The
Chairman: With this it will be
convenient to discuss the following amendments: No. 115, in
clause 52, page 25, line 26, leave
out ‘panels are’ and insert ‘employers panel
is’. No. 27, in
clause 52, page 25, line 26, leave
out ‘by order under section 50,
or’. No. 101, in
clause 52, page 25, line 27, at
end insert— ‘(3A) The
members’ panel shall be comprised of members of the scheme
nominated and selected by a process including all the members of the
scheme or an organisation representing the
members.’.
No. 64, in
clause 52, page 25, line 28, after
‘panel’, insert ‘and employers’
panel’. No.
155, in
clause 52, page 25, line 30, leave
out subsection
5.
Danny
Alexander: Amendment No. 154 is lengthy and the purpose
behind it might take a little time to
explain. The Bill
naturally and rightly contains provisions in clause 52 for the
consultation of scheme members and employers, and the establishment of
a members’ panel and an employers’ panel. I am grateful
for advice and suggestions from Age Concern about the amendment, which
tries to set out in more detail what the role of the members’
panel should be, how it should work and, particularly, the fact that it
should be properly
resourced. The
members’ panel will have a big role in ensuring that the scheme
acts in the best interests of members. It is thus essential that the
members’ panel is given both appropriate powers and sufficient
resources to carry out its responsibilities and meet its obligations
effectively. Giving the panel the power to make formal representations
and the right to a formal reply would mean that it could quite simply
not be ignored. The Minister might say that the panel would not be
ignored in practice, but the amendment would ensure that it could not
be
ignored. Any
good approach to consultation, in which many hon. Members will have
been involved in their constituencies or elsewhere, will encourage the
sponsoring body to seek the panel’s views at an early stage.
Certainly, the principles of good community consultation would suggest
not getting to the end of one’s deliberations and reaching
conclusions, and only then asking people what they think. A proper
consultation engages with those who have a right to be consulted along
the way, thus leading to better policy making. That reduces, but cannot
totally eliminate, the likelihood of serious disagreements emerging
late in the process. Such an approach would also demonstrate to members
and potential members that the panel was independent of
trustees. The amendment
would empower the panel to carry out research, and that would ensure
that there was a good evidence base for its advice. Employers and the
financial services industry, which quite properly takes a great
interest in the development of personal accounts, as members of the
Committee will be all too aware, are likely to have access to
considerably greater expertise and financial resources than members and
potential members. A statutory right to carry out research would ensure
that funding was available to redress the balance and to plug the
knowledge gap from a perspective that had scheme members’
interests at heart. Without such a statutory right, any research
funding would be available only at the discretion of trustees. The
right would also ensure that the panel was able to research the views
of members and potential members so that it could represent their views
fairly, although I am sure that the Minister would envisage that
anyway. PADA is already doing some research among potential members and
is seeking public opinion to try to understand how people view the
scheme. Meaningful
participation in processes that are designed to make policy often
requires detailed work to analyse the possible impact of future
developments. I am told
that the experience of existing panels is that the work requires
individuals with both a strong personal commitment and the time to
devote to understanding issues that are often highly technical. That is
why it should be possible, when necessary, for trustees to pay panel
members more than just expenses. If a substantial time commitment or
effort is required for a particular piece of work, it needs to be made
clear that panel members can be paid so that they are enabled to
participate fully. Without that, there will be a risk that the panel
will either attract only those who can afford to take time off, or that
its advice will be rushed or ill-thought, neither of which would be the
Minister’s intention when seeking to establish a members’
panel. In addition,
there is an argument that membership of the panel should not
necessarily be restricted to people who are current members of the
scheme because it should also be able to take account of the needs of
future members, who are specifically referred to in the principles of
PADA, which will be debated under clause 62. Such a measure would be
unduly restrictive, such as if a panel member had retired and was no
longer a member of the personal accounts scheme. The panel will also
benefit from the involvement of people with particular knowledge and
skills who might not be attracted from within the membership base.
Research by the National Consumer Council found that people sometimes
simply wanted to be confident that their interests are being fully
represented by
others. The amendment
would also provide for the right to reappoint members. That right,
within the context of an overall maximum term of appointment, would
avoid any suggestion that an individual could be leaned on. Such a
practice is followed in other
bodies. The amendment
is detailed because it relates to an important aspect of how the system
works. It seeks to reflect the Government’s intention properly.
I hope that it will give the Minister the opportunity to put on record
that he has detailed intentions in many of the areas to which the
amendment refers. Those areas include how the system will work, how
panel members could be appointed, how their work could be resourced,
and how the contribution of panel members could be properly paid for so
that we were able to attract the broadest range of people as
members. Other issues
are the fact that the panel’s terms of reference and the way in
which it is constructed should not deter people who might not have the
resources or personal means to take lengthy periods of time off work,
and that outside experts who might not necessarily be members of the
scheme could also be involved in the panel when appropriate so that it
could act as broadly and independently as possible in the interests of
members and with full consultation with the trustees from the
beginning. An area to
which we will no doubt return is the fact that while the Bill sets out
clear principles for PADA, it does not set down principles for the
Personal Accounts Board to follow, when it inherits the scheme and
takes it over. The members’ panel will have a critical role in
ensuring that members’ interests continue to be at the heart of
what we expect to be a scheme that will last for a long
time.
