Pensions Bill

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Mr. O'Brien: Again, I am listening with care to what is being said. It is the case that in our discussions with employers’ organisations they expressed some concerns that we should not move too quickly to criminalise employers. There are sanctions here. We are going to table a Government amendment in due course which will enhance the value of our measure as a deterrent by preventing employers from being able to claim back payments or benefits given to their workers as part of any agreement that is rendered void by the clause.
At the moment our view is that keeping this in the realm of employment law presents a strong enough way of preventing employers from taking this action. We anticipate that the vast majority of employers will comply with the legislation but he is right to say that there may well be small numbers who take the view that they can breach the law. That would not be a competitive approach and is one which could do quite a bit of damage to the employers who are complying properly.
I am listening with care to what he says and interested as to how hard he is pushing this particular proposal. We have taken a view up to now that we do not want to move into the criminal law in this area. He seems to be pressing quite hard that we should move into that area. I will be interested to know whether he intends to press this new clause to a Division. It might affect my view.
He did raise a couple of other issues in relation to missed contributions and whether they would be enforced. I should tell him that any contributions that are missed would be enforced. It is the case that we would have the ability to get the employer to move into a position where they make up the missed contributions if a person ought to have been automatically enrolled and would have wanted to have been part of a pension scheme—in other words, would not have opted out. In those circumstances, the TPR would be able to enforce the repayment of those missed contributions.
Mr. David S. Borrow (South Ribble) (Lab): Could my hon. and learned Friend reassure me that should the problems raised by the hon. Gentleman turn out to be true once the legislation has gone through and is up and running, the Minister will be able to remedy the problems quickly without bringing forward primary legislation—to do it by regulation rather than legislation?
Mr. O'Brien: We would not be able to regulate to bring in criminal sanctions like that; we would have to do that in primary legislation.
I am interested in how hard hon. Members opposite wish to press this. I do not have a closed mind on it. I am happy to give way to the hon. Member to indicate whether he, in principle, wishes to press this, which may influence my view about whether the Government should take this back and look at it again.
Andrew Selous: I think that it is a serious issue for the reasons that I have already outlined. If I heard him right, the Minister said that he was prepared to go back to the Department, sit down with his officials and perhaps look at the area again. If he is prepared to do that, we would be prepared to bear with him, perhaps until Report stage, to see what he comes forward with. It is an important point and the point made by the hon. Member for South Ribble, who is behind him now, is also important. I do not want the window of opportunity to do something to move on and we then find that it is difficult to do something about later.
Mr. O'Brien: I am grateful to the hon. Member. I would also welcome the view of the Liberal Democrats.
Danny Alexander: I share the concern of the hon. Member for South-West Bedfordshire that it is a very serious issue. If the Minister is saying that he will take the issue away and look at it again, perhaps with a view to coming back at Report stage or in the other place so it can be properly considered by the Government, that would be very reasonable. There does need to be an additional power in the area. It seems wise not to press the matter, if the Minister is going to go away and look seriously at how an amendment could be framed.
Mr. O'Brien: We are interested in proceeding by way of consensus on this. The Government’s view had been that we did not wish to move into the area of criminalising employers in this particular regard at this stage. There have been strong views expressed by the Opposition, both Conservatives and Liberal Democrats, on this. Indeed, among my colleagues there are some views that this is an area where we need to have a firm response by Parliament to the view that employers should not provide these sorts of inducements and that, therefore, a criminal sanction ought to be given serious consideration. Therefore, I agree to give that serious consideration to the views expressed and take this back and talk to the various stakeholder organisations, on the basis that there are obviously some strong feelings in Committee today.
Amendment agreed to.
Question proposed, That the clause, as amended, stand part of the Bill.
Danny Alexander: I simply remind the Minister that in the earlier debate I made some important points about pre-employment issues. I hope he will answer them in the coming debate.
10.15 am
Mr. O'Brien: I am also conscious of a point made by the hon. Member for South-West Bedfordshire that I have not yet dealt with. He asked me whether the regulator, as part of his role, would be looking for unusual patterns of opt-out among employers and employees. The answer to that question is yes, he will be. It is the role of the Pensions Regulator to monitor the data in relation to the level of opt-outs among employers. It will vary from sector to sector, but we anticipate there will be an average level of automatic enrolment, and that will enable the regulator to look for unusual patterns of high opt-outs. It will then be able to intervene with those employers to find out why those high levels are present.
