Clause
63
Directions
and
guidance
Mr.
Waterson:
I beg to move amendment No. 49, in
clause 63, page 29, line 30, at
end insert ‘ as soon as is
practicable.’.
This
is a short amendment, which I can deal with expeditiously. The clause
sets out that the Secretary of State will give the authority guidance
or directions about the discharge of its functions. We are a bit iffy
about the Secretary of State giving it directions, because it seems to
be a back-door way of achieving what one of our earlier amendments
tried to achieve, which was to ensure that in the Bill, the authority
was obliged to follow, or comply with, its principles. We agree that it
is right that any direction should be published, so all the amendment
asks is that it be published as soon as is
practicable.
Mr.
Plaskitt:
The authority will have operational
independence and autonomy to create the
infrastructure for personal accounts. It will be responsible for the
specification, design, and the award of contracts for the systems and
services associated with the scheme. This is a complex task which is
critical to the delivery of the policy ambitions of the reform
programme. It is vital that the authority’s responsibilities are
clear, that it is effective in delivering those responsibilities, and
that it manages its business and money properly.
As with any
non-departmental public body, accountability to Parliament for the
authority’s performance and actions rests with the Secretary of
State. Therefore it is right that there are provisions that allow the
Secretary of State to give a steer, or indeed take action, if
appropriate. The Department for Work and Pensions has a great deal of
experience in the stewardship of non-departmental public bodies.
Formally, we work within the guidance for Departments issued by the
Treasury and the Cabinet Office, as well as drawing on our own centre
of expertise. Informally, our approach is to maintain an open and
constructive dialogue and to foster relationships so that any issues
arising can be debated and resolved without recourse to legal process.
Therefore, I hope that any formal directions would be unnecessary.
However, we would be remiss if we did not cover for all
eventualities.
Provisions for the issue of
directions to public bodies are common practice. Similar legislation
has been made for many other public bodies, including
the Olympic Delivery Authority and the Learning and Skills Council.
They provide reassurance to Government and Parliament that appropriate
measures are in place to ensure that a public body works within its
scope, does its job properly and manages itself to the standards
expected from a public
body.
Directions, by
their nature, relate to matters that the Secretary of State considers
to be of such importance that the authority should be required to
comply with them—a serious failure by the authority to perform
any of its functions, for example. I would like to make clear that the
Secretary of State cannot issue a direction to the authority that
either changes its functions or gives it a new function. The issue of a
direction relates to the “how” not the
“what”.
Directions will be issued in
writing to the authority and the clause imposes a statutory requirement
for them to be published. Directions issued to other public bodies are
not always required to be published—that we have made that
requirement here reflects the importance that we place on transparency
in the governance of the authority. It is right that the Secretary of
State should inform Parliament of how he has exercised that power. It
ensures clear lines of accountability and allows for proper, ongoing
scrutiny of the delivery of the
reforms.
The
amendment seeks to set in legislation the requirement for us to publish
any directions made quickly. I assure the hon. Member for Eastbourne
that any directions will be published without delay. Indeed, if we have
to have recourse to such an intervention, we intend that the directions
would be published as soon as they were made, subject to the necessary
practical arrangements. I hope that meets the hon. Gentleman’s
point and that he will feel able to withdraw his
amendment.
Mr.
Waterson:
That seems a satisfactory explanation, and on
that basis, I beg to ask leave to withdraw the amendment.
Amendment, by leave,
withdrawn.
Clause 63 ordered to stand
part of the Bill.
Clause
64
Finance
Mr.
Waterson:
I beg to move amendment No. 50, in
clause 64, page 29, line 37, leave
out
‘grants’.
The
Chairman:
With this it will be convenient to discuss
amendment
No. 51, in
clause 64, page 29, line 38, leave
out from ‘which’ to end of line 39 and insert
‘shall include conditions about
repayment and interest at commercial
rates.’.
Mr.
Waterson:
We are back to our old friends
“grants” and “interest-free
loans”—in other words, the level playing field. Perhaps
the Minister could take as read what I said during debates on previous
amendments trying to get at this issue. I hope that he will not take it
personally if I say that I have found him a rather slippery customer
when it comes to this issue. He has kept up a ferocious rearguard
action, refusing to give any kind of commitment. Clearly he is the
right man in the right job in the right Government at the right
Department. Ferocious is perhaps not the right word for the hon.