2
pm
Mr.
Waterson: I am grateful to the hon. Member for Inverness,
Nairn, Badenoch and Strathspey for probably taking less time to
introduce his amendment than it would have taken to read it
out. Amendment No. 154
is very detailed. It is a tad prescriptive, so we probably would not
join him in voting for it, if he pressed it to a Division, although I
got the impression that he was just trying to draw out a comment from
the Minister on its contents. The amendment has Age Concern’s
seal of approval, which is very
important. The hon.
Gentleman is right that the role of the members’ panel is
important now, as it will be in the future. He is right to say how
important it will be when PADA changes to become the board. He is also
right that there is no point in setting up a members’ panel if
it is going to be ignored and not listened to—if it is just to
look good. He has not tabled a similarly detailed amendment about the
employers’ panel, which is a pity, in a way. Perhaps he takes
the view that employers can look after themselves on these matters and
have sharp enough elbows to ensure that they get their point
across. I wish to speak
fairly briefly to my two amendments in the group—amendments Nos.
27 and 64. The purpose of amendment no. 27 is really to probe the
Minister. It would leave subsection (3) as stating that the composition
and functions of the two panels would be determined by the trustees
under an order. I do not see why we should have an alternative in there
for the Secretary of State to make an order, which is how I read the
measure. If independent trustees are being set up, they should be in
charge. The Minister is looking puzzled—that must mean that
either I have it horribly wrong, or he has suddenly realised that there
is a gaping flaw in the Bill.
Mr.
O'Brien: There is not a gaping flaw in our Bill. I was not
entirely clear about the order. Under the hon. Gentleman’s
amendment, the composition functions of the panel would be determined
by the trustees under an order, but who would make the order? How would
the trustees make an order? Such an order would usually mean a
parliamentary order, so they would not be able to do that. Presumably,
the amendment should refer to some sort of rules set by the
trustees.
Mr.
Waterson: This is the Minister’s Bill, not mine. I
have not drafted it. It suggests that there are two ways to
go: “by order under
section 50”, which would
be made in the traditional fashion by the Secretary of
State—
Mr.
O'Brien: Let me clarify the situation. Our position is
that the composition and functions of the panel can be determined
either by an order under clause 50, or by the trustees acting under an
order under clause 50 so that they may make the detailed rules. Either
way, there will be an order under clause 50. Clause 50 would be applied
in either case. Under the amendment, there would be no clear
order-making power.
Mr.
Waterson: I am grateful to the Minister for clarifying
that, but he has not dealt with my central point: why not just leave it
to the trustees? However, I am glad that we have sorted that out
because it was ruining my day. Why should the Secretary of State be
involved in this at all? Surely, the ideal situation is to set up the
trustees—good, competent people at arm’s
length—who can make these decisions, rather than being
interfered with by the Secretary of
State. I appreciate
that the amendment would make an even bigger nonsense of subsection
(3), but if the Minister accepts my basic premise, he can go away and
use all the resources of the Department to draft an amendment that is
going to work. I do not understand why Ministers should be involved in
this at all. That deals satisfactorily, or otherwise, with amendment
No. 27. Amendment No.
64 concerns the functions of the members’ panel under subsection
(4). It is conceptually very important that the members’ and
employers’ panels are seen as equally important with regard to
advice and the role that they have in developing personal accounts. As
I said, one of my objections to the very long amendment tabled by the
hon. Member for Inverness, Nairn, Badenoch and Strathspey was that it
covered the members’ panel but did nothing for the
employers’ panel.
Subsection (4) says that one of
the functions of the members’ panel—it does not mention
the employers’ panel—is to nominate individuals to be
members of the trustee corporation. This is slightly academic because
presumably anybody could nominate people to be members of the trustee
corporation, just as it sometimes seems that anyone can nominate
themselves or a relative for an honour.
If we are to have a
members’ panel, and to take it seriously and listen to it, and
if we are to have an employers’ panel, and to take it seriously
and listen to it, they should have equal status wherever possible. I
cannot think of a good reason why the Minister should not accept that
amendment, which I commend to
him. Nick
Ainger (Carmarthen, West and South Pembrokeshire) (Lab): I
want to speak briefly about how members of the members’ panel
are to be selected. I have been briefed by UNITE, which is not the
organisation comprising the Transport and General Workers Union and
Amicus. This UNITE got its name a lot earlier. It represents BT and
Post Office pensioners and has existed for several of decades. It is in
negotiations with Unite, the trade union, about the name.
I am sure the
Minister is aware of UNITE’s submission. It makes the very good
point that it is extremely successful in maintaining contact with
members of both those large pension funds and keeping them well
informed of developments. It suggests that there must be some form of
election. That is the way in which it has worked for a long
time—it was set up in the 1920s as a pensioners’
organisation for the Post Office.
