 27,000 members of Carillion’s defined-benefit pension schemes will now be paid reduced pensions by the Pension Protection Fund—one of the biggest calls ever on that fund. I agree with what the Minister said earlier about the success of the fund, which was introduced by the previous Labour Government.

Richard Adams was Carillion’s finance director for ten years. He refused to make adequate contributions to pensions schemes, and the chair of trustees said that he seemed to consider them a “waste of money”. The scheme actuary, Edwin Topper from Mercer, said that Carillion’s

“primary objective was to minimise the cash payments to the schemes”.

The Committees heard that the Pensions Regulator threatened seven times to use a power that it had never used, concluding:

“These were empty threats; the Carillion directors knew it and got their way.”

The Committees added:

“The Government has recognised the regulatory weaknesses exposed by this and other corporate failures, but its responses have been cautious, largely technical, and characterised by seemingly endless consultation. It has lacked the decisiveness or bravery to pursue bold measures recommended by our select committees that could make a significant difference. That must change. That does not just mean giving the FRC and TPR greater powers. Chronically passive, they do not seek to influence corporate decision-making with the realistic threat of intervention. Action is part of their brief. They require cultural change as well.”

Since then, the Pensions Regulator has launched a new approach. It says that it will take a

“clearer, quicker and tougher approach to driving up standards in the pension sector.”

We must all hope that the new approach, facilitated by the new powers under discussion, will do the job.

More recently, the current Work and Pensions Select Committee has expressed its support for the lenient approach that the Pensions Regulator has taken during the pandemic to employers seeking to reduce deficit reduction payments for defined-benefit pension schemes. We warned, though, that

“following our predecessor Committees’ experience with BHS and Carillion, the Pensions Regulator must remain alert to the risk of unscrupulous employers not in financial difficulty seeking to take advantage.”

We recommended specifically:

“If an employer is making deficit reduction contributions at a lower rate because of the pandemic, no reasonable person would expect them simultaneously to be paying dividends to shareholders and bonuses to senior executives. We recognise that there may be a small number of exceptions to this, but we would expect them to be wholly exceptional. We urge the Pensions Regulator to keep a close eye on this area, and to raise the alarm if it detects abuse.”

When the Government respond to the report, I hope that the Pensions Regulator will accept that recommendation, and we must all hope that the entirely sensible changes being made by the Bill do the important job that history makes clear is needed.

I support my right hon. Friend the Member for East Ham, who has crystallised some of the dangers in private sector schemes. I do not want to add to the excoriating verdict of his predecessor Committee in the two cases mentioned, except to say that this does have an effect on the willingness of individuals to save into pension schemes. Although people might not know the detail of this behaviour and the losses it has caused to retirement income, some out there in the ether will use the lack of effective protection that has resulted from the failure both of regulation and in pursuing effectively those who engage in this kind of larceny. Individuals who may otherwise be pension savers choose not to save into a pension and regard it as a bit of a mug’s game because their money is not properly protected. They know that there are scams and that a range of people out there—from the great killer sharks who loot pension schemes, to those who do dodgy things at the margins—are causing people who were saving into pension schemes, in good faith, to lose benefits in retirement.

How will the Minister drive the Pensions Regulator to be far more proactive and effective? Later, we will come to the Bill’s measures on scamming and the even worse end of bad behaviour, but that is for a future part of the Bill. I hope the Minister can reassure us that he will insist that the regulator transforms its passive attitude into a much more aggressive one that not only actively deters but drives this appalling behaviour out of the whole of the pension scene.

I utterly endorse the speech of the right hon. Member for East Ham. I did not disagree with a single word of it. I could wax lyrical about why the Government, with the support of the Work and Pensions Committee and the special joint inquiry it set up with the Business, Innovation and Skills Committee to address BHS, have introduced this overdue legislation, which is linked to a much-enhanced regulator with a strong direction from Select Committees and the Government that there should be a much more robust approach. The new chief executive of the Pensions Regulator was appointed by the Secretary of State and me with a specific exhortation that they take a different approach.

The actions of Philip Green at BHS and the Carillion case, with which the right hon. Gentleman is extraordinarily familiar, scarred all Members of Parliament. No matter what our political party, we have all seen the impact that those cases have had on individual members of our communities. I take the point that the hon. Member for Wallasey made: these scandals involving organisations and companies that have not been sufficiently regulated, and for which the regulator has not, to be blunt, had the power, to intervene and take a different approach, have affected people’s perceptions of the sanctity and safety of their pension.

We have gone to great effort to ensure, on a cross-party basis and taking on board the various Select Committee recommendations, that we give the regulator enhanced powers. We will come to the significant reality of the criminal sanctions that clause 107 outlines. Without a shadow of a doubt, we are in the business of ensuring that callous crooks who put a pension scheme at risk are not able to function as they did in the past. I most definitely endorse every comment that was made.

Question put and agreed to.

Clause 103 accordingly ordered to stand part of the Bill.

Clauses 104 to 106 ordered to stand part of the Bill.

Clause 107

Sanctions for avoidance of employer debt etc

I beg to move amendment 19, in clause 107, page 90, leave out lines 5 and 6 and insert—

“(c) The person neglected to act in accordance with their duties and responsibilities.”

This amendment and amendment 20 are intended to avoid the risk that routine behaviour by parties involved with pension schemes and others would be judged criminal, and thereby to protect professional advisers from criminal liability for carrying out their role.

With this it will be convenient to discuss the following:

Amendment 20, in clause 107, page 91, leave out lines 3 and 4 and insert—

“(c) The person neglected to act in accordance with their duties and responsibilities.”

This amendment and amendment 19 are intended to avoid the risk that routine behaviour by parties involved with pension schemes and others would be judged criminal, and thereby to protect professional advisers from criminal liability for carrying out their role.

Clause stand part.

Clauses 108 to 116 stand part.

That schedule 7 be the Seventh schedule to the Bill.

Clause 117 stand part.

That schedule 8 be the Eighth schedule to the Bill.

Amendments 19 and 20 are in my name and that of my hon. Friend the Member for Gordon, and for the reasons that other members of the Committee have outlined we support part 3 of the Bill. We are also incredibly supportive of the principles of clause 107, which introduces new criminal offences aimed at deterring occupational pension schemes, sponsoring employers or scheme trustees from engaging in wrongdoing in relation to their pension scheme. We would not table the amendments if we were not concerned, and if serious concerns had not been raised about the clause.

We think the clause will act as a strong deterrent against those who would wilfully run a scheme down, as we have seen happen in the not too distant past, and as was outlined earlier by the Chair of the Work and Pensions Committee, the right hon. Member for East Ham. However, the new criminal powers are wide-ranging and have the potential—I am sure it is unintentional—to criminalise routine behaviour by parties involved with pension schemes and those who are not directly involved at all, such as lenders and those doing business with a pension scheme’s employers. That could have damaging knock-on effects for the viability of the pension scheme, if those who dealt with it, or employers, deemed that that legal risk was intolerable.

We have been working with the Institute and Faculty of Actuaries, which the Minister previously quoted in his favour in relation to part 3 of the Bill, as it has serious misgivings about the impact that the clause could have. It suggests that a wide range of conduct has the potential to have a detrimental effect on the likelihood of scheme benefits being met, in which case schemes might fall foul of the proposed current wording of clause 107.

The Institute and Faculty of Actuaries says, for example, that such conduct might include a Government entity terminating an outsourcing contract, where the contractor has a pension scheme; an employer giving employees a pay increase; a Government increasing corporation tax or business rates; a landlord increasing rents, where the tenant has a pension scheme; trustees or a scheme actuary granting an augmentation or increase to members without additional employer contributions; or a bank refusing to lend to an employer. That view is also supported by the Pensions and Lifetime Savings Association.

Our amendments would protect professional advisers from criminal liability for carrying out their role. That could be achieved in the Bill if the duties and responsibilities of an individual were considered when determining whether a person intended to commit an offence. The amendments would clarify matters in adding the question of negligence, which we feel is the intention behind the clause, but which is not explicit. They would also make it clear that a person’s role and responsibility should be considered.

The intended effect is not to change the policy aims of the legislation—far from it—but to clarify the extent of the powers and, in doing so, protect professional advisers from criminal liability for legitimately carrying out their roles. We therefore hope that the Government will accept the amendments.

I have listened with great interest to the case that the hon. Member for Airdrie and Shotts has been making. I have also been contacted by a reputable industry body, the Pensions Management Institute, as well as the Institute and Faculty of Actuaries, which has been mentioned. They expressed alarm about the consequences of clause 107, which the hon. Gentleman has raised concerns about.