If it is the case that there is a non-unionised, low paid, edge-of-usual sector practice that needs investigating, we would expect the Pensions Regulator to be in a position where it could carry out a serious examination of the circumstances in that employer’s organisation—indeed, for the very competitive reasons that the hon. Gentleman identified earlier.
The hon. Member for Inverness, Nairn, Badenoch and Strathspey asked some important questions about pre-employment rights. We looked at this with a great deal of care and were pressed by the TUC to consider whether pre-employment rights should be present, because it would be theoretically easy for employers to say “We are not offering you a job yet, but we are interviewing you and one of our questions will be: are you going to sign up to the whole pensions deal? If you are, we will take a decision based on that.” So, in effect, before there is a contract of employment, or an agreement, there is a view by the employer that he will take a particular approach to an employee.
That is the problem, and it is one of the reasons why we proposed Govt amendment No. 156, which we just dealt with. It gives the employee the ability to have had an inducement, to have accepted the inducement—in the sense of accepting any “bung”, as the hon. Member for South-West Bedfordshire put it—and then, as soon as he is employed, to say “Fine, thank you for the bung, I’m going to keep that, but I now want to be automatically enrolled in the pension scheme” and there is nothing that the employer can do about that.
If we decided to create a new pre-employment right, then the concern of employers’ organisations would be that there has been pressure in the past to create all sorts of other pre-employment rights. While I did not detect a great objection to this particular one, it was to some extent a matter of principle for them, that creating a pre-employment right in this regard would then raise the question, “If you do it on this, why are you not doing it in a whole series of other circumstances?” That would be quite a significant change of principle in terms of the way we have operated employment legislation heretofore.
Danny Alexander: I do understand what he is saying, but it does leave me feeling somewhat uneasy, because the message we are sending to potential employees who are offered a bung is to accept it and then deal with it once they are in the job. While I understand the pragmatic reality of that position, for somebody who is applying for a job to be told, “If your employer is trying to do something dodgy here, the best thing is to get into the job, trouser the cash and then get your pension rights”, there is something about that solution that leaves me feeling uneasy. I wonder whether some wording regarding whether pensions rights should be discussed at an interview stage could be brought into the Bill. It would fall short of an employment right, but would still perhaps act as a disincentive to a breach of law occurring if employers went down that route.
Mr. O'Brien: I am not sure the suggestion the hon. Gentleman makes, which is that pension issues cannot be discussed in initial discussions, would fall short of a pre-employment right. We therefore need to approach this with some caution. He is right that we are adopting a course which is inelegant and is perhaps not ideal. We all know that we would rather take the course of action that he suggests in general terms, but the breach of the broad principle that there are no pre-employment rights is regarded by employers as an enormously important one—mainly because it could lead to a lot of other demands. There is a view in industrial relations circles that there is essentially a balance between employers and trade unions and employees that needs to be very carefully maintained. While this particular change might not, of itself, damage that balance, other things might then flow from it and that balance might be undermined.
It is a tricky situation and I understand why the hon. Gentleman feels uncomfortable with the position. But it is one that we have negotiated and it is, in a sense, part of what we have talked about in the past—a consensus whereby we have got the employers on board to support this. A number of compromises have been made—the TUC, for example, wanted to bring employment rights and they have accepted that this compromise, although not what they wanted, is one with which they can live.
Miss Julie Kirkbride (Bromsgrove) (Con): While all of us have every sympathy with what the hon. Member for Inverness, Nairn, Badenoch and Strathspey is saying, it would not always be the case in terms of discussing the prospect of employment that the prospective employee would not want to discuss pensions. There will be some situations where a pension will be part of a whole package of measures making up that person’s employment. Therefore it would not be an advisable road to go down to say that there is no discussion of these things in advance of being offered a contract.
Mr. O'Brien: That is an entirely fair point. Indeed, in some employment situations, the pensions package is a big part of the negotiation. At the same time and in defence of the hon. Member for Inverness, Nairn, Badenoch and Strathspey, he is suggesting not so much that the pension should not be discussed, but that an offer of employment cannot be conditional upon an employee saying that he will not take a pension, which is a slightly different point.
While I understand the hon. Gentleman’s point, and I have some sympathy with it, for the reasons I have given, we are probably best preserving the consensus with the employer on this point and accepting that it is a part of the overall agreement which has enabled broad-based support to be given to the Bill.
Amendment agreed to.
Clause 49, as amended, ordered to stand part of the Bill.
Further consideration adjourned.—[Mr. David.]
Adjourned accordingly at twenty-four minutes past Ten o’clock till this day at One o’clock.
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