Gentleman, but he has given us not a jot of comfort about the
possibility of a bung being given to PADA in the shape of a
non-repayable grant or some dodgy loan, which would have to be repaid
or which would not attract any interest, let alone at commercial
rates.
Let us try
again. I will go back a stage or two. In the regulatory impact
assessment on the previous Pensions Bill, the Government set up a
figure of £21 million for what they called the funding
requirement of the delivery authority between 2006-07 and 2008-09. At
the time, we tabled amendments trying to tackle what
we then called cross-subsidisation and I asked for a breakdown of how
that £21 million was going to be spent. In retrospect, I suspect
that a lot of it has been spent or spoken for, so it would be nice to
have a breakdown of where it has gone or is going. Perhaps the Minister
will write to me about
that. In the debate of
1 February 2007, I asked what the limit was of the taxpayer’s
commitment to the delivery authority. We are not Johnny-come-latelies
on this issue, not that that has done us a lot of good. The then
Pensions Reform Minister, now the Secretary of State, explained that in
the longer term, personal accounts would be self-financing. That has
been a mantra from the Department for some time up to the present day.
Paragraph 18 of schedule 6 of the 2007 Act provided for the Secretary
of State, subject to Treasury consent, to make grants to the authority
out of the money provided by Parliament. The clause will replace that
paragraph to extend the ways in which the Secretary of State may give
financial assistance to the authority. The important word in that
sentence is “extend”. Really, the Government are giving
themselves more opportunities to shove money in the direction of the
authority.
I
always make a point at Committee stage of referring to the explanatory
notes at least once because there is bound to be some poor devil who
has spent half a lifetime drafting them. As the explanatory notes
helpfully say in paragraph
189:
“It allows
the Secretary of State to provide finance to the Authority in
connection with its functions, for example, through grant or loan. Any
of the finance may be subject to
conditions.”
Perhaps
“Don’t spend it all at the same shop” might be one
of those conditions because there certainly seem to be no conditions
about interest, repayment or anything of that
sort.
The impact
assessment makes the point that during its advisory
phase, the authority is being funded through grant in aid. In paragraph
3.80 it says that
“in the
long run, the personal accounts scheme is intended to be
self-financing”.
We still
have not got anywhere near finding out what the Minister thinks long
term means. Also, rather interestingly, in the same document, the
Government say in paragraph
3.81:
“At this
stage in the development of the personal accounts scheme the Government
cannot publish its estimated cost due to commercial confidentiality and
the potential risk that doing so could influence the commercial
process.”
I do not begin
to understand that. Surely it would be more relevant if there was an
issue about who they were going to spend the money on in terms of who
they were going to buy expertise, services, equipment or whatever from.
For them simply not to be able to produce any estimate of their overall
costs due to commercial confidentiality seems to me to be simply trying
to hide behind the words rather than being open and
transparent.
Perhaps
as well as pursuing my traditional arguments about grants and loans I
could ask the Minister to be a bit more open and frank about the
ongoing costs of the PADA than his impact assessment appears to want to
be. Will he particularly deal with the issue of where the £21
million has gone or is going? While we are about it, I referred this
morning to the £6 million plus that has already been spent on
consultants in the development of personal accounts, according to a
written answer
provided by his colleague, the Minister for Pensions Reform, the other
day. Perhaps I could also have a breakdown of that figure, allowing for
any commercial sensitivities that might be
involved. 6.45
pm
Mr.
Plaskitt:
We are back on some fairly familiar ground, in
respect of where we were this morning. The hon. Member for Eastbourne
wanted me to take his contribution for read. I could perhaps say the
same about mine, but I will not. I will once again revisit the issues
about PADA
funding.
Clause
64 amends schedule 6 of the Pensions Act 2007 to extend the ways the
Secretary of State may fund the authority in carrying out its
functions. In addition to grants, the Secretary of State may provide
loans, guarantees and indemnities to the authority, which may be
subject to conditions. This clause is linked with clause 61, which
allows the delivery authority to borrow money.
