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Mr. Hague: I shall give way one more time.

Mr. Field: Does the Minister now accept that he has made the case for pensioner trustees? He is saying that employers will not abide by those schemes unless they can have a majority of their people on the scheme to represent their views, despite all his talk that trust law will govern those trustees. If it is good enough for the employer to want a majority of members to represent his interests, surely there is a case for ensuring that there is a pensioner representative of pensioners' views.

Mr. Hague: There is a strong case for ensuring that there are member -nominated trustees--by which I mean, in that context, trustees nominated, not necessarily only by the active members, but by active and pensioner members. However, let me discuss in more detail the arguments of the hon. Member for Birkenhead (Mr. Field).

We recognise that there are many excellent schemes, more than one third of whose trustees are member-nominated trustees. We recognise that there are many schemes that have pensioner-nominated trustees, and that they can do a good job. The hon. Member for East Kilbride said that the Government had said that pensioners were not trusted or accepted by other members. That is a caricature of the argument made by my noble Friend Lord Mackay of Ardbrecknish in another place. The Government are not arguing that pensioners make bad trustees--quite the reverse. We agree with all the positive arguments made by the Goode committee and by the hon. Gentleman in his opening remarks. Our worry is about the mandatory nature of the proposal.

If pensioners are given a separate facility by statute to appoint a pensioner trustee, other members may well have reservations about the implications of that privileged position compared with the position of other members, and might fear that the pensioner trustee would be inclined to act in the interests of pensioners rather than of scheme members as a whole.

Mr. Stern: Will my hon. Friend give way?

Mr. Hague: I have to get on, but I give way to my hon. Friend.

Mr. Stern: Now that my hon. Friend has mentioned that matter, I hope that he will answer the argument that I made earlier--that while employers and members have the opportunity of an out from the scheme, pensioners are the one group which is irretrievably locked in, and that is the very group to which he is denying representation.

Mr. Hague: My hon. Friend makes a fair argument, but we must set it in the balance against the other arguments that I am about to make. As he clearly said in his speech, there may be no perfect solution and there are very different ways of considering those matters. We must balance some factors against others.

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I believe, and the Government believe, that creating artificial distinctions between the members to whom, collectively, we are giving rights in the Bill may encourage members to believe that trustees are somehow representatives of the category of member to which they personally belong. Active members may come to regard a statutory pensioner trustee provided by the amendment as somehow called to represent the interests of pensioners.

Arguments can be made, once one has accepted that there should be a mandatory provision for a pensioner trustee, for provision for deferred pensioner trustees or for specific rules to be laid down to say that there must be active member trustees. One can extend that argument to considerable lengths, and argue that widows should be represented in some way. Many different interests are involved, and venturing into the mandatory representation of specific interests creates many more anomalies and difficulties than it is likely to solve.

That amendment would also not do justice--this is the argument of my hon. Friend the Member for Bristol, North-West (Mr. Stern)--to the wide variety of schemes which currently operate. The provisions in the Bill will allow schemes to develop their own arrangements for the selection of trustees, subject to the approval of the active and the pensioner members. Trustees will make those proposals to each active and pensioner member. Members' interests will be protected by a rigorous statutory consultation procedure, which includes consultation on all aspects of the selection process and the conditions necessary to become a member-nominated trustee. For example, a scheme might decide that its circumstances required a pensioner trustee, or perhaps an independent trustee; whatever the trustees' proposals, however, pensioner members as well as active members will have the opportunity to approve or reject them. It seems clear that, where scheme membership consists of a reasonable proportion of pensioners, those members will be in a strong position to influence the nomination and selection process.

There is a third reason for rejecting amendment No. 1. It would upset the crucial balance between the interests of members and employers on the trust board. It would do that because it provides for a pensioner trustee in addition to whatever proportion of member-nominated trustees a scheme had determined. That would raise the minimum requirement for member-nominated trustees from at least one third to at least one half and, in many cases more than half, for all but the very largest trustee boards. Only if the board had exactly nine or more than 10 trustees could an employer be confident of being able to nominate a majority of them under that proposal. That would conflict with the point that I made earlier about the balance that we have struck.

The amendment would create artificial distinctions between members and constrain the freedom of pension schemes to develop selection rules best suited to their circumstances. It would upset the balance of interests contained in the statutory minimum of at least one third member-nominated trustees.

I emphasise that we have no objection whatever to pensioner trustees if that is what scheme members want. In the Bill we are giving millions of pensioners the right,

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which they do not have and have never had in the past, to be consulted along with the active membership. It is all very well for Labour Members to shake their heads, but the fact that pensioners will be consulted is set out on the face of the Bill. It is clear that they will be consulted when we have passed the Bill into law. Amendment No. 16 seems to be designed to provide a back-door way of putting pressure on sponsoring employers to agree to have at least 50 per cent. member- nominated trustees. If they do not, the amendment would impose on them the cost, which could be substantial, of an independent trustee. There is no reason to believe that a scheme with under 50 per cent. of member-nominated trustees would necessarily benefit from the imposition of an independent trustee. It would be wrong to require the regulatory authority to consider applications made on that basis. Of course, if there are genuine concerns about the running of a scheme, however many member-nominated trustees it may have, the regulatory authority has the necessary powers under clause 7 to appoint an independent trustee.

It is a pity that amendment No. 12 has not been referred to very much in the course of our discussions as it is one with which I have some sympathy. It was tabled by my hon. Friend the Member for Brighton, Kemptown (Sir A. Bowden) and the hon. Member for Birkenhead. I appreciate that in larger schemes 10 per cent. of members will be a considerable number.