I have seen, for example, letters to the Minister from the Joint Industry Forum, which is a genuinely cross-industry group. One is dated 11 December last year, and the other is dated 9 September this year. They suggest possible changes and discussions with officials about how the difficulties could be overcome. I hope the Minister will tell us what discussions there have been since those letters, to try to resolve the problem, and what his conclusion was.

It is worth quoting from the Joint Industry Forum’s second letter, which was sent in September:

“Third parties such as banks, trade counterparties and landlords could find themselves guilty of a criminal offence in relation to a pension scheme for which they previously had no responsibility. So could government bodies that deal with the private sector, pension trustees, trade unions, investment counterparties, or anyone who deals with the employer in any capacity whatever. We note that the third party need not be dealing with the pension scheme—any business dealing with the employer could be sufficient”

to be brought within the scope of the clause.

The letter continues:

“We appreciate the underlying policy is to create a criminal offence for the most serious conduct that harms pension schemes. However, the legislation has set the test at a much lower level—any conduct that causes a ‘material detriment’ to the likelihood of scheme benefits being met could be a criminal offence. All sorts of routine business activities could cause such a ‘material detriment’. Many of those activities would not normally be thought wrong, let alone criminal. Any business contract that an employer signs is likely to involve liability that could compete with the pension scheme. Unless the contract is immaterial, it could be a criminal offence.”

That certainly sounds to me like a serious problem, albeit clearly an unintended one, and I am surprised, given that the first of those letters was sent almost a year ago, that it does not appear as yet to have been resolved. The amendments tabled by the hon. Member for Airdrie and Shotts would certainly deal with the problem. I hope the Minister will be able to give us a persuasive explanation for how he plans to overcome what appears to be a clear and serious problem on the face of the Bill as it stands.

I would like to provide some reassurance on that particular point. I am acutely aware of it and have engaged at length with many different organisations. It is certainly not the intention to frustrate legitimate business activities where they are conducted in good faith. It is important, however, that where the elements of offences are met, no matter who has committed it, the Pensions Regulator should be able to respond appropriately. Any restriction of the persons would create a loophole for these people to potentially act in such a way.

The new criminal offences proposed in the Bill make it clear that an offence is committed only if the person did not have a reasonable excuse for doing the act or engaging in the course of conduct. Crucially, what is reasonable will depend, obviously, on the particular circumstances of the act, but the burden will be on the regulator to prove that the excuse was not reasonable. The regulator will be publishing specific guidance on these powers after consulting industry, but ultimately it is for the courts to decide that an offence has taken place, and, if so, the appropriate punishment.

The amendments also seek to remove the reasonable excuse defence—as set out in sections 58A and 58B—and replace it with a narrower concept of negligence. The existing defence of reasonable excuse is wider in definition than that proposed by the amendments. Therefore, the current defence provides more protection and a greater safeguard to potential targets. What is considered negligent is, in fact, specific and relies on case law—the law of tort, as I am sure the hon. Member for Airdrie and Shotts is aware—therefore introducing the concept of negligence would not help individuals to determine if what they were doing would be deemed negligent.

I have a real worry about this. Is the Minster saying that, for example, if a trade union successfully called for a higher pay rise than was initially offered, the company subsequently failed and there was a problem with the pension scheme, that the trade union would have to say that it had a reasonable excuse for pressing its pay demand? That seems a strange arrangement for us to be entering into.

It is for the regulator to show that that was not a reasonable approach. The burden is on the regulator to bring the offence and to prove it. I will choose my words carefully because this is subject to further regulation and consultation by the regulator, but it is certainly not the case that this is to catch everybody in how they conduct their normal business. However, there has to be a capability to identify and then prosecute and bring action against all persons, if they are found to have committed an offence without reasonable excuse. The ask is to narrow down the scope of the offence. We have just had a debate about circumstances where people have potentially committed things in the past.

I understand the Minister’s riposte, but there are two points here. First, the amendment covers reasonable excuse by allowing consideration to be given to the person’s role in the trust. For instance, in a trade union, to take the argument of the Chair of the Select Committee, consideration would be given to the person’s role.

Secondly, the Minister is asking us to wait until the Pensions Regulator has consulted and says how it thinks it should deal with the matter, but by that point it will be too late to ensure that we have got this measure right. I hope that the Minister looks again at this point and provides better comfort to the likes of the Institute and Faculty of Actuaries, which has a very broad base of professional expertise, and which suggested the amendments. I hope for a more favourable response from the Minister.

I am happy to write to the hon. Gentleman and set out the position in more detail. I come back to the simple point. If a trade union has a reasonable excuse for asking for a pay rise for its members, given their circumstances in an organisation, there is no reason why it should have any concern whatsoever. The starting point is whether someone has a reasonable excuse to progress a particular thing. If it is clearly part of normal business activities, I would not anticipate a problem.

I wonder whether the Minister would agree that it does seem very odd that a trade union making a legitimate pay claim might have to worry about whether it is committing a criminal offence because of some future damage to the pension scheme. I am very surprised that the Minister is putting in place measures that would have that effect.

This is in the context of the offence of avoidance of employer debt. We start with the very eloquent exposition that the hon. Member for Airdrie and Shotts gave on where employer debt arises and contributions are not made to pension schemes. One has to then look at the individuals and their approach. I do not believe that including a reasonable excuse defence will in any way hold back normal, traditional business activity. I can give that reassurance: traditional business activity would clearly include union work. This is clearly an issue that the regulator is very conscious of. On the one hand, we want a more robust approach. On the other hand, we want to ensure that normal business activity goes ahead. I believe that this is the appropriate way forward.

I cannot say that I am wholly satisfied with the Minister’s explanation. The two amendments would narrow and focus the intention of the clause and ensure that protection is given to people who are legitimately carrying out their duties to the pension scheme and who have related business or commercial interests, and, indeed, Government bodies that interact with employers or a scheme. I therefore intend to divide the Committee.

Question put, That the amendment be made.

The Chair adjourned the Committee without Question put (Standing Order No. 88).

Adjourned till this day at Two o’clock.

Pension Schemes Bill [ Lords ] (Second sitting)

The Committee consisted of the following Members:

Chairs: †Mr Laurence Robertson, Graham Stringer

† Bailey, Shaun (West Bromwich West) (Con)

† Baker, Duncan (North Norfolk) (Con)

† Baldwin, Harriett (West Worcestershire) (Con)

Bell, Aaron (Newcastle-under-Lyme) (Con)

† Buck, Ms Karen (Westminster North) (Lab)

† Davies, Gareth (Grantham and Stamford) (Con)

† Drummond, Mrs Flick (Meon Valley) (Con)

† Eagle, Ms Angela (Wallasey) (Lab)

† Eshalomi, Florence (Vauxhall) (Lab/Co-op)

† Gray, Neil (Airdrie and Shotts) (SNP)

† Griffiths, Kate (Burton) (Con)

† Malhotra, Seema (Feltham and Heston) (Lab/Co-op)

† Morris, James (Lord Commissioner of Her Majestys Treasury)

† Opperman, Guy (Parliamentary Under-Secretary of State for Work and Pensions)

† Roberts, Rob (Delyn) (Con)

† Thomson, Richard (Gordon) (SNP)

† Timms, Stephen (East Ham) (Lab)

Kenneth Fox, Huw Yardley, Committee Clerks

† attended the Committee

Public Bill Committee

Tuesday 3 November 2020

(Afternoon)

[Mr Laurence Robertson in the Chair]

Pension Schemes Bill [Lords]

Clause 107

Sanctions for avoidance of employer debt etc

Before we resume our scrutiny, I remind Members to maintain social distancing. Hansard colleagues would be grateful if Members could email their speaking notes to hansardnotes@parliament.uk.

I understand that there was some uncertainty about the effect of the grouping of amendments with clauses 107 to 117 stand part. I have therefore decided to exercise the Chair’s right to amend groupings, and I am grateful to the Minister for his flexibility. Once we have disposed of amendment 20, I will allow a debate on clause 107 stand part, with which it will be convenient to debate clauses 108 to 116, schedule 7, clause 117 and schedule 8. Mr Gray, do you wish to move amendment 20?

The amendment is not moved.

Question proposed, That the clause stand part of the Bill.

With this it will be convenient to discuss the following:

Clauses 108 to 116 stand part.

That schedule 7 be the Seventh schedule to the Bill.

Clause 117 stand part.

That schedule 8 be the Eighth schedule to the Bill.

