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Standing Committee B
Thursday 22 April 2004
[Mr. Win Griffiths in the Chair]
Consultations about regulations
Question proposed [this day], That the clause stand part of the Bill.
Question again proposed.
The Parliamentary Under-Secretary of State for Work and Pensions (Mr. Chris Pond): Committee members will be aware of the popular Radio 4 programme ''Sorry I Haven't a Clue''. That is not my response to the questions asked before we adjourned, but on that programme, contestants are required to sing along to the soundtrack of a popular song. The song is then paused and the winner is the contestant who is still singing the right part of the song when the soundtrack is turned on again. My challenge today is whether I can remember the right point in the sentence at which our sitting adjourned. In that context, I shall say, ''This would be inappropriate''—let us see whether that matches with the Hansard report of this morning's proceedings.
The hon. Member for Eastbourne (Mr. Waterson) was concerned that not all groups would be consulted, including those with the most passing of interest in the matter. I was explaining that it might be inappropriate for consultation to take place, for example, with the employer when the matters that were being consulted on were of concern to the trustees. I was simply making the point that consultation should be with the appropriate individuals and groups.
Concern was also raised about the consultation time, which would usually last for 12 weeks, and whether it could be undertaken in a shorter time in certain circumstances, such as when urgent changes have to be made and it is necessary for the consultation process to take place urgently.
Mr. Nigel Waterson (Eastbourne) (Con): I hope that the Under-Secretary and I are not misunderstanding each other, but my worry about subsection (2)(b) is that there would be no consultation, not that the process would be shortened. It states that subsection (1) would not apply
''where it appears to the Secretary of State that by reason of urgency consultation is inexpedient''.
That suggests that consultation would not occur at all.
Mr. Pond: As I explained, within the general principle that we wish to consult whenever possible, we hope that consultation will take place even in circumstances in which we cannot undertake the full 12 weeks. However, there will be circumstances in which action will have to be taken almost immediately and consultation is not possible. We must consider the full range of possibilities but within the general context
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that, whenever possible, consultation should take place.
The hon. Member for Northavon (Mr. Webb) and my hon. and learned Friend the Member for Redcar (Vera Baird), who sadly has not been able to join us, raised an important point about the six-month period during which consultation does not need to take place. That is a fairly standard provision, carried over from similar legislation. We trust that there has been sufficient scrutiny of such legislation and that further consultation would not be appropriate within the first six months of the Bill coming into effect.
Mr. Waterson: I have two points to make. First, the fact that such a provision appears elsewhere does not mean that it is not gobbledegook in that legislation, too. The consultation concerns the regulations, to be established in a statutory instrument, which we have not seen. Given some of the principles that have been painfully extracted and hammered out in Committee, we are talking about two different animals. Secondly, I still do not understand the reason behind the magic period of six months. I am not claiming any great credit, but I think I was the first to raise the matter, which also worried the hon. and learned Member for Redcar and the hon. Member for Northavon. I suspect that all three of us—well, if all three of us were here—would be puzzled by what the Under-Secretary has said so far. However, perhaps he has not reached the relevant part of his briefing notes.
Mr. Pond: I apologise to the hon. Gentleman if I left him out of my comments. He described the provision as gobbledegook; in that case, it is also gobbledegook in the Pension Schemes Act 1993 and the Pensions Act 1995. I will leave that statement on the record without further comment.
The principle is that, as the first sets of regulations come into force, following parliamentary debate on the policy during the Bill's passage through Parliament, the obligation to consult does not apply. That is the purpose of the six-month cut-off point. However, that does not prevent consultation from taking place and, where appropriate, it will take place.
Question put and agreed to.
Clause 240 ordered to stand part of the Bill.
Clauses 241and 242 ordered to stand part of the Bill.
Minor and consequential amendments
Amendments made: No. 90, in
schedule 11, page 229, line 6, at end insert—
' In section 53 (supervision: former contracted-out schemes), after subsection (1B) insert—
''(1C) But where a direction under subsection (1) conflicts with a freezing order made by the Regulatory Authority under section 20 of the Pensions Act 2004 in relation to the scheme then, during the period for which the freezing order has effect, the direction to the extent that it conflicts with the freezing order—
(a) is not binding as described in subsection (1), and
(b) is not enforceable as described in subsection (1B).'''.
