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In light of the regulator’s operational experience and developments in the pensions market, the Government made amendments to the regulator’s anti-avoidance powers in the Pensions Act 2008 to deal with new risks
that had emerged. The changes provide the regulator with an additional power to issue a contribution notice where an act or failure to act would have a materially detrimental effect on the likelihood of members’ benefits being paid. The new provisions build on the regulator’s original powers to issue a contribution notice, in which the regulator has to show that the main purpose of the act or failure to act was to avoid the debt to the pension scheme.
The hon. Gentleman was critical of the pensions regulator, but I hope to reassure him that the decision was taken appropriately. In December 1989, the Caparo Group acquired Armstrong Equipment Ltd which, as he said, was a west midlands-based producer of wire thread, brass inserts and tooling systems. Two years later, Caparo went private, buying back the remainder of the company’s listed shares.
In March 2006, Caparo put Armstrong Equipment Ltd into receivership. The Armstrong pension scheme trustees asked the regulator to investigate following the buy-back of the employers’ business by a connected Caparo company as part of the administration process. Following a thorough investigation, the regulator concluded that there were no reasonable grounds for use of its anti-avoidance powers—that is, for issuing either a contribution notice or a financial support direction. The regulator then communicated its decisions to the trustees.
It is important to note that the regulator’s decisions to use its powers turn on several important factors. As a result of both domestic and EU law, the regulator’s status as a public authority places demanding standards on its decision making. In broad terms, a public authority would be acting unreasonably if it took account of factors that were not relevant, or failed to take account of relevant factors. The regulator’s powers involve specific legal tests, and there are certain factors to which it should have regard. That can include the degree of involvement that the person had in an act, and the value of any benefits derived. In June 2007, the Department for Work and Pensions received correspondence from legal representatives acting for the trustees. It stated, in effect, that they were considering a judicial review of the regulator on the basis that its decisions not to intervene were flawed. That is essentially the case that the hon. Gentleman has made tonight.
Mr. Graham Stuart: I believe that the trustee concerned is the largest professional trustee in the country, and it could not make sense of the regulator’s decision. It seemed completely flawed to that trustee.
Angela Eagle: Yes, that was the trustee’s initial thought, but as I have said, the regulator was set up as an independent body, and that means that it is independent from Government. That independence ensures that its decisions in any particular case are not influenced by Ministers. It is not appropriate for Ministers to discuss the details of the regulator’s investigation in a particular case, or specific details relating to the regulator’s decisions. However, it is relevant to note that once the trustees had had further discussions with the regulator, they decided not to pursue the matter further. That is, they were satisfied that the regulator had properly considered whether to issue a contribution notice or financial support direction. [Interruption.] They did not seek a judicial review; they decided not to do so after they met representatives from the pensions regulator.
The hon. Gentleman made a number of points about the transparency of the regulator’s decisions. The regulator, and anyone receiving information from it, is bound by restricted information provisions under the Pensions Act 2004. Broadly, they provide that the regulator cannot disclose information that it receives relating to the business or affairs of any person. That is done to ensure that commercial or personal information that is usually of a sensitive nature is appropriately protected, and that the provision of such information, on which regulator investigations rely, is not discouraged through fear of disclosure. Those who provide information to assist regulator investigations must be able to trust that their confidences will be respected. Much of the information that the regulator receives in the course of an investigation is restricted in such a way for those reasons. I understand that a good deal of information was shared by consent between the parties and the regulator, so that a full debate of the issues could take place. As the members are legally distinct from the trustee, however, the regulator was unable to share its information directly with them.
Mr. Stuart: Will the Minister agree to meet me and representatives of the members, who would be grateful for the opportunity to speak to the Minister in more detail?
Angela Eagle:
I am happy to meet them, but I have to say that the decision is a matter for the regulator. Parliament has ruled that Ministers cannot interfere in such decisions. In those circumstances, if the hon. Gentleman wishes to discuss such issues, I would have thought it more important that he meets the regulator than me, the Minister. Parliament has decided that I
cannot have a direct effect on the decisions that an independent regulator takes, as the House put in place powers to make the regulatory process independent of Ministers. It would perhaps be more productive if the hon. Gentleman pursued his worries directly with the regulator.
The trustees essentially represent members’ interests and usually provide an interface with the regulator. I understand that the regulator has throughout encouraged the trustees to engage in dialogue with members to address their queries.
The hon. Gentleman did not mention it, but I know that he has referred the case to the parliamentary ombudsman. Again, the matter is one for the independent parliamentary ombudsman to look at. I am aware that the regulator is co-operating with the ombudsman’s investigation, and I look forward to the outcome of the investigation in due course.
I have every sympathy for former employees of the Armstrong Group. To lose one’s job and to be uncertain about the future of one’s pension is distressing and causes great worry to many people. The Pensions Act that the House passed in 2004 was designed to tackle these problems, with a more powerful, proactive pensions regulator and real help for members of pension schemes through the financial assistance scheme and the Pension Protection Fund, which did not exist before the legislation was passed. This cannot put everything right when pension schemes are wound up, but it ensures far greater levels of protection than ever existed when the previous Government were in power. I make that point as the hon. Gentleman has chosen—
10.41 pm
House adjourned without Question put (Standing Order No. 9(7)).
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