I am grateful to be able to make some comments about clause 107. This morning’s debate gave us the opportunity to put on the record some of our thoughts and to acknowledge our support for part 3 of the Bill. There has been some debate, and I seek some further assurances from the Minister.

On the role of the Pensions Regulator, we support strengthening the existing sanctions regime with the introduction of new criminal offences and higher penalties for wrongdoing. The pensions landscape has been troubled in recent years by scandals, including the BHS and Carillion scandals, which have had catastrophic consequences for the scheme members involved. My right hon. Friend the Member for East Ham and my hon. Friend the Member for Wallasey also made that point. The Minister made the important remark that callous crooks who put at risk other people’s pensions cannot be allowed to get away with it.

It is right that those who intentionally or knowingly mishandle pension schemes or endanger workers’ pensions face severe penalties, which is why we wholeheartedly support the relevant provisions in the Bill. The only note of concern is the scope of the provisions, and I refer to the very helpful and instructive debates in the other place on that issue. We are firm in the view that the offence must apply to unscrupulous employers or directors of companies, but there is fear that it is so wide in scope that pretty much anyone involved in the management of a pension scheme could be exposed to sanctions, including third parties such as advisers, banks and even trade unions. Colleagues from the SNP have made some of those points effectively.

Government representatives have assured us that the courts will have the necessary discretion to ensure that only those who have genuinely been involved in wrongdoing will be caught by the new offences, but I note that pensions lawyers have realised similar concerns to those that we are raising today. It would be helpful to have further confirmation, following the Minister’s comments this morning, of whether there are further plans to review whether the offences work as intended or whether there are any other unforeseen consequences.

Welcome to the Committee, Mr Robertson. We hope that we will be well behaved under your chairmanship.

I take the hon. Lady’s points on board, and I will repeat, as if I said them all, the comments that I made in respect of amendment 20. I stress that subsection (2)(c) sets out a complete defence to any particular assertion of wrongdoing, namely the

“reasonable excuse for doing the act or engaging in the course of conduct”.

The hon. Lady talks about the future. The regulator, who has rightly been much talked about today, is very mindful of the debates in Parliament and of what is said in this place and the other place. I have discussed the ongoing regulation, and the fact that we are going to have to introduce further regulation on these particular clauses and set out the guidance in more detail. I hope that will reassure her that the comments have been taken onboard and that we are not using a sledgehammer to crack a nut.

We all accept that there are grave and serious incidents, such as those that happened with BHS, Carillion and others, but we also want to ensure that the pensions system functions in a fair way. The hon. Lady will also be aware that, as always, all powers are kept under review. It is certainly my hope that we will introduce another pensions Bill before too long. As with any matter, were there to be any disagreement about the implementation, we can always revisit that.

Obviously we have missed out on the amendments tabled alongside the Institute and Faculty of Actuaries. Between now and Report, will the Minister commit to discussing with some of those stakeholders, such as the IFoA, and with us, to lay out how he can allay the fears of stakeholders, if he cannot allay ours?

As always, I am delighted to discuss with anybody. There is no doubt that we have done huge amounts of discussion and engagement already. My approach would normally be to set out in writing, as a preliminary, what I feel the position is and how we can provide the assurances, and discuss them off the back of that. At any stage, any parliamentarian is perfectly entitled to engage with the regulator and discuss their concerns, because it will be for the regulator to issue the guidance following Parliament passing the Act. I am sure that we can address the point being made.

Question put and agreed to.

Clause 107 accordingly ordered to stand part of the Bill.

Clauses 108 to 116 agreed to.

Schedule 7 agreed to.

Clause 117 ordered to stand part of the Bill.

Schedule 8 agreed to.

Clause 118

Qualifying pensions dashboard service

I beg to move amendment 7, in clause 118, page 104, leave out lines 20 to 22.

This amendment would remove a subsection which requires regulations under inserted section 238A of the Pensions Act 2004 to include a requirement excluding facilities for engaging in financial transaction activities from a qualifying pensions dashboard service.

Mr Robertson, may I address Opposition amendments 1, 2, 15, 14, 4 and 5 at the same time, on the strict understanding that, of course, individual votes will occur as and when needed?

Is that agreed? Yes. Therefore, with this it will be convenient to discuss the following:

Amendment 1, in clause 118, page 104, line 41, at end insert—

“(5A) In subsection (5)(b), the “state pension information” to be prescribed must include—

(a) a forecast of the individual’s future state pension entitlement,

(b) information relating to the individual’s forecasted total income through the State Pension in the ten years following their 60th birthday,

(c) information relating to the individual’s estimated total income through the State Pension in the ten years following their 60th birthday, had the pensionable age for men and women not been amended under the Pensions Act 2011,

(d) a statement of the difference between the forecasts in (5A)(b) and (5A)(c).”

This amendment seeks to require the provision through the pensions dashboard service of information relating to the effect on the state pension income expected by those affected by changes to the timetable for equalisation of the state pension age made by the Pensions Act 2011.

Amendment 2, in clause 118, page 104, line 41, at end insert—

“(5A) In subsection (5)(b), the “state pension information” to be prescribed must include——

(a) a forecast of the individual’s future state pension entitlement,

(b) an estimate of what the individual’s future state pension entitlement would have been if the “triple lock” had not been implemented in 2011/2012 and that entitlement had instead increased in line with the minimum amount which could have been provided for each year in draft orders laid before Parliament under section 150A of the Social Security Administration Act 1992,

(c) a statement of the difference between the forecasts in (5A)(a) and (5A)(b).

(5B) In subsection (5A), “triple lock” means the policy of uprating the basic State Pension, the additional State Pension and the new State Pension by the highest of—

(a) the increase in average earnings,

(b) the Consumer Prices Index (CPI), or

(c) 2.5%.”

This amendment seeks to require the provision through the pensions dashboard service of information relating to the effect of the “triple lock” on state pension forecasts.

Amendment 15, in clause 118, page 104, line 41, at end insert—

“(5A) In subsection (5)(b), the “state pension information” to be prescribed must include the individual’s State Pension age and any changes to State Pension age affecting that person made under the Pension Act 1995 or any subsequent legislation.”

This amendment would ensure that an individual’s State Pension age (and any recent changes to that age) are clearly displayed on the dashboard.

Amendment 14, in clause 118, page 104, line 41, at end insert—

“(5A) Requirements prescribed under subsection (2) must include a requirement to provide information relating to the performance of pension schemes against environmental, social and corporate governance targets.”

This amendment would add information on environmental, social and corporate governance targets to the list of information displayed on the dashboard.

Amendment 4, in clause 118, page 105, line 20, at end insert—

“(6A) A requirement under subsection (6)(d) may require the provider of a pensions dashboard service to ensure that the needs of people in vulnerable circumstances, including but not exclusively—

(a) persons who suffer long-term sickness or disability,

(b) carers,

(c) persons on low incomes, and

(d) recipients of benefits,

are met and that resources are allocated in such a way as to allow specially trained advisers and guidance to be made available to them.”

This amendment would require that specially trained advisers and guidance are made available to people in vulnerable circumstances and would provide an indicative list of what vulnerable circumstances should include.

Amendment 5, in clause 118, page 105, line 20, at end insert—

“(6A) A requirement under subsection (6)(d) may require the provider of a pensions dashboard service to communicate to an individual using the dashboard the difference between—

(a) provision of information,

(b) provision of guidance, and

(c) provision of advice.”

This amendment would require the provider of a pensions dashboard service to ensure that users are made aware of the differences between “information”, “guidance” and “advice”.

I am delighted to speak to clause 118, which I accept is a matter for debate. It relates to the pensions dashboard, which has been the product of a huge amount of work thus far to get it to this stage. The clause gives the Secretary of State legislative powers in relation to England, Wales and Scotland to create a set of requirements that pensions dashboard providers must meet in order to be considered a qualifying pensions dashboard service.

Only qualifying pensions dashboard services will be allowed access the approved infrastructure, providing pensions information to consumers. These requirements may include what information is provided and the circumstances in which it must be provided. They may also include requirements relating to data security, identity verification and standards, ensuring that the information shown to the individual is accurate, secure and consistent across all dashboard providers. This information may cover state, occupational and personal pensions. The pensions dashboard will bring together an individual’s savings from multiple pensions, including their state pension, online and in one place. Clause 118 defines the service itself and provides powers to set the standards required of a qualifying dashboard service.