No. 91, in
schedule 11, page 229, line 6, at end insert—
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' In section 99 (trustees' duties after exercise of option)—
(a) in subsection (4) after ''circumstances,'' insert ''by direction'', and
(b) in subsection (4A) for ''in relation to applications for extensions under subsection (4)'' substitute ''requiring applications for extensions under subsection (4) to meet prescribed requirements''.'.
No. 92, in
schedule 11, page 229, line 6, at end insert—
' In section 101J (time for compliance with transfer notice)—
(a) in subsection (2) after ''circumstances,'' insert ''by direction'', and
(b) in subsection (6)(a) for ''in relation to applications for extensions under subsection (2)'' substitute ''requiring applications for extensions under subsection (2) to meet prescribed requirements''.'.
No. 93, in
Mr. Pond: I beg to move amendment No. 571, in
schedule 11, page 229, line 8, at end insert—
' In section 146 (functions of the Pensions Ombudsman)—
(a) for subsection (1)(f) substitute—
''(f) any dispute, in relation to a time while section 22 of the Pensions Act 1995 (circumstances in which Regulator may appoint an independent trustee) applies in relation to an occupational pension scheme, between an independent trustee of the scheme appointed under section 23(1) of that Act and either—
(i) other trustees of the scheme, or
(ii) former trustees of the scheme who were not independent trustees appointed under section 23(1) of that Act, and'', and
(b) in subsection (8), in paragraph (a) of the definition of ''independent trustee'' for the words from ''section 23(1)(b)'' to the end substitute ''section 23(1) of the Pensions Act 1995 (appointment of independent trustee by the Regulatory Authority)''.'.
The Chairman: With this we may discuss the following:
Government amendments Nos. 572 to 578.
Government new clause 38—Independent trustees.
Mr. Pond: I want to take Committee members for a stroll down memory lane. When we discussed clause 31, we committed ourselves to tabling a new clause to deal with independent trustees. That new clause is now before us.
New clause 38 amends sections 22 to 25 of the 1995 Act. It gives the regulator power to appoint an independent trustee if the employer is insolvent or if there is a pension protection fund assessment in relation to the scheme. The 1995 Act requires an insolvency practitioner or official receiver to ensure that an independent trustee is in place at all times. If there is none, they are required to appoint one. There is evidence to suggest that an independent trustee is not always appointed. Currently, the only way to resolve that situation is for a member of the scheme to apply to court to force the insolvency practitioner or official receiver to appoint an independent trustee. However, that does not happen often, mainly because of the potentially prohibitive personal costs to the
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member. The new clause will help to ensure that an individual trustee is appointed where required by empowering the regulator, rather than the insolvency practitioner or official receiver, to appoint an independent trustee.
My hon. Friends the Members for Cardiff, West (Kevin Brennan) and for Hamilton, South (Mr. Tynan) expressed unease about the fees charged by independent trustees, especially when a scheme is in wind-up. By enabling the regulator to decide whether an independent trustee appointment is appropriate, rather than by requiring an insolvency practitioner or official receiver to appoint one in every case, we do away with unnecessarily costly appointments. The regulator will have the power to opt instead to appoint a trustee under section 7 of the 1995 Act, and that trustee could be a member or a lay trustee.
The regulator will also have the power to determine whether the employer, the scheme or both should meet the costs of any independent trustee that the regulator appoints. The new clause also allows the regulator to establish a register of independent trustees. It requires any independent trustee that the regulator appoints to come from that register. We will set out in regulations the minimum criteria for inclusion on the register, but I assure hon. Members that the measure will enable the regulator to monitor the fees charged by independent trustees. I know that that innovation will be welcomed by Members on both sides of the Committee.
A mixed bag of consequential amendments accompany the new clause; I offer my apologies for that, but they are all necessary technical and editing changes resulting from the amendments to section 22, and the replacement of sections 23 and 24, of the 1995 Act. The amendments further demonstrate our resolve to protect members in occupational pension schemes and their rights. The measures are supported by the insolvency practitioner and independent trustee groups. I hope that the new clause and the related amendments are accepted.