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'(f) in conjunction with the Pension Protection Fund Board to take all reasonable steps to maintain the cost of the levy on occupational pension schemes to the minimum compatible with the Regulator's other duties under this Act.'.
Government amendments Nos. 62 to 73.
Amendment No. 8, in clause 50, page 35, line 20, at end insert
'save that the register will be open to members of the public during normal working hours, but with the home addresses of individual scheme trustees deleted.'.
Amendment No. 9, in clause 57, page 39, line 40, at end insert
'but only to the extent that the collection of such information appears to the Regulator proportionate to the benefits to be obtained from collecting that information.'.
Government amendments Nos. 78 and 79.
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Amendment No. 10, in clause 62, page 44, line 9, at end insert—
'(8) Where such an inspection is carried out under this Act, and no further action is taken by the Regulator following such inspection, the owners or occupiers of the relevant premises are entitled to claim from the Regulator the reasonable costs of such inspection.'.
Government amendments Nos. 80 to 82.
Amendment No. 11, in clause 63, page 45, line 9, at end insert—
'(7) Where such an inspection is carried out under this Act, and no further action is taken by the Regulator following such inspection, the owners or occupiers of the relevant premises are entitled to claim from the Regulator the reasonable costs of such inspection.'.
Government amendments Nos. 83 to 86.
Amendment No. 12, in clause 79, page 55, line 21, at end insert—
'(3A) Any code of practice issued by the Regulator must include an analysis of the costs and benefits of the code'.
Government amendment No. 87.
Amendment No. 13, in clause 80, page 56, line 3, at end insert
'which includes a draft analysis of the costs and benefits of the code'.
Government amendments Nos. 89 to 96.
Amendment No. 3, in schedule 1, page 204, line 2, leave out
'with the approval of the Secretary of State'.
Government amendments Nos. 134 and 135.
Mr. Osborne: Now that my shadow Secretary of State has done his star turn, it is back to the understudy.
Mr. Osborne: That is the kiss of death, as the Pensions Minister knows. I shall make sure that it does not appear on the record.
The amendments are designed to increase the independence of the new pensions regulator, and to reduce the regulatory impact on pension schemes and those employers who still provide them. Central to the background to this legislation and to our discussions in Committee has been the collapse in confidence in savings and pensions, in regard not only to the halving of the savings ratio but to the closure of final salary schemes. Indeed, in the last week or two, some further developments have taken place to set the amendments in context.
The chairman of Aviva—the owner of Norwich Union and the biggest life assurer in the country—warned in the Financial Times on Monday:
"We will have a generation of elderly people coming soon who will have a hard time to live above the poverty line. No one should be proud or pleased with that scenario."
Indeed, Aviva says that it is seeing faster rates of savings growth in many continental European markets than in the UK, because of people's reluctance to save. A report from JP Morgan Fleming last week found that the number of defined benefit schemes that had closed or been restricted to new staff had doubled in two years, and that 61 per cent. of the top 350 pension funds had
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closed or restricted availability to defined benefit schemes. Indeed, they are shifting to defined contribution schemes.
The reason that I have made those points is that a central criticism of the Bill is that it will increase the burden on occupational schemes. It will do so partly for good, honourable reasons such as the creation of the PPF and the levy that that will impose, but that will nevertheless create an impact in regard to some of the measures in the Bill. It is therefore incumbent on us to reduce the burden on schemes as far as possible in other areas of the Bill, so that employers are still encouraged to create final salary schemes for their employees. At the moment it is not the industry's view that the burden will be reduced. The Association of Consulting Actuaries produced a report for this debate and surveyed employers. It found that a majority of firms felt that the measures would decrease occupational pension scheme coverage. Fewer than one in 10 felt that the measures would improve coverage. Close to nine out of 10 firms said that the Bill's measures would either add to costs or make no difference. That is against the background of the Government's claim that there would be savings of £130 million from the Bill. Clearly the industry does not accept that.
Amendments Nos. 5 and 6 are an attempt to recognise a danger that most of the industry believes to be real and present. The amendments would give the pensions regulator additional and specific statutory objectives, alongside the four set out in clause 5. The objectives in the Bill deal with matters such as protecting the benefits of members and reducing the risk that they might have to fall back on the PPF. Those are good objectives and it is good that the Government have taken up the recommendation of the National Audit Office and put statutory objectives in the Bill.