The provisions are complicated and extensive, but I will try to explain how data flows will be dealt with, because we have frequently been asked, particularly on Second Reading, how data will move through the pensions dashboard infrastructure and how an individual can access that data. The first step will be an individual logging on to their choice of dashboard. If that is the first time they have used the dashboard, the next step will be to verify their identity. Once their identity has been verified, information will pass from the pension finder service to connected pension schemes, asking them to match the individual’s information. If the pension scheme finds a match, it will confirm that to the pension finder service and then respond to the individual via their chosen dashboard that it holds some data for them. When the individual next logs on to their dashboard, the information from the pension scheme will be viewable by the individual.

The best analogy for how that information becomes viewable on a dashboard is probably the cashpoint idea. Whatever cashpoint individuals use, they can view the current balance of their account on the screen. However, the operator of the cashpoint is not able to see that information, as it is encrypted and only unlocked in combination with one’s cash card and a personal identification number. Dashboards will operate in a similar way. The information will be shown on screen but will not be viewable or collected by the organisation delivering the dashboard. The decryption of the data will happen only after an individual has logged in and asked to have the data presented. I should note that an individual can give delegated access to their information to an independent financial adviser or under Money and Pensions Service guidelines. This delegated access is time-limited and can be revoked at any point.

That is a broad outline of the provisions and what we are trying to do with the dashboard. Self-evidently, this project has been many years in the making. It is supported by industry and by consumer groups across the country. It is also a logistical challenge on an epic level, with nearly 40,000 schemes having to operate and provide data in a suitable format so that it can all be accessed. It is with regret that the Government are having to legislate to force providers to provide the data. I would have preferred the industry to have done this itself, but it is unquestionably the case that we now have to compel it to provide the data. It is quite clear that we also have to regulate this process.

Progress of this particular part of the legislation includes the amendment to clause 118, inserted by their lordships, in respect of financial transactions. The Government resist this amendment and will seek to overturn it. There are many reasons why this is not an appropriate way forward, but we strongly believe that the fundamental reason is that prescribing and preventing financial transactions both misunderstands what a dashboard is intended to be and would place undue restrictions on what it can do. While a dashboard will initially provide a simple find-and-view service, we expect dashboard functionality to evolve over time. We want to allow for innovations that could give members more control over their pension savings, which is why it is vital that we do not, at this stage, limit the future capabilities of the system. That applies to a number of different amendments that we will deal with.

New regulations on activity will ensure that dashboard providers will be subject to a robust regime, including Financial Conduct Authority authorisation and supervision. We want to make dashboards easily accessible for members of different ages and with different priorities and preferences for viewing their pension savings.

The practical reality is that if financial transactions were prevented, the idea of consolidation, for example, would be exceptionally hard to progress with. All aspects of greater understanding of a larger or lower contribution, and any aspect that required any financial aspect to it, would be prevented. It is certainly not something that we would support at this stage.

In support of that, I pray in aid the comments of the No. 1 consumer organisation, Which?, which submitted a briefing on Second Reading that addressed the Government’s amendment on this point and subsequent Government amendments. It supported the Government’s position, as opposed to the amendment put forward by the House of Lords, stating: “From the most recent amending stages in the House of Lords, amendments 52 and 63 are the most complex for us. Whilst we support the sentiment of both amendments, we do not want to see bad outcomes for consumers, which could happen if they are exploited through commercial dashboards and/or being able to transact with platforms. But we do not agree that the introduction of commercial dashboards should be delayed, or that the transactions should be banned.”

It expands and goes on to say: “Which? agrees that there is a need to protect consumers from the risk of commercial dashboards and from bad outcomes from transactions through the dashboard. However, this must be done via the introduction of consumer protections and regulatory oversight rather than a blanket ban. For example, we believe that the pensions industry should be required and enabled to take on greater responsibility for vetting pension transfers and pension liberation requests and alerting law enforcement and regulators.”

We will come to clause 125 and the provisions that we are setting forward at a later stage.

The Minster is making a powerful case for rejecting the approach that was taken in the other place. Could he elaborate on the costs of this platform, and who ultimately will pay for building a pensions dashboard?

The costs are substantial. There are a variety of ways in which this is being paid for, but first and foremost, it will not be paid for by the individual. Our constituents will be able to access the dashboard, and the facility that we are creating, for free. My hon. Friend will have to forgive me for giving a generalised answer, because I cannot give the pounds, shillings and pence now, but I will be happy to do so in writing before Report.

The cost is fundamentally met in respect of the work on state pension; there was a budget announcement many years ago for the expensive work that is required by Her Majesty’s Revenue and Customs to provide the state pension provision as part of the dashboard, as it is our intention that state pensions will be part of this from day one. I believe that £5 million was set aside to pay for that part.

There is ongoing payment for the Money and Pensions Service, which is through a variety of means. Some is from Treasury funding, but it is paid for primarily through the pension levy, which pays for a variety of things in the usual way, from the regulator to the Pension Protection Fund and the Money and Pensions Service. Ultimately, the cost is borne by individual schemes and members, but not by the individual constituent accessing the dashboard—it is not expected in any way that there should be a cost for doing that.

It is clearly our intention and desire that a commercial dashboard should be available. That leads me to a point that I will come back to in more detail: do we go to where the customer is, or do we make the customer come to us? In this particular example, we strongly believe that we should go to where the customer is.

It is entirely right that we design a system with a data portal that could in no way be utilised for bad purposes, but that could be accessed by an individual, whether they are presently with Aviva, PensionBee or another organisation. They can then work with a particular independent financial advisor—whether my hon. Friend the Member for Delyn in a former life or other independent financial advisors—who would have to be specifically approved to do this work. They already have a relationship with those people and they are already in the position of having an understanding. If we do not have that commercial capability, we will lose out on a significant chunk of the market and there will be a significant deficit in the ability of what we all believe is a great idea to have a practical effect. That is the fundamental point in respect of costs. I am happy to give my hon. Friend the Member for West Worcestershire a detailed breakdown before Report and Third Reading.

I may return to Government amendment 7 but I shall first try to address amendments 1, 2 and 15 on the state pension. I am certain that I will be invited to comment on a variety of matters relating to the women’s state pension increase, but my only comment at the outset is that it is not the Government’s intention to amend the Pensions Acts of 1995, 2007, 2008 or 2011. We intend that the state pension will be part of the original provision of the dashboard. We are working with HMRC, which is responsible for that information, so that we can identify the date of state pension age and the amount that people might be expected to receive at the present stage. We do not intend to take into account what their entitlement would have been with or without the amendments to the 2011Act, as proposed in amendment 1, or what it would have been with or without the benefit of the triple lock, as proposed in amendment 2, or in respect of the 1995 Act, as proposed in amendment 15. I am sure that I will be tempted to cast a view on the future of the triple lock, but I am delighted to say that that is a matter for the Chancellor. As we discussed in the Social Security (Up-rating of Benefits) Bill, the decision has been made in respect of the upcoming year of 2021-22, and that is the extent of the matter at present.

Amendment 14 concerns the extent to which the dashboard should add information on environmental, social and corporate governance matters. I am delighted to have been the Minister who brought ESG into part of this country’s pensions system and drove forward change in the pension and asset management systems, with due credit to Chris Woolard and the Financial Conduct Authority for changing their original views and coming on board with our timetable. I am utterly in support of the principle of ESG and of ensuring that individuals have as much information, on a long-term basis, about what their pension fund is being invested in. However, I shall resist the amendment for several reasons.

First, we intend that the dashboard should start with simple information. We want to ensure that the information available in the dashboard service is easily understood by consumers and that the impact on user behaviour is considered. Trustees must have a policy on ESG and must disclose it in any event, but we do not think that the provision of that information should be prescribed in the Bill, and nor do I want to prejudice the pensions dashboard programme consultation, which began earlier this year, about what information could be shown. The consultation specifically includes signposting users to schemes’ statements of investment principles and implementation documentation, including information on schemes’ ESG policies and work. The programme will publish an initial version of a proposal for data standards by the end of the year, and we will respond in respect of what specific information will flow from that at a later stage.

Amendments 4 and 5 in the name of the hon. Member for Airdrie and Shotts deal with people in vulnerable circumstances. Although I applaud the principles behind them, the matter is slightly more complicated than the amendments necessarily make it appear. I am happy to explain in more detail at a later stage, but it starts with the fundamental principle that the Money and Pensions Service, which oversees the dashboard programme, has a statutory objective to ensure that information and guidance is available to those most in need of it, bearing in mind in particular the needs of people in vulnerable circumstances. It must have regard to that in the development of pensions dashboards.

