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Mr. Deputy Speaker:
May I just point out to the House that there was an error in the text of proposed amendment (a) to amendment 64, tabled by the hon. Member for Bournemouth, West (Sir John Butterfill)? On page 1153 of the amendment paper, the words
proposed to be inserted should read "some or" and not "some of". I am sure that that will come as matter of great satisfaction to the House, and hopefully we can proceed.
Did you wish to make a point of order, Mr. Heath?
Mr. Heath: That was my point of order, Mr. Deputy Speaker, and you have corrected the matter. Thank you.
Mr. Deputy Speaker: I wish all were satisfied quite so quickly. I am obliged to the hon. Gentleman.
Mr. Straw: It may be convenient for the House if I inform hon. Members that I intend to accept amendments (a) and (b), in the name of the hon. Member for Bournemouth, West (Sir John Butterfill), to amendment 64, which is in my name; and his amendments (a) and (c) to my amendment 67. I also urge the House to accept amendments 90, 93, 94 and 95, which are in his name. I understand that the hon. Gentleman will make clear the reasons why he does not intend to move amendment (a) to amendment 74, amendment (b) to amendment 76, amendments (a) and (b) to amendment 80 and amendments 91 and 92.
The provisions relate to part 4 of the Bill, which implements a number of recommendations of the report by the Committee on Standards in Public Life on MPs' expenses-the Kelly report. Lest there be too much complaint that the Bill is longer now than when it began its journey, I should say that although that is true, one of the main reasons is that in the intervening time, we had the expenses scandal, the Kelly report and a decision by the House to establish the Independent Parliamentary Standards Authority, which was done via free-standing, emergency legislation last summer-the Parliamentary Standards Act 2009. That preceded the Kelly report, and we have decided to implement the parts of the report that require legislation in this Bill, because it is the only available vehicle. That inevitably means that the process has been a bit compressed, but I suggest that it would have been disastrous for the already damaged reputation of the House and of politics if we had not proceeded fully to implement the Kelly report by the time of the forthcoming general election.
During debates in Committee on the Kelly provisions, the right hon. Member for North-West Hampshire (Sir George Young) and others raised a number of issues that I undertook further to consider. In particular, I undertook to look at how we give effect to the Kelly report's recommendations on MPs' pensions and at the enforcement powers of the compliance officer in respect of the expenses regime. I also told the shadow Leader of the House that I would look carefully at his proposal to require IPSA to be ready to offer guidance to Members on prospective claims for expenses, to avoid our getting into a position in which claims are made and rejected, which would be on the public record. It would be better for advice to be given in advance, and I am pleased to tell the House that an amendment in my name meets that concern.
On Members' pensions arrangements, the House will recall that paragraph 13.32 of the Kelly report suggested that either the Senior Salaries Review Body or the independent regulator could, among other things "set the terms and" oversee
"the...administration of parliamentary pensions."
Paragraph 13.34 states that the Committee, after consideration, thought that that should be a matter not for the SSRB, but for the new body. Recommendation 43 states:
"The independent determination of MPs' pay and pensions should be entrenched in primary legislation in the same way as expenses. The independent regulator"-
"should therefore be given statutory responsibility for setting MPs' pay levels and overseeing MPs' pensions as well as for dealing with expenses."
We made some progress on implementing the pensions provisions in Committee. I am grateful to the hon. Member for Bournemouth, West, my right hon. Friend the Member for Islwyn (Mr. Touhig), my right hon. and learned Friend the Leader of the House, and other trustees for their subsequent contributions. I fully recognise that the trustees of the pension fund, who do great, unsung work on behalf of current Members and pensioners are properly anxious to ensure that the new arrangements will work effectively and provide everyone-current Members and pensioners-with appropriate safeguards in respect of their accrued pension entitlements.
I have set out what Kelly recommended, and I think everybody accepts that we must remain faithful to the principles that Kelly set out. He said that the full remuneration package of MPs-expenses, pay and pensions-should be subject to determination by IPSA, and that IPSA should, to use its word, "oversee" the administration of the pension scheme. However, there was no suggestion in the Kelly report that IPSA should do everything in respect of pensions, and IPSA has not made that suggestion.
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The first concern was that there should be proper safeguards for hon. Members' accrued pension rights. My aim is to ensure that the statutory safeguards afforded to members of other occupational pension schemes broadly apply to the parliamentary scheme. As with statutory protection for pension schemes elsewhere, amendment 74 would put a double lock on any provision adversely changing accrued pension rights. It would first be necessary for the trustees to consent to the scheme making such provision and, secondly, each member would have to give his or her informed consent to any changes to accrued rights.
It is the Government's view that in giving such approval, and indeed exercising any of their other functions, the trustees would need to act in the best interests of the members in accordance with their clear fiduciary duties as trustees. That protection means that if IPSA were to change the rules of the scheme, the pension entitlements that other hon. Members and I have would be safeguarded if we left service immediately before any change. No adverse changes could be made to that pension entitlement without the agreement of the trustees or our individual consent.
Secondly, there were concerns that schedule 7, as originally drafted, left open to doubt whether the new arrangements ensured the continuation of a trustee-based scheme with appropriate member representation on the board of trustees. Amendment 64 would put that beyond doubt and set out on the face of the Bill the structure of the board of trustees. The amendments provide for a board of 10 trustees, one of whom would be appointed
by IPSA, a second by the Minister for the Civil Service, while the remaining eight would be member-nominated trustees. It will be left to the trustees collectively to make appropriate arrangements for the nomination and selection of the member-nominated trustees, but such arrangements must involve all members of the MPs' and Ministers' pension schemes.
