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Mr. Ainsworth: Clause 272 will not apply when there is to be no recovery. The hon. Gentleman is right; it is about associated joint property in default of agreement. The principle of recovery has not yet been established. The clause deals with associated property. The court may decide that there should be no recovery of that property. The issue is how to deal with the separation of those properties, and how to behave proportionally with regard to a separation when an agreement cannot be reached. Obviously, in the first instance there should be an attempt to reach an agreement so as to separate out the recoverable property.
When an order is made to recover the proceeds of crime, the recoverable property is clearly recoverable. It is not necessarily yet the case that the associated property is recoverable. An agreement is attempted in order to separate that out. If an agreement cannot be reached, subsection (4) will ensure that both the owner of the associated property and the interests of the enforcement authority are dealt with in a fair and proportionate way. I do not know whether that helps the hon. Gentleman.
6.15 pm
Mr. Grieve: It certainly does. The Minister began his comments by saying one thing, and switched to saying another half way through.
Mr. Ainsworth: You noticed.
Mr. Grieve: As I have occasionally done the same thing myself in the past four weeks, I shall not hold that against the Minister.
I read the explanatory notes, which suggested to me the idea that the provisions might be mechanisms by which payment might be postponed. For instance, including someone whose interest in the house is
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extinguished would create the right for him to live in the house for the rest of his life. I assumed, perhaps wrongly, that ultimately the enforcement authority would get its cash, although I accept that an element of interest might not be present in that. I may be wrong; I simply went by what I read in the explanatory notes. I think that the Minister's argument has more force, so I shall be sensible and partly agree with him. That is not how I read the clause, but perhaps I misunderstood it.
Mr. Ainsworth: I thank the hon. Gentleman for his kindness. I had hoped that he would not notice the seam running through my argument, but that was too much to ask. I have outlined the circumstances, and now that he has received my clarification, perhaps he is less unhappy.
The hon. Gentleman's amendment would instruct the court about what weight to give each of the factors. That would, arguably, conflict with the court's duty under the Human Rights Act 1998, since it is for the court to decide on its own proportionality, taking into account all the circumstances of the case. I hope that with his new understanding of the circumstances, he is prepared to withdraw his amendment.
Mr. Grieve: As a Christmas present of good will to the Minister, I shall say that by changing his argument half way through his speech he has persuaded me that I should not press the amendment to a Division. I shall reconsider the matter and decide whether we should return to it on Report. I concede that if the provision means that property may never be recovered, the proposed balance makes more sense. I had thought that the proposal was a method of postponement in arriving at the best way of recovery, and I felt that in those circumstances the rights of the individual should take priority over the rights of the enforcement authority. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendment made: No. 314, in page 157, line 16, at end add
'and to any other relevant circumstances'.—[Mr. Bob Ainsworth.]
Clause 272, as amended, ordered to stand part of the Bill.
Clause 273
Payments in respect of rights under pension schemes
Mr. Foulkes: I beg to move amendment No. 315, in page 157, line 27, leave out 'and' and insert 'to'.
The Chairman: With this it will be convenient to take the following: Government amendment No. 316.
Government amendment No. 317.
Government new clause 8—Consent orders: pensions.
Mr. Foulkes: I rise to speak not only to give my hon. Friend the Under-Secretary a rest from the process of attrition that he has experienced during the past hour or so, but because if I did not get up soon, given the temperature in the Room, hypothermia would set in. I
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think that someone who was born in the same part of the world as the hon. Member for Lewes was must be in charge of the heating here.
Norman Baker: It is very bracing.
Mr. Foulkes: None the less, I shall now move on to the amendments.
Clauses 273 to 275 provide that if recoverable property is lodged in a pension scheme, the value of the rights obtained with that recoverable property can be recovered by the director or by Scottish Ministers. The provisions on pensions are intended to close a possible loophole and deter abuse, as I think that I said a few days ago; or was it a few weeks ago? It seems like years. [Interruption.] I was a much younger man at the time.
Clause 276 provides that recovery orders can be made on terms agreed by the parties. That reflects the fact that many civil actions are settled by agreement between the parties before the final hearing , as the hon. Member for Beaconsfield will be especially aware. The clause also reflects the experience of other civil recovery schemes around the world, which have found that civil recovery respondents, in common with other respondents in civil cases, do not always contest actions brought against them.
We always intended that recovery from pension schemes would be able to proceed with the consent of the parties involved. However, clause 276 as currently drafted does not cater for the particular requirements of pensions. The new clause and the three consequential amendments will remedy the defects.
New clause 8 is the key to the changes being made. It makes specific provision for cases in which an order reached with the agreement of the parties concerned under clause 276 involves pension rights. In the case of other types of property, once the court has made a recovery order, recoverable property will normally be vested in the trustee for civil recovery. The trustee is then required to realise the value of the assets vested in him. The Bill makes several detailed provisions as to how recovery orders will operate.
Rights in a pension scheme cannot be vested in the trustee for civil recovery in this way. They cannot be transferred to another person and subsequently sold, because they are neither a transferable nor a tradeable commodity. Therefore, clause 273 provides that the trustees or managers of the pension scheme must pay an amount equivalent to the value of the rights obtained with recoverable property to the trustee for civil recovery. The clause also allows for costs incurred by the pension scheme to be recouped. Clauses 273 to 275 make other necessary provisions relevant to pensions.
The Bill recognises that the recovery of rights in a pension scheme raises issues that require special provision. It is not prescriptive on consent orders under clause 276. It leaves the parties to the agreement to reach an outcome satisfactory to them and to the court. That will be an effective approach for most types of property, and will leave the parties a considerable degree of flexibility. However, when we were considering pensions, it was clear that it was not
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appropriate to leave the arrangements completely at large. That is because any agreement reached will impact on the pension scheme and the pension scheme administrator. Consequently, it is necessary to apply several provisions that would apply in the case of a recovery order made under clause 267 to a recovery order made by consent.
New clause 8 will do that. It provides that when a recovery order is made by virtue of clause 276 and rights under a pension scheme are involved, the order may not provide for rights to be vested in the trustee for civil recovery. Instead, it provides that if the trustees or pension scheme managers are party to the agreement reached, the order may require a payment to be made in accordance with the agreement. It also provides that the trustee or scheme manager has the power to do that.
Additionally, the new clause makes provision for the recovery of costs by the trustees or scheme managers in the same manner as such provision is already made in clause 273. Finally, the clause applies aspects of clauses 273 to 275 that are relevant to recovery orders made by consent.
When the new clause is inserted into the Bill, it will appear after clause 276. Its insertion will necessitate some textual amendments to the other pensions clauses. Amendment No. 315 makes a minor change to the wording of clause 273, to take account of the addition of the new clause. Amendment No. 316 makes a minor change to clause 276. Finally, amendment No. 317 inserts a reference to the new clause in clause 276. The three amendments are therefore entirely consequential on the insertion of the new clause.
I should emphasise that it is anticipated that there will only be 15 to 20 civil recovery cases a year—which should be taken into account in debates on other parts of the Bill. Whether any of those cases will involve rights under a pension scheme will depend on the facts of each case. It seems unlikely, however, that the Bill will have significant implications for the pensions industry as a whole. If a civil recovery case involves pension rights, the new clause will ensure that it is possible for an agreement to be reached by the parties in a way that recognises the particular needs of pension schemes.
I hope that all Committee members are satisfied with those proposals, and that the hon. Member for Henley (Mr. Johnson) will send me one of his Christmas cards to thank me for explaining them, as he has been using his time in Committee so valuably by writing all his Christmas cards—as, indeed, have many other members of the Committee.
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