The pensions dashboard programme usability working group—a catchy title, I accept—will explore how best to help users to understand the information being presented to them and where they can get more help, including those who are most vulnerable. That could include making recommendations about mandatory signposting to guidance and/or advice. Money and Pensions Service guiders are trained to recognise that some customers may need additional or different types of help.

The Financial Conduct Authority will seek to introduce a new regulated activity and amend the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, consulting on rules relating to that activity. That may also include a requirement to signpost users to guidance and to provide information about how to find regulated financial advice. We believe that the best way to do that is through the FCA rules and not in the Bill.

I will make two other points on the vulnerability issue. The Department for Work and Pensions, the FCA and the Money and Pensions Service all have a duty to comply with the public sector equality duty in section 149 of the Equality Act 2010. Although dashboard providers will be regulated, there has also been a recent consultation on guidance on the fair treatment of vulnerable consumers, and that will be responded to in guidance published by the FCA either later this year or in early 2021.

My final comment on the proposals on vulnerable individuals would be on the potential difficulty where, as I explained a dashboard is merely a find-and-view service. Were the amendments taken to their ultimate conclusion, they would require a pension scheme to make further inquiry of the individual themselves before the release of the information. I fear that the practical reality of that in a find-and-view service of this nature is neither appropriate nor in the best interests of all parties. I entirely accept the principle behind the amendments, but I believe that we may be able to navigate the problem in an alternative way.

I am grateful to have the opportunity to respond to the Minister, and I thank him for those detailed remarks. I wish to speak against amendment 7, and I will lay out my arguments, and to speak to our amendments 15 and 14 and the reasons why we tabled them. I do not intend to push them to a vote, but we will listen to what the Minister has to say.

It is disappointing to see the Government row back on the positive progress on commercial transactions that was made in the Lords. A serious concern of ours, which was raised in the other place, is that the introduction of commercial dashboards paired with the ability to engage in commercial transaction activities would make it easier for savers to be encouraged into detrimental pensions decisions and inappropriate products.

The Minister will not need persuading of the risks that savers currently face. Scammers prey on the uncertainty and fear now felt by many about the potential impact of coronavirus on their pension pots and about the challenges that children and grandchildren may face. As Baroness Drake pointed out in the Lords,

“The impact of scams, mis-selling, provider nudging and poor decision-making could increase if an individual’s total savings are displayed in one place, the dashboard allows financial transactions, and the wrap of consumer protection is not fit for purpose. For some vulnerable customers, poor decisions could be more costly if the impact is across all their savings, and if people are scammed, they could be scammed out of everything.”—[Official Report, House of Lords, 30 June 2020; Vol. 804, c. 647.]

Previous pension scandals, such as the mis-selling of pensions in the 1980s and the defined-benefit transfers after 2015, show the dangers of opening up the market before appropriate safeguards are in place. The Treasury’s July 2014 consultation on pension freedoms expected only a small number of additional requests for DB transfers. The Treasury predicted that the reforms would stimulate innovation and competition, but we also saw innovation from scammers. In 2018, the Work and Pensions Committee detailed the activity of vultures who attracted British Steel workers to transfer their pensions by providing sausage and chips lunches. In February 2020, almost six years after the reforms, the FCA said that product sales data indicated that

“a substantial volume of assets continues to move from DB schemes into the non-workplace market.”

It also said that

“Unsuitable DB-DC transfers remain a significant source of harm”,

and

“could, collectively, result in losses of up to £20 billion worth of guarantees over 5 years.”

Going back 34 years to the Social Security Act 1986, the Secretary of State for Social Services said that changes to rules for personal pensions

“will not only give the public a wider choice and a greater say in how their savings are invested; it will also increase competition between providers of pensions, to the benefit of the consumer.”—[Official Report, 26 January 1986; Vol. 90, c. 820.]

The result of those changes was an £11.8 billion pensions mis-selling scandal.

Labour’s view is simply that this move is too great a risk. The Government should take a greater role in protecting individuals from potentially catastrophic decisions that cannot be reversed, and should provide further clarity on that point. We want clarification on whether the Government intend ever to allow transactions on the dashboards—the Minster’s remarks on that point were not completely clear. If they do, what protections are planned for consumers to avoid risks of the kind that I have set out; and if they do not, why do the Government want to remove new section 238A(3) of the Pensions Act 2004, inserted by clause 118(2), which makes that position clear in the Bill?

Amendment 15 is about the state pension age. The Minister mentioned that he would expect the state pension age and the details of the state pension to be on the dashboard. Our amendment seeks to include the state pension age and any changes made to the state pension age under the Pensions Act 1995 or any subsequent legislation that affect the person. The Minister ruled that out in his earlier comments, but I want to put some of our points on the record, as we may indeed come back to this.

Amendment 15 is intended to help people to access and understand information relating to their state pension age, and is motivated by concern about the way that women have been affected by state pension age changes and the way they have been treated by the Government. Recent research by Labour found that almost 15,000 women over the age of 65 are claiming universal credit. That number may well be higher now, because of the coronavirus crisis. Labour believes that the Government should consider immediate action to support that group. We have made a number of asks of the Government to prevent people falling through these gaps during this crisis, but it is unacceptable that the ’50s women have been forgotten by the Conservative Government both within the crisis and out. Under a Labour Government, that would never be allowed to happen.

The amendment is aimed at helping people to access clear information about their state pension age. Many women will be shocked to find out that they will retire later than they had expected to, often destroying plans that they had and causing considerable injustice and hardship. I am sure the Minister has been approached by women affected, just as I and colleagues across the House have been. Poor communication and administration of the changes has made matters much worse. By providing retirement age information in a clear fashion, the amendment would give women and men the proper time to prepare for retirement, give them transparency as to their own finances, and allow them to get help when they need it in a clearer way.

Amendment 14 deals with ESG information. I thank the Minister for his remarks; I know of his commitment to this agenda and the work that he has done. The amendment follows on from the fantastic progress made in the Lords on the role of pensions investments in tackling climate change. Indeed, when the Bill was first published by the Government, it included no reference to climate change. Working across parties, Labour was able to secure a Government consultation on how recommendations from the Taskforce on Climate-related Financial Disclosure relate to pension schemes, and for it to be completed within one year.

I am certain that the hon. Lady does not want to make an issue of this, but does she not accept that it was the Conservative Government who sat down over Christmas and amended the Bill specifically to address TCFD recommendations and to include climate change in the Bill? We added a new clause on climate change. I totally accept that Labour colleagues worked on a cross-party basis to do that, but it would be wrong to say anything other than that the Government started the process to ensure that climate change was in the Bill and that the TCFD was part of it, and we are doing a consultation on the implications of it. I am sure she does not want to mislead the Committee on that.

Indeed, I acknowledged in my opening remarks the Minister’s commitment to this agenda. He has also acknowledged Labour’s working with the Government on this agenda, but also helping to secure the amendments that have led to the new subsections in the Bill. The amendments require trustees and managers to take into account the Paris agreement and domestic climate targets in the overall governance, and disclosure of climate change risk and opportunities. It is a credit to the way in which we have proceeded on this agenda that for the first time climate change has featured in domestic pensions legislation.

The amendment would build on the commitments by providing information relating to the scheme’s performance against environmental, social, and corporate governance targets, adding to the list of information on the dashboard and empowering individuals to better understand the role their savings play in tackling climate change and achieving other social and environmental goals. We are aware that the Government intend to keep the dashboard simple at first—indeed, the Minister commented on that in his opening remarks—but we note that Baroness Stedman-Scott said in the other place:

“We are very interested in how dashboards can support and increase engagement, including whether information on areas such as ESG, which trustees are required to cover as part of their disclosure obligations, may be incorporated into the dashboards. This is to be informed by user testing and may evolve over time.”—[Official Report, House of Lords, 26 February 2020; Vol. 802, c. GC163.]

I know that the Minister has had further conversations on this issue. He also referred to the ongoing consultation about what could be on the dashboard. However, I hope that he will be able to confirm that that is something he hopes to implement as the dashboard is developed further.

It is a pleasure to serve under your chairmanship, Mr Robertson, during this important part of the Committee’s deliberations. Like the shadow Minister, Scottish National party Members are concerned about Government amendment 7. We strongly support the premise of a pensions dashboard and hope that allowing people greater access to information about their pensions will encourage informed choices that ensure long-term savings and investments that provide dignity in retirement. However, we are concerned that the Government amendments to this section of the Bill will mean that the creation of the MaPS dashboard could be a missed opportunity.

