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 panels views at an early stage. Certainly, the principles of good community consultation would suggest not getting to the end of ones 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
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 Governments 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 panels 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.
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 Concerns 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 toif 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 groupamendments 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 puzzledthat 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. Gentlemans 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 Ministers 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 trusteesgood, competent people at arms lengthwho 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 panelit does not mention the employers panelis 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 UNITEs 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 timeit 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
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
This unique aspect of the schemeand the importance of members feeling ownership of the scheme, if we are to the deliver our ambitionsmeans 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 membersor an organisation representing themwould 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.
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
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