The practical details of the statutory consultation procedure are to be prescribed in regulations. That is still subject to consultation with those who have experience of the day-to-day operation of schemes. It is therefore not clear at this point that the amendment hits on the right number. The figure of 5,000 might be too low or, as I suspect, it may be too high. I am therefore unable to accept the amendment. I can assure my hon. Friend the Member for Kemptown and the hon. Member for Birkenhead that I will give the spirit of that amendment very careful consideration with a view to incorporating a provision on the same principle in secondary legislation.

For the reasons that I have given, I think that it would be wrong to sympathise in the same way with the other amendments. The Bill will represent a major extension of the rights of members of pension funds whether they be active or pensioner members. It is important for us to make that clear and for it to be clearly communicated in the way that my hon. Friend the Member for Sevenoaks has asked for. However, it would be wrong to elevate one group of members above the other groups of members, which is what these amendments would do.

Mr. Ingram: We have had a useful and interesting debate. It is interesting that the Minister is the only hon. Member who has argued against amendment No. 1. Every other contribution has argued for the principle of pensioner trustees and refuted all the arguments that were advanced by the Minister in his response. He has justified employer-based trustees on a sectional basis but denies that right to other groups that have the right, in the case of large schemes, to seek equal representation.

The case has been strongly argued. I do not intend to press amendment No. 16 to a Division. Given the weight of the arguments advanced in support of amendment No. 1, however, it is right that we should vote on that amendment in due course.

Amendment negatived.

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Clause 16

Requirement for member-nominated trustees

Amendment proposed: No. 1, in page 9, line 39, at end insert-- `(6A) The arrangements must provide that when a scheme has more than 850 members, and pensioner members comprise a majority, one additional trustee shall be nominated, who shall be a pensioner member of that scheme.'.-- [Mr. Ingram.]

Question put, That the amendment be made:--

The House divided: Ayes 252, Noes 282.

Division No. 194] [10.00 pm

AYES

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Abbott, Ms Diane

Adams, Mrs Irene

Ainger, Nick

Armstrong, Hilary

Ashdown, Rt Hon Paddy

Ashton, Joe

Banks, Tony (Newham NW)

Barnes, Harry

Barron, Kevin

Battle, John

Bayley, Hugh

Beckett, Rt Hon Margaret

Beggs, Roy

Bell, Stuart

Benn, Rt Hon Tony

Bennett, Andrew F

Bermingham, Gerald

Berry, Roger

Betts, Clive

Blunkett, David

Boateng, Paul

Bowden, Sir Andrew

Bray, Dr Jeremy

Brown, Gordon (Dunfermline E)

Brown, N (N'c'tle upon Tyne E)

Bruce, Malcolm (Gordon)

Burden, Richard

Byers, Stephen

Caborn, Richard

Callaghan, Jim

Campbell, Mrs Anne (C'bridge)

Campbell, Ronnie (Blyth V)

Campbell-Savours, D N

Cann, Jamie

Carlile, Alexander (Montgomery)

Chidgey, David

Chisholm, Malcolm

Church, Judith

Clapham, Michael

Clark, Dr David (South Shields)

Clarke, Eric (Midlothian)

Clarke, Tom (Monklands W)

Clelland, David

Clwyd, Mrs Ann

Coffey, Ann

Cohen, Harry

Connarty, Michael

Corbett, Robin

Corbyn, Jeremy

Corston, Jean

Cousins, Jim

Cunliffe, Lawrence

Cunningham, Jim (Covy SE)

Cunningham, Roseanna

Dalyell, Tam

Darling, Alistair

Davidson, Ian

Davies, Bryan (Oldham C'tral)

Davies, Rt Hon Denzil (Llanelli)

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Davies, Ron (Caerphilly)

Davis, Terry (B'ham, H'dge H'l)

Denham, John

Dewar, Donald

Dixon, Don

Dobson, Frank

Donohoe, Brian H

Dowd, Jim

Dunnachie, Jimmy

Dunwoody, Mrs Gwyneth

Eagle, Ms Angela

Eastham, Ken

Etherington, Bill

Evans, John (St Helens N)

Ewing, Mrs Margaret

Fatchett, Derek

Faulds, Andrew

Field, Frank (Birkenhead)

Flynn, Paul

Forsythe, Clifford (S Antrim)

Foster, Rt Hon Derek

Foster, Don (Bath)

Foulkes, George

Fraser, John

Fyfe, Maria

Galloway, George

Garrett, John

Gerrard, Neil

Godman, Dr Norman A

Godsiff, Roger

Golding, Mrs Llin

Gordon, Mildred

Graham, Thomas

Grant, Bernie (Tottenham)

Griffiths, Win (Bridgend)

Grocott, Bruce

Gunnell, John

Hain, Peter

Hall, Mike

Harman, Ms Harriet

Harvey, Nick

Hattersley, Rt Hon Roy

Henderson, Doug

Hill, Keith (Streatham)

Hinchliffe, David

Hodge, Margaret

Hoey, Kate

Hogg, Norman (Cumbernauld)

Home Robertson, John

Hood, Jimmy

Hoon, Geoffrey

Howarth, George (Knowsley North)

Howells, Dr. Kim (Pontypridd)

Hoyle, Doug

Hughes, Kevin (Doncaster N)

Hughes, Robert (Aberdeen N)

Hughes, Roy (Newport E)

Hughes, Simon (Southwark)

Hutton, John

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