Amendment 7 is a case in point. It would allow commercial dashboards to facilitate financial transactions, which we feel is a mistake and is a big reason why we want a lead-in period before commercial dashboards become operational. We feel that the impartial information that we want the MaPS dashboard to provide should be entirely separate from transactions, at least to begin with. That position is supported by the Pensions and Lifetime Savings Association, for all the reasons outlined by the shadow Minister.

Providing digital platforms to bring together a person’s savings landscape is a huge step forward, but exposing that information to marketing and commercialisation will remove the power of the saver to access information that is presented impartially and without commercial motive and hand it to organisations that will encourage individuals to take big decisions about potentially their largest financial asset. As the shadow Minister said, it could also make people vulnerable to scammers.

The UK Government appear not to have learned from the oft-worn problems associated with pension freedoms. Customer satisfaction in Pension Wise is high, and its evaluation score published last month makes for good reading, yet only 14% of all pension pots accessed—not people who access their pots, but pots accessed—were accessed after receiving guidance from Pension Wise. The House of Commons Library report earlier this summer highlighted that, as a result of pension freedoms, more people were choosing to shift their savings from secure defined-benefit schemes to riskier defined-contribution schemes, and a large proportion of those drawing down their pension were doing so without seeking advice or guidance. That is likely to be exacerbated if commercial dashboards are allowed to contain financial transactions. We think that is really risky. Allowing financial transactions to take place on the dashboard without having first assessed and accounted for the risks is clearly a recipe for trouble, and I urge the Government to reconsider.

We want the dashboard to provide as much information as possible for savers, which is why we tabled amendments 1, 2, 4 and 5 and support amendments 14 and 15, tabled by the Labour Front Benchers. These amendments seek to add information relating to a person’s state pension to the dashboard, ensuring that the impact of policy changes can be tracked by savers. Amendment 1 would show the detriment suffered by 1950s-born women. The Bill’s scope to provide more meaningful help and support to women born in the 1950s, who have seen their state pension age increase with little or, in some cases, no notice, is extremely limited. We have been clear and consistent in our support for women born in the 1950s. We want the Government to carry out a full impact assessment of the detriment suffered by them from various changes, and to use that to inform payments to be made to them. However, these amendments are as far as the Bill’s scope allows us to go. They would give these women more information about how the state pension changes have affected them. They would also act as a strong deterrent against this type of mishandled policy change happening again.

Public dashboards should be as clever as possible, to account for complexity in individual circumstances and to more accurately project lifetime savings. That view is shared by some of those who have provided evidence to the Committee, including the Institute and Faculty of Actuaries and the Pensions and Lifetime Savings Association. Therefore, the SNP has tabled amendments to mandate specific information on the dashboard.

Amendment 2 would mandate information on the effect of the triple lock on state pension forecasts. The triple lock is a vital guarantee for our pensioners, and the SNP wants a clear commitment from the UK Government to its being maintained in the future. The Minister’s response to the amendment will give a clear indication of the UK Government’s policy agenda with regard to the triple lock. I can understand the Minister hesitating and not wanting to show where the women’s state pension has suffered detriment and where it would have been without the various changes—with varying levels of notice, ranging from some to none—as that would highlight the significant detriment that has been incurred, but maintaining the triple lock has been an undoubted positive, so I can only imagine that the Government would not want this information to be shown because they do not have a long-term commitment to the triple lock.

Our amendments 4 and 5 seek to tie up some loose ends left by pension freedoms and the creation of MaPS. We need strong consumer protection to ensure that people get the most out of their savings. The UK Government failed to ensure that when they introduced pension freedoms, but we hope that they have now learned their lesson. The SNP has tabled amendment 4 to require that specially trained advisers and guidance are made available to people in vulnerable circumstances, including, but not limited to, persons who suffer long-term sickness or disability, carers, persons on low incomes and recipients of benefits. Those types of circumstances can have a significant impact on people’s finances and long-term savings plans. It is also the case that people in difficult financial circumstances may be more likely to utilise new pension freedoms, but at a cost to their long-term pensions saving. It is clear that the UK Government had not put in place for older people opting to free up funds adequate safeguards to ensure that they would not end up in a desperate financial situation later. That was highlighted by the Library report from the summer that I have talked about.

Those with less money are more vulnerable to economic shocks in their personal finances, as well as being potentially more vulnerable to scammers who give misleading or false advice for a fee. Additionally, being a carer or disabled can incur extra lifestyle costs. Specially trained advisers and resources must make up part of the new body, so that people can have confidence in its ability to support those in vulnerable circumstances.

The SNP has tabled amendment 5 to ensure that customers using the pensions dashboard are made aware of the differences between “information”, “guidance” and “advice”. Guidance, information and advice are very different things. People expecting advice as to what route to take may be disappointed to receive only various pieces of information. Likewise, there may be issues about exactly what the body is allowed to advise and to what extent it is able to advise on options available. It is a simple amendment, but we feel that it would be extremely helpful in taking this issue forward.

I accept that there are some complexities, a number of which the Minister outlined, in addressing vulnerable customers under amendment 4, but I do not accept that nothing further can be done here. I hope that the Government, agreeing with the premise of our amendment, might want to look again at whether something can be done on Report. I am not clear on why the issue addressed in amendment 5 should not be dealt with in the Bill and why people cannot be signposted to information regarding “advice”, “guidance” and “information” on the dashboard. Why should we hope that people will be able to find it elsewhere when we could use the opportunity of the dashboard to provide that information up front?

We support amendment 14, which would provide greater information to consumers regarding

“the performance of pension schemes against environmental, social and corporate governance targets.”

That would build on the success of the Labour Lords in leading the Government to amend the Bill in the House of Lords with regard to other areas of environmental and climate change reporting. We also support amendment 15, which seeks to add to the dashboard a person’s pension age and any related information regarding recent changes.

It is a pleasure to be able to speak to clause 118 and discuss the related amendments. I am delighted finally to be here. I am sure that my hon. Friend the Minister will not thank me for pointing out that it was the Budget speech in 2016 that said that we would have a fully functioning dashboard by 2019. We got there in the end, or we are getting there in the end. I am delighted that we are making progress.

It is very important for everyone to remember—I failed to do so and have caused a lot of hair pulling for the Minister and his team over the last few weeks—that the Bill seeks to lay out the foundation, the framework, for the data standards that will be adopted and is not necessarily about getting bogged down in the minutiae of what the dashboard will look like in the end and the final functionality of it. We live in an information age. The watchwords of both the Pensions Regulator and the Financial Conduct Authority for at least the last decade have been all about informed decisions. Pensions are a vital part of anyone’s life and they need to catch up with the rest of the world. We risk non-engagement from this and future generations if we cannot give them the information that they want in the manner in which they want it.

Auto-enrolment has been an amazing thing and has seen millions more people saving in pensions. We have a complacency risk coming down the line; people think that where we are with auto-enrolment is going to be sufficient to get them the retirement they dream of. We run the risk of that not necessarily always being the case, but that is another story for another day.

Auto-enrolment has led to multiple pots over many people’s working lives. How do we track those? How do we service them? How do we maximise their value? How difficult is it now for consumers to be able to look at all of those different pots and understand how they relate to each other and what that is going to mean for them at the end of the day?

I was delighted that about six weeks ago the Minister put in place a small pots working group, which will be very useful in understanding where to go in relation to small pots. There are currently 8 million or so in the UK, with the expectation that by 2035 that will have gone up to around 27 million. It is a huge issue that needs addressing. The biggest problem with small pots is their erosion over time due to the effect of charges. We definitely need to address that issue in some way.

On the amendments, I start with Government amendment 7. The ability to conduct transactions is not inherently bad and there are already safeguards in regulations. To rule out every type of transaction in primary legislation feels heavy-handed.

In Committee in the Lords, Earl Howe said:

“It is of course very important that individuals access advice and guidance before making decisions on undertaking significant pensions transactions.”—[Official Report, House of Lords, 2 March 2020; Vol. 802, c. GC207.]

I completely agree with the noble Earl. The regulations are in place around what is significant; it is the word “significant” that is key. There is no need to rule out everything in primary legislation. Why go to all the trouble of informing people about what they have got, if we do not give them any means of interacting with it?

Financial transactions could be to increase or decrease a contribution level or make a one-off lump sum payment. How empowering it would be for the consumer to be able to do that and look, in real time, at the impact of those changes on the end result. We must not restrict the ability to make any transactions; regulations around what transactions should be allowed are already there and will undoubtedly be strengthened in further regulations down the line.