We propose to add a couple of objectives, one of which—on the regulator—would be to promote occupational pension provision by minimising regulatory burdens applying to well-run schemes and their sponsoring employers. It is a broad remit for the regulator; to look not just at itself, but at the world of occupational pension provision, how to encourage it and how to stop the Government—perhaps unwittingly, perhaps not—discouraging it.
In Committee in March, the Minister said that the proposals were worthy aims but were unnecessary because the new regulator would adopt a risk-based approach. Perhaps that is what he will say today. We think that that is a little complacent and we do not see why the regulator should not have a statutory obligation to promote occupational pension provision and to minimise the regulatory burdens on well-run schemes.
Amendment No. 6 makes it an objective for the regulator, in conjunction with the PPF, to take all reasonable steps to maintain the costs of the levy on occupational pension schemes to the minimum compatible with the regulator's other duties under the Bill. We hope that the regulator will do that anyway, but we think that it would be useful to have that written into the Bill. In Committee, the Minister said that there were measures in the Bill to check the costs of the levy but, again, we felt that to be too complacent. We want to keep the regulator from running away from itself and creating a mini-empire.
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In the regulatory impact assessment, the Government came up with the extraordinary figure that the Bill would lead to savings of £130 million, a figure with which almost the entire industry disagrees. Given that overwhelming view, the purpose of the amendments is to give the regulator the job of monitoring costs and to see whether the Government or the industry is right. We think that it would be sensible and useful to include that in the Bill.
5.15 pm
Our other amendments are designed to ensure that the regulator's powers are kept to the minimum required for it to do the job that we all want to see it do. As currently drafted, the Bill gives the regulator extensive powers to seize documents, enter premises and interview people. I have vague recollections of an afternoon in Committee when we went through some of those powers and I made the point that Parliament should always be cautious about expanding the state's power to enter premises, interview people and seize documents. Our amendments would introduce some checks on that power.
Amendment No. 9 would deal with the broad power given to the regulator in clause 57 to
"collect any information which appears to it to be relevant to the exercise of the functions"
of the PPF. We would qualify that by saying that that should happen
"only to the extent that the collection of such information appears to the Regulator proportionate to the benefits to be obtained from collecting that information."
That judgment would be made only by the regulator, not by anyone else. It is difficult to see how the Minister could disagree with that sensible provision, although no doubt we will shortly hear how and why.
Under amendments Nos. 10 and 11, when the regulator carried out an inspection and no further action was taken, owners and occupiers would be entitled to claim reasonable costs from the regulator. An inspection might be very expensive and disruptive to business, and it is fair that there should be some redress and some check on the regulator's zealotry. Amendments Nos. 12 and 13 merely require that where the regulator produces a code of practice—a new power that it is being given—that
"must include an analysis of the costs and benefits of the code".
Again, that would force the regulator to consider the consequences of its actions in the real world.
Other amendments would ensure that the regulator was genuinely independent and open, and gained the confidence of the public and of pension schemes. Through amendment No. 1 we are saying that as the chairman of the regulator is already appointed by the Secretary of State, it is surely permissible to allow the chairman to appoint the board of the regulator, rather than all members being appointed by the Secretary of State. The chairman should be able to choose his or her own board, although the amendment includes the perfectly reasonable proviso that the Secretary of State should approve those appointments. We must get the balance right and let the regulator have some freedom over how it wants to set up and run its operations.
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Amendment No. 3 would give the regulator the power to employ staff on his or her own terms, by amending schedule 1. Amendment No. 2 would require at least one non-executive member of the regulator to be a representative of an occupational pension scheme. We think that too often, Governments—this is true of Conservative as well as Labour Governments—operate in a vacuum, particularly when they have been in power for a while and are out of touch with what is going on in the real world. This proposal would force the regulator to include someone with real first-hand experience of the impact of the regulator's action on occupational schemes.
In amendment No. 8, in a spirit of openness, we propose that the register of occupational pension schemes compiled by the regulator should be open to public scrutiny. It should not give the home addresses of the trustees, but should be an open public register, rather like the open public register of companies at Companies House. That would help with pension tracing, but as I said, it would also be useful in terms of freedom of information. The Minister said in Committee that this was a perfectly reasonable amendment. Although he was concerned about human rights, the right to privacy and so on—he sounded a bit like Donald Rumsfeld when he fell back on the human rights defence—he undertook to reflect on the strong points that I had made. That is presumably why Mr. Speaker, in his wisdom, allowed me to re-table the amendment. It will be interesting to hear what the Minister has to say.
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