I would be interested to hear
how my hon. and learned Friend the Minister thinks that members of this
members’ panel will be chosen. Will that occur through election
or by nomination? If so, who will nominate these people? What is the
direct connection with the members of the scheme? How will those who
are contributing to the scheme be kept informed of developments? I
recommend that he and his officials read the UNITE briefing, if he has
not already seen
it Mr.
O'Brien: Clause 52 deals with consultation with members
and employers. The Government believe that engagement with all
participants in the scheme is vital for success. We have designed the
Bill so that the scheme order must require the trustee to make and
maintain arrangements for ongoing consultation. We need an order to
oblige or enable trustees to do things.
This
scheme will have a very large and diverse membership with many
thousands of participating employers. It is vital that there are good
channels of communication between them and the trustee to give and
receive feedback, thus create a feeling of ownership among members. We
consider the establishment of members’ and employers’
panels to be absolutely fundamental to the process, although that is by
no means the only way that the trustee would communicate with members
and employers. The
authority will consider how these panels should operate, including by
looking at similar existing arrangements, such as those for the
Financial Services Authority consumer and practitioner panels.
Recommendations will be made on the constitution and remit of these
panels, taking account of current best practice.
The answer to the point about
election made by my hon. Friend the Member for Carmarthen, West and
South Pembrokeshire is that I do not yet know what recommendations are
going to come forward from PADA. Election is obviously one of the ways,
and nomination is another, but questions then arise of how to go
through the nomination process, which organisations will have the right
to nominate, and how we use the process of getting to literally
millions of members to enable some sort of election to take
place. I do not have
final answers for my hon. Friend, except that the submission that he
identifies is certainly one way forward of which we will take account.
Also, we will want to look at other ways in which very large
organisations are able to maintain the engagement and participation of
their members. This will be a difficult process, which is why I am
unable to be specific about exactly how this will be done. We have time
to work this out, but we need to give him and others the reassurance
that we see the process of setting up both these panels as absolutely
fundamental. They should be set up in a way that commands
confidence. The
intention of amendment No.115 is that while the composition and
functions of the employers’ panel would be in the scheme order,
the members’ panel would be given the freedom to decide its own
functions. Amendment No. 27 would provide that the scheme order would
require the trustee corporation to establish members’ and
employers’ panels, but could not include anything about their
composition or functions, because the intention would be that the
trustee would make those
decisions. When
striking a balance between legislative requirements and independence
for the trustee, we need to keep in mind the scale of the scheme.
Millions of members will be drawn from thousands of employers. Some
will have a few members, while others will have hundreds or
thousands of members. It is likely that many of those members will not
have saved in a pension before. That will make the arrangements for
engaging and involving members all the more important—and
indeed, all the more
complex. This unique
aspect of the scheme—and the importance of members feeling
ownership of the scheme, if we are to the deliver our
ambitions—means that Parliament and the Government have a
legitimate interest in ensuring that there is a broad approach to
employer and member engagement. I think that we have an interest in
this. We want to know that that it is being done and how it is being
done. We want to be satisfied that it will be done properly and
adequately. That is why the Bill provides for an order under the clause
to set the broad composition and functions of a
panel. I reassure hon.
Members that it is not our intention that that would determine all the
practical detail of how the panel operates. The panel members will be
able to make arrangements with the trustee about how they can best
represent members, and the methods of consultation and dialogue with
the trustee. Therefore, while the order will set the functions of the
panels, the panel members will have a significant say in how those
functions are
discharged. Amendment
No. 101 would provide that all members—or an organisation
representing them—would have to be involved in the process of
setting up the members’ panel. Amendment No. 154 goes into quite
some detail on the constitution and function of the members’
panel and how it interacts with the trustee. It is, of course,
essential that the members’ panel is designed to be as
representative as reasonably possible. It is also important, however,
that, given the unique scale and diversity of the potential membership
of the personal accounts scheme, we do not constrain the options
available for the authority at this early
stage. It is not for me
to anticipate the panels’ work or advice. However, I would not,
for example, necessarily want to restrict the scope of a panel to
members of the scheme only at this stage. It might be desirable for a
scheme of this scale to include room on the panel for national
organisations, such as Help the Aged and Age Concern, or those with
experience in promoting legal or consumer rights. We need to look at
how this ought to operate, rather than trying to form a complete
judgment at this
stage. 2.15
pm I
do not underestimate the challenge of ensuring that all members have a
say in the nomination and selection of the members’ panel, for
reasons I have already given. That is not to say I disagree in any way
with the principle suggested by hon. Members opposite. In fact, I
broadly agree. However, I want to ensure that we give the authority
sufficient flexibility to consider innovative solutions to what can be
a very difficult challenge.
I do not
believe we should create primary legislation which, however well
intentioned, will so restrict the options they can put to us that we
will not be able to make amendments to it except via further primary
legislation, even if we all agree that those amendments should be made.
If we are to look at the detail of this, it
would be better to do so either in regulations, which are more easily
amended as times change, or by a broad-based order followed by
decisions made by the trustees and, in due course, by others, including
perhaps the members’
panels. | 