Talk about people losing the safeguards around DB schemes or being moved into DC are wildly off the mark. That cannot be done now, so why on earth would anyone be able to do it just because we change from paper transactions to making transactions through the dashboard? We do not allow it now; why would we allow it in future? It is a ludicrous and scaremongering suggestion, and I do not like it.

Amendments 1, 2 and 15 are not relevant. The dashboard should show what people are going to get, not what they would have got if the rules were different or they had not changed or the Government had not changed this or that policy. It is supposed to be an accurate picture of what someone is actually going to get, at that time. Seeing multiple sets of figures, only one of which is correct and actually relevant to what they are going to get, would just cause confusion for the consumer.

Unfortunately, as many people have let out of the bag, the amendment on the state pension age and the WASPI women in particular was tabled specifically to highlight a campaign issue and the unfairness of a Government policy decision. It cannot be good law and it will create a horrible precedent, however well-meaning the amendment might be, to put such provisions in primary legislation. I hesitate to say it, but it feels a little like tabling amendments to incite dissatisfaction in previous Government policy, but I am sure that hon. Members would never seek to do that.

The Minister said in his opening remarks everything that I had written down on amendments 4 and 5. I found amendment 14 very interesting. People who are concerned with environmental, social and corporate governance targets will always seek them out, and always have done. We do not need to force that information on people who do not want it. Believe it or not, plenty of people think that their pension is something to provide them with an income in retirement, not necessarily a tool to solve the ills of society.

There are consumers who want that level of detail, and they will undoubtedly be able to select the dashboard provider that meets their needs and gives them all the information that they want, but there is no need to make that happen in primary legislation because the market will work itself out and the people who want that information will be able to access it via other providers.

I understand that the hon. Member is concerned about the provision of information, but can he see a downside to it being there?

No, but I also do not see a downside to lots of other types of information being there, so why this type and not others? The purpose of primary legislation should not necessarily be to say all the things that should be there. Lots of things potentially should be there, but that does not mean that they have to be there, and prescribing that they must be there does not really fit in.

I understand that, but the information is designed to assist in decision making, and may be helpful for those who are reviewing their pensions. In the context of much change across society and concern about such issues, does the hon. Member agree that that information may be helpful to those who want to base decisions on ESG information, and has no downside for those who do not?

That may be, but as I mentioned earlier, it muddies the waters. If people want to access that information, there is a slew of providers out there. If they want the one that provides the most ESG information, they will gravitate towards it. We do not need to override the general public’s ability to make an informed choice by legislating to make it happen. As I mentioned earlier, “informed choices” are the big words. The ability to go that way should be entirely left in the hands of the consumer.

As I said, the Minister mentioned everything that I wanted to on amendments 4 and 5, but I reiterate that I am very happy to see the pensions dashboard finally taking a few steps closer towards completion. Hopefully the clause will stand part of the Bill.

It is a pleasure to see you in the Chair this afternoon, Mr Robertson, after the dynamic chairing from your colleague this morning; we made a lot of progress. I will make some observations about dashboards, and talk particularly about Government amendment 7, which, as colleagues know, removes the Drake amendment that was added in the other place. However, I will first comment on how potentially beneficial a good working pensions dashboard coming into existence would be for many millions of pensioners looking to plan for their retirement.

Many of us who have been involved in pensions policy making—in Opposition, in Government or both—know that the holy grails in this area are: first, to get people to think about pension saving in the first place; secondly, to get people, especially when they are younger, to think that they may ever reach retirement age, and to start planning for what their income might be when they get there; and thirdly, having established from a young age that interest in considering what their income will be when they are older and in setting money aside to ensure that they have a secure income, to ask them to navigate the current pensions landscape in the UK, which is asking an awful lot of most of our citizens, because it is extremely complicated and changes over time. We have the confluence of many different sorts of pension availability, from the much more effective DB schemes, which used to be more common but in which 10 million people still have savings, it has to be pointed out, to the evolving and developing DC and individual savings schemes.

One feature of the entire pensions industry, apart from its complexity, and in many ways its lack of transparency, is that a lot of hidden charges eat away at people’s pension entitlements when they finally retire. Of course, once they get to retirement, by definition, their chances of putting more money away to make sure that they have a secure retirement have gone, so the aim of a pensions dashboard is to somehow chart a way through the jungle of different sorts of pension schemes, entitlements and payments so that an interested individual—we already know that there are not enough of those—has a sensible chance of being able to look at something like this and understanding the advantages that setting more money aside from their current income might give them when they come to retire.

That seems such a simple thing to want to achieve, but because of the complexity and the nature of the systems that we have and the way they are put together—the kind of industry and suppliers we have—it is difficult. I suspect that being able to deliver a pensions dashboard that somehow fits across all these systems and is coherent, even at a sensible level, will be a gigantic undertaking. The Minister gave some hint of the massive paddling that the duck is doing below the surface as it serenely floats towards the launch of pensions dashboards. As an ex-pensions Minister, I can only imagine the connections he has been trying to make below that surface.

One of the most important things that we need to do to ensure the successful launch of pensions dashboards is to keep them as simple as possible in the initial stages, and also to try to establish the brand of dashboard at the beginning, so that consumers get used to the idea that there is something out there that they can plug into to get decent, reliable and timely explanations of what they have put into the various systems and what that is likely to give them when they retire. I find it difficult to understand the Government’s hostility to Baroness Drake’s modest amendment, which proposes that the Money and Pensions Service dashboard—which is not commercial and is objective—should be in place for a year before other dashboards might follow. It establishes the idea that the issue of timing should be taken into consideration in the evolution of dashboards.

Obviously, Baroness Drake’s amendment would ban the commercial transactions associated with some of the commercial dashboards that we know will be offered in due course. I understand the reasons she gave for that. Making it easier to transfer money out of a pension, at the click of a button, is probably not a good idea given that, once the money has been transferred, it is very difficult to get it back—and nor can those years of contributions be put back in.

This is an area where pension freedoms, and some of the problems that have come from them, have impinged on the good intentions of the dashboard. The pensions most at risk from pension freedom scams—we will get on to this in later parts of the Bill—are defined-benefit schemes, where much greater amounts of money are there to be taken by the sharks. Over time, as the Minister knows, people’s pots will build up, especially with the creation of CDCs as well as DC schemes, and the nasty sharks who are out to perpetrate grand larceny on people’s pensions—I am talking about criminals rather than the industry—will increasingly focus on them. Although this might not be a huge issue at the moment—opting in and the DC schemes created by auto-enrolment are only just beginning to build up—it will, over time, become increasingly attractive for con artists.

I believe that Baroness Drake’s amendment was a good compromise. I understand the arguments about putting it in primary legislation, because when things are put in primary legislation, that tends to make it harder for them to evolve. I accept that point. However, in his reply to this debate on pensions dashboards, might the Minister explain why he thinks that having the sudden appearance of multiple commercial dashboards all at once—before the concept has properly been bedded in and people understand it—is actually a good thing? Over many years, the industry has been made far too complex by these kinds of things. Perhaps it would be a good idea to sequence, far more than the Minister suggested, the creation of the MaPS dashboard to begin with, and then, over time, to allow other dashboards to be created.

Could the Minister also say more about how he sees the consumer protection regime, which is a very important part of this, fitting in with the evolution and introduction of pensions dashboards, especially if he continues to insist on some commercial dashboards having a transactional capacity? I can understand that we might want to think about that in a few years’ time, when consumers are more sophisticated, but I worry about introducing it all at once. I am very interested to hear what the Minster has to say in his reply.

It has been a while since I have been compared to a duck, but I know there was a compliment buried in the comments about the depth of the swimming I am doing to try to persuade the Committee. Let me be blunt about the Herculean nature of the task: there are 40,000-plus schemes to be created, with a common dataset to be agreed and then made capable, plus all of the information from state pensions. While I revere everything that the former Chancellor George Osborne did—clearly, there were many great qualities that the great man had— it was a little optimistic of him, by anybody’s interpretation, to say in 2016 that this would be produced by 2019. He also anticipated greater engagement by industry and that it would lead the way. I do not wish to have a dig at industry, but the only reason we are mandating this process is that, while we always have to add regulatory guidance, the industry did not take the opportunity it had to embrace it.

I repeat the point I have made on many occasions, both in this House and outside it, to various industry organisations: it is for the industry to prepare—this relates to the point raised by my hon. Friend the Member for West Worcestershire—its data appropriately, in such a way that it is dashboard compliant on an ongoing basis. I make the strong point that failure to do so will have consequences for the individual organisations, and will clearly have consequences for our constituents, who would not be able to access that particular data.

