Previous Section Index Home Page


Education and Library Boards

The Parliamentary Under-Secretary of State for Northern Ireland (Mr. Barry Gardiner): Last November, following substantial overspends by the Belfast and the South Eastern education and library boards in 2003–04, I announced that a statutory inquiry would be held into financial management and control standards in the two boards. The inquiry, conducted by Dr. Bill Jack, former Comptroller and Auditor General for Northern Ireland, considered the extent to which the boards and their chief executives, as accounting officers, fulfilled their responsibilities.

The report highlights serious failings in the execution of responsibilities within both boards and makes 49 specific recommendations for improvement relating to each board, its chief executive and chief finance officer. I would like to thank Dr. Jack for his professionalism in conducting the inquiry and for producing a comprehensive and meticulous report. Copies of the inquiry report have been placed in the Library of the House of Commons.

The overspends have had serious consequences — this was real money, not paper deficits on a set of accounts. In total it is estimated that the SEELB has now overspent by £21.4 million and the BELB by £11.4 million. If the boards had contained spending within their approved limits, additional resources would have been available for education and wider public services.

The problem of overspending is a matter of grave concern. The Government cannot and will not tolerate persistent failure to exercise control of expenditure, which is a fundamental responsibility of public bodies and of accounting officers, who are answerable to Parliament for their stewardship of public funds. The boards are obliged under statute only to incur expenditure within plans approved by the Department, and the Government will take all the steps necessary to ensure this is secured, and that there is no recurrence of the overspending. The recommendations in the inquiry report represent a strong reminder, not only to the two boards in question, but to all those responsible for managing public funds, of the need to live within their budgets.

Proper stewardship of public moneys allocated to each board must be restored. This will require full and speedy implementation of the 49 recommendations contained within the Jack report. I will ensure that the necessary steps are taken by the boards and the Department of Education to achieve this, including the establishment of an effective regime to monitor progress on implementation. Through
4 Apr 2005 : Column 126WS
these arrangements, proper standards of financial management and control will be re-established in the Belfast and South Eastern education and library boards.

I have asked the permanent secretary to write to the chief executives of both boards making it clear that accounting officer status will continue only on a probationary basis until June 2006, at which point it will be reviewed formally by the Department. It is my intention that, during this period, there will be continuous monitoring to ensure the effective implementation of Dr. Jack's recommendations.


Financial Assistance Scheme

The Minister for Pensions (Malcolm Wicks): Today we have published for consultation draft regulations setting out our detailed proposals for the Financial Assistance Scheme (FAS). In our previous statement on 22 February, Official Report, columns 16–18WS, we said that there are at least 380 schemes in which members might be potentially eligible for financial assistance, and placed a list in the Library. That list is indicative and based on information provided by scheme representatives.

We will be unable to confirm formally that any scheme will definitely qualify for the FAS until the regulations containing detailed eligibility criteria have been approved by Parliament and until schemes have been formally assessed under those criteria.

However, if the information we hold is confirmed during the qualification process and if the further information which may be needed to confirm scheme eligibility is provided by scheme representatives within prescribed timescales, then those schemes will meet FAS scheme qualification criteria. There is no reason to expect that any scheme should otherwise be taken off the list.

As indicated in the statement made on 22 February, the FAS will provide assistance to members of defined benefit pension schemes in circumstances where the sponsoring employer is insolvent. We are aware that some trustees and members of schemes that start to wind up with a solvent employer before 5 April 2005, but where the employer may enter insolvency after 5 April 2005, have been concerned that they will be excluded from both the FAS and the Pension Protection Fund (PPF).

I can reassure members of those schemes that start winding up before 5 April 2005 that they will potentially be eligible for assistance from the FAS should a relevant insolvency event occur after 5 April 2005. This is in order to minimise the administrative risk that members of those schemes will find themselves falling between the FAS and the PPF. However, to ensure its effective operation, it will still be necessary to set a cut-off date for the occurrence of the insolvency. That cut-off date will coincide with the end of the period by which schemes must have notified the FAS of their potential eligibility. The date will be prescribed in the regulations.
4 Apr 2005 : Column 127WS

As solvent employers have a duty to support their schemes and provide the benefits members were expecting, it is right that the FAS focuses on insolvent employers. We have however taken action to facilitate operation of the arrangements for deemed buy back which enables some members of severely under-funded contracted-out pension schemes in wind-up, who meet the qualifying conditions, to choose to be reinstated into the state system.

On 31 March we laid new regulations to speed up the process and ensure schemes get their calculations quickly. These regulations clarify that as well as being available to members of some insolvent schemes (helping ensure that the funding allocated to the FAS can help as many people as possible), this option is also available to some members in schemes with solvent employers.

As we announced on 22 February, the FAS will provide help to those within three years of their scheme pension age on 14 May 2004. The assistance will top up individuals' pensions to a level broadly equivalent to 80 per cent. of the core pension rights accrued in their scheme. The draft regulations provide a detailed explanation of what this will cover.

Payments will commence at age 65 and assistance will only be provided to those who will receive at least £10 a week (or equivalent) from the FAS. There will also be a cap on the total amount of assistance and pension payable so that FAS payments do not top up people's pensions to more than £12,000 per year.
4 Apr 2005 : Column 128WS

Payments will be backdated to the date we announced the Financial Assistance Scheme (May 2004) or the recipient 65th birthday, whichever is the later. These are likely to be in the form of a lump sum.

Surviving spouses of scheme members who were within three years of their scheme pension age on 14 May 2004 (or who would have been had they not died) will be eligible to receive payments from the date of the death of the member, regardless of the survivor's age. The FAS will provide support at 50 per cent. of the member's level of assistance.

Getting assistance quickly to people who are older, especially where they are ill, is obviously a pressing concern. So, although not included in these regulations, we are exploring how to ensure that seriously ill people within three years of their scheme pension age can be paid very soon, before their pension scheme has finally wound up, and including survivors' rights. We are also exploring whether we might be able to fast track payments to people who are already 65 and putting in place arrangements to ensure those reaching 65 start receiving FAS payments as soon as possible after their 65th birthday.

We will make a further announcement on these options as soon as possible.

More details on these issues are in the draft regulations. A copy has been placed in the Library. We have invited comments on these for a period of six weeks until 16 May. Subject to the outcome, we plan to lay the regulations in June with the intention that they come into force as quickly as possible.