The amendments include appropriate transitional provisions, so that there can be a managed progression from the current board of trustees to the new one, but the existing trustees will continue to be trustees until the end of the transitional period. There is also provision for the first eight member-nominated trustees to be chosen from among the existing trustees.
Thirdly, amendment 66 would require IPSA to obtain the consent of the trustees before making the administration scheme under paragraph 3 of schedule 7. This is an appropriate further safeguard, given that the administration scheme will set out the trustees' core responsibilities in respect of the administration of the parliamentary contributory pension fund and the management of its assets.
I have considered very carefully whether we have got the balance right between the administration scheme and the MPs' pension scheme. I know that this was another issue that has troubled the trustees. After much discussion, I am satisfied, and I hope that the trustees are too, that we have got the demarcation between the two schemes right. The pension scheme will determine the full range of pension benefits and entitlements. In accordance with the overarching principle of independent determination, these are properly matters for sole determination by IPSA, albeit-as the provisions in the Bill make clear-after consultation with the trustees, the Government Actuary, the Senior Salaries Review Body and others.
I have studied carefully the amendments in the name of the hon. Member for Bournemouth, West and other trustees, and I have had the opportunity to discuss them. I have advised the House on those that I think it should accept. I understand that the hon. Gentleman is ready to withdraw some of his amendments, but I shall address them briefly.
Amendments 91 and 92 are not necessary. There is no question but that the trustees will owe a fiduciary duty to members of the scheme and that it will continue to operate as a trust-based scheme. Nothing in these provisions would alter the current position in that regard. Amendments 74(a), 76(b) and 80(a) and (b) relate to accrued rights. I think that those amendments were based on a misunderstanding, although everyone has had to run very fast with these provisions. It is important that we get them on the statute book quickly, so all of those advising us on all sides have had to work very fast.
The provisions in schedule 7 are based on those in the Parliamentary and Other Pensions Act 1987. Our provisions use the language "pension or future pension", rather than the language "benefit or future benefit" as used in the Pensions Act 1995. The same outcome will be achieved, and there is no question that the use of different language will mean that members are disadvantaged.
Finally, I wish to address the IPSA expenses regime and the role of the compliance officer. In Committee, the right hon. Member for North-West Hampshire was
keen to ensure that there was some explicit duty on IPSA to offer guidance to MPs, and I recognise the need for clear, comprehensive and consistent guidance, alongside the scheme itself. This will be essential if the mistakes of the past are not to be revisited. Moreover, such guidance needs to be a living document, regularly reviewed and updated in the light of experience.
In addition, while hon. Members must take personal responsibility for their own expenses claims, it is right that such guidance should be augmented by some facility to seek advice from IPSA, albeit that those arrangements must be a matter for IPSA to determine. In IPSA's consultation paper on the expenses scheme, it made clear its intention to provide such advice and guidance. Amendment 55 will provide statutory underpinning for this.
Finally, amendments 56, 58 to 60 and 62 respond to concerns that the enforcement provisions in schedule 5 to the Bill do not enable the compliance officer to exercise appropriate discretion when seeking to recover overpaid expenses in those cases where the compliance officer has established that IPSA was wholly or partly at fault. There may be circumstances where, for example, an MP incurs expenditure in good faith having sought advice from IPSA; IPSA then reimburses that expenditure; but it subsequently transpires that the advice was erroneous and that the expenses should not have been paid. If in exceptional circumstances such as these the compliance officer finds that IPSA is at fault, we agree that the compliance officer should have discretion not to require full repayment of the overpaid expenses.
I hope that I have given a helpful explanation of the amendments and that they will command the approval of the House.
Mr. Shailesh Vara (North-West Cambridgeshire) (Con): On this side of the House, and in common with many others, we have been absolutely clear that MPs' pay and expenses should be determined by an independent body. MPs setting their own financial package is simply not acceptable. Given all that has happened in recent months, that imperative has become ever more pressing. On that basis, we supported the Parliamentary Standards Act 2009.
Just as we supported IPSA's conception, we also pressed for its speedy inception, in order to ensure that the next Parliament can start under a new regime. After a long process of reviews and reports, the passing of the Parliamentary Standards Act 2009, and now with several additions and amendments to the 2009 Act being pursued through the Constitutional Reform and Governance Bill, we are close to ensuring that the next Parliament will be able to start with a clean sheet, so far as pay, expenses and allowances are concerned.
Many of the changes made so far to this Bill are welcome. They have strengthened the Parliamentary Standards Act, following the many important and welcome recommendations made by Sir Christopher Kelly. As a result, the future management of Members' pay and allowances will be independent and transparent, coupled with a more rigorous audit and assurance process.
In Committee, we raised several concerns regarding some of the new clauses introduced by the Government. These included the need for a clearer requirement for IPSA to provide advice to Members; the fact that the compliance officer had a dual role, giving advice as well
as having an investigatory role; the manner in which the original schedule 7 dealt with the transfer of the MPs' pensions scheme to IPSA, along with an obvious lack of consultation by the Government with the scheme's trustees; and the issue of payment