My hon. Friend the Member for Delyn made a fair point about the small pots problem, which the Chair of the Work and Pensions Committee and I have discussed in private and also debated in broad terms in public. Both of us remain concerned that there is a proliferation of pots, that costs and charges implications apply, as the hon. Member for Wallasey outlined, and that solutions need to be found. We are coming together—including the Work and Pensions Committee—to try to find those solutions. Clearly, one solution would involve consolidation, whether on the basis of ability to take small pots that have been eaten up by costs and charges, or on the basis that one is absolutely passionate about a particular ESG issue and wishes to consolidate around an ESG provider. All of those things would be prevented if I were to allow this amendment to continue. I have great respect for the guru of all pensions matters, Baroness Drake, who I have engaged with at length over the last couple of years. However, I believe she is mistaken in her approach to this, and I do not wish to rule out the capability for financial transactions.

If I have not been clear previously, I make it clear now—as the hon. Member for Wallasey invited me to do—that the original product of the pensions dashboard will be simple. It will be a simple find and view service that will then be built on and overlaid as time goes on, not least because not all particular providers will be on board from the word go. I could wait and wait, and then have a big bang moment whereby every single provider was ready and everything was done. Alternatively, the MaPS can start and other organisations slowly but surely come on board and the process is rolled out as it goes forward. I certainly do not believe that we should rule out the issue of financial transaction.

Let me finish the point and then I will give way. On the specific amendment inserted by their lordships, it is unclear what activities would be considered financial transactions. The advice I have been given is that the amendment is very widely drawn and would require new primary legislation before such activities could be commenced in the future. Obviously, while pension Bills are like buses—we wait for ages for one to come along and then do two in a month—I do not anticipate one coming along in a great hurry, though I hope there is another one before the close of this Parliament. However, we definitely assume that this would cover consolidation of pots, transfers between providers, and potentially the raising or lowering of one’s contributions to an individual pension. In those circumstances, it would be utterly illogical, given all the other comments that we are making about the desirability of such an approach, to rule out financial transactions.

Even if I leave to one side what the Minister says about the need for amendment 7, why is he not dealing with this incrementally? Why take the risk not just of allowing commercial dashboards to happen straightaway but of allowing them to be transactional straightaway? Why not build confidence in the system among consumers with the MaPS dashboard, allow a bit of a buffer before commercial dashboards come onstream to ensure that consumers understand what they are entering into, and then, when the regulator and the Government can assess the risks of the transactional ability of the commercial dashboards, come to a point where that is allowed? Why all at the same time? It seems far too risky to me.

That is an outstanding point, which I am sure the hon. Gentleman will make in respect of clauses 119 and 122 on delay to the onset of the dashboard. Many of the points that the hon. Member for Wallasey made relate to costs and charges, which we will come to later, and to the one-year delay argument. I do not believe that it is appropriate for something that is allowable at present—any one of us could go to our individual provider—

The Minister must understand the greater risk from digitisation when the full suite of people’s financial savings—their biggest financial assets—are sat there. For some people who are perhaps not as digitally savvy as others, and who might be taken in by scams, that is a huge risk. At the moment, the paper-based system is rather different.

We will come to scams and the work that the Work and Pensions Committee and the Government are trying to do to enhance the protections on an ongoing basis. It is clear that the Financial Conduct Authority regards this as a regulated activity. There will be an authorisation process for individual providers that wish to be able to do it. It will not be automatic by any stretch of the imagination. We are very mindful of this, as are the pensions dashboard working group, various other user groups and the consumer protection organisations that are part of it—from Citizens Advice, to Which? and others. They are utterly committed to ensuring that this will be a safe process. Going back to the fundamentals of the Lords amendment, I do not believe that it is in the consumer’s interests to rule out financial transactions. I certainly would not support that.

Does the Minister agree that if we look around the world at where commercial transactions have been incorporated into dashboards—for example, in Israel and Denmark—we see that there have been no cases of mis-selling, so any risks spoken about in this debate are somewhat overblown, given that there is no precedent?

I am grateful to my hon. Friend for that point. That does not mean to say that we do not have a regulatory system that ensures that there are protections, but the nature of a dashboard and international examples definitely suggest that this is an empowerment and an assistance to individual consumers.

I will press on, because I am going to answer some of the points that the hon. Lady made. I am mindful that we have spent some time on this particular point and we have a lot to get through.

On matters related to the state pension and triple lock, I leave the triple lock to the Chancellor with good blessing and understanding. I will not get into a rehash of many arguments over the state pension changes made from 1995 and which continued over 13 years of Labour Government. The policy was supported by certain Labour Ministers, including in the DWP. Then, obviously, there was a change of Government and the policy was not necessarily supported. When the hon. Lady talks of the way that people have been treated by the Government, that means all Governments since 1995.

I have persistently defended the actions and the civil servants of the DWP throughout the period between 1997 and 2010. Interestingly enough, so have the courts, because we have recently had the Court of Appeal decision in the BackTo60 claim, which found comprehensively in favour of the Government—not just this Government, but previous Governments—in respect of all matters that apply, including notice.

It is worth putting on the record that the worst problem was what happened with the Pensions Act 2011, as I think the then Pensions Minister, Steve Webb, has since recognised.

I am not going to comment on his capabilities. The bottom line is that that was a persistent level of policy making made by successive Governments from 1993 onwards and utterly continued by the Labour Government, who, to the best of my recollection, proceeded to raise the state pension age to 65 by 2020 in the 2007 or 2008 Act. It was then clearly increased in the 2011 Act. One can argue about why that was done. Perhaps it was a consequence of the great former Prime Minister Gordon Brown’s efforts at manhandling the economy, or perhaps there were other reasons for taking that approach. However, I make the point that I have consistently defended individual Ministers and the Department for their consistent approach to addressing something that all other western countries have done in respect of state pensions. They have all approached it in broadly the same way.

We want the dashboard, and I accept that there is a desire to have many other things on it. We want it to be a simple interface that is accessible to all and that is not overlaid by many different things. With user testing over time, it is possible that more information will be outlined, but the comparable example I give—namely, simpler statements—is appropriate and right.

I seek clarification on the Minister’s position on ruling out and ruling in. He has said that he does not want to rule out financial transactions on the dashboard in the future, but did he also say that they would not be ruled in without primary legislation?

Secondly, the Minister said that some pension schemes may not participate. What will and what will not be compulsory? For those that might not share all the information, will there be an obligation to share some, so that somebody could look at the dashboard and have a complete scan, even if they do not have all the information, in order to know that they have pots out there?

I will deal with the first point about financial transactions. If we accepted the amendment as drafted by the House of Lords, we would not be able to proceed with financial transactions without future primary legislation. I passionately believe that, with the suitable guidance and protections that we all want, consolidation is appropriate, and that would be a financial transaction. It should definitely be permissible on an ongoing basis, arising out of information proceeded and obtained by a dashboard. It is absolutely that sort of empowerment that the dashboard will offer, and it is entirely the right thing.

Clearly, that is my view. There is a dashboard delivery organisation and the Money and Pensions Service, and a whole host of user groups are also involved. I have communicated my strong view. I certainly do not want to rule it out in the future, which is the desired effect of the amendment. The reality is that if I allow Baroness Drake’s amendment to go ahead, it would restrict the capability of the dashboard massively in the future. That is not something I am prepared to do.

I have addressed many different points. Given the time, I will pause there and let others reflect.

Question put, That the amendment be made.

Amendment 7 agreed to.

Amendment proposed: 1, in clause 118, page 104, line 41, at end insert—

“(5A) In subsection (5)(b), the “state pension information” to be prescribed must include—

(a) a forecast of the individual’s future state pension entitlement,

(b) information relating to the individual’s forecasted total income through the State Pension in the ten years following their 60th birthday,

(c) information relating to the individual’s estimated total income through the State Pension in the ten years following their 60th birthday, had the pensionable age for men and women not been amended under the Pensions Act 2011,

(d) a statement of the difference between the forecasts in (5A)(b) and (5A)(c).”.—(Neil Gray.)

This amendment seeks to require the provision through the pensions dashboard service of information relating to the effect on the state pension income expected by those affected by changes to the timetable for equalisation of the state pension age made by the Pensions Act 2011.

Question put, That the amendment be made.

Amendment proposed: 5, in clause 118, page 105, line 20, at end insert—

“(6A) A requirement under subsection (6)(d) may require the provider of a pensions dashboard service to communicate to an individual using the dashboard the difference between—

(a) provision of information,

(b) provision of guidance, and