I should like
to reassure members that any costs arising from the authority’s
work in relation to implementing the personal accounts scheme will be
recovered from the revenue from membership charges. However, it is
important to draw a distinction between the work the authority will be
doing on the implementation of the scheme and other work it will be
taking forward. As the Committee is aware, the Government are already
funding the authority. This reflects its current role to provide advice
to Government on the operational implications of policy. It is right
that Government should meet the cost of that
advice.
The hon. Member for Eastbourne
asked me to say more about the £21 million allocation. He will
know that it was an early estimate of the cost of establishing the
delivery authority. The estimate was made even before the appointment
of the chairman and chief executive. We currently anticipate that PADA
will achieve its grant-in-aid status later in the current financial
year. At that point it will be sufficiently well established to start
incurring costs on its own account and to pay for these from its grant
in aid. We have so far provided around £10 million in support
for the creation of PADA. That figure is correct up to December 2007. I
hope that that gives the hon. Gentleman a little bit of extra
information.
This
Bill will also extend the authority’s remit so that it can work
with the Pensions Regulator to support the delivery of the systems that
will enable employers to comply with their new duties. This will
benefit all those eligible for auto-enrolment into any qualifying
scheme, not just the members of the personal accounts scheme.
It would not be right to require personal account
scheme members to pay for this aspect of the authority’s work.
We want to retain the flexibility to fund this activity in the right
way, most probably through grant in aid from the Government.
Amendments Nos. 50 and 51 would
remove that flexibility. As the hon. Gentleman knows, no decision has
yet been made on the best approach to financing the personal accounts
scheme in its initial stages. It will be for PADA to consider the
options available to provide initial finance for the scheme, and then
make
recommendations to the Secretary of State on the best possible approach.
However, this work can occur only once the authority’s powers
have been extended through this Bill, when it is able to take the next
steps towards implementing the
scheme. I should like
to reiterate that if any degree of Government support is involved to
help the scheme get up and running, then it will be fully compliant
with European requirements on competition and state aid. It is common
practice to take broad powers to finance a non-departmental public body
that will be tasked with the delivery of a major project such as
personal accounts. Again, as I said in respect of a similar discussion
this morning, it is important at this stage that we do not second guess
the outcome of its work or restrict the authority in its
considerations.
Mr.
Waterson:
On the basis that we are moving from
the stage where money is shelled out by the
Department to it being shelled out by the authority itself, can I take
it that there will at least be a written statement to the House when
there is a grant in aid in excess of the £21 million
that has already been earmarked for the
authority?
Mr.
Plaskitt:
There are two things to say in respect of that.
First, when annual reports are published, he will be able to see all
sources of income to the authority. That is quite right and proper. I
have already indicated that we have given the £21 million
estimate for the setting up of PADA. I have tried to reassure him on
that point. I have given him an indication of how much has been
allocated to date. It is clear that within the existing financial year
it will reach grant-in-aid status, after which it will incur costs on
its own account. He can deduce from that timetable the information
that he needs.
I stress that that does not
mean that the specific powers that we are taking in the clause for the
sources of funding will necessarily be used. They will simply ensure
that the authority has the flexibility to identify the funding strategy
that provides the best deal for its members. It would be wrong to
fetter the development of the best funding solution
by insisting on any particular approach. I also stress to the Committee
once again that we have no intention of unfairly subsidising the
personal accounts scheme.
My reassurances are similar to
those that I gave this morning. I may anticipate what the hon.
Gentleman thinks about them, but I hope that my explanation has
reassured him of the Government’s intentions and made it clear
why flexibility is important both for getting the best deal for members
of the scheme and funding the authority’s activities. I hope
that that is sufficient to encourage him to withdraw
the
amendment.
Mr.
Waterson:
I am grateful to the Minister, who has built up
a large bank of reassurances on similar matters today. It is late in
the day, and I am in a generous mood, so I am prepared to take them at
face value and put them in the bank myself. I hope that we will be kept
posted of any significant shift in the amounts of grant in aid, and I
can only reiterate the point that I have made a number of times that
not just the official
Opposition but the industry want a level playing field and no hidden
public subsidy. I beg to ask leave to withdraw the
amendment.
Amendment,
by leave,
withdrawn.
Clause
64 ordered to stand part of the
Bill.
Clauses
65 and 66 ordered to stand part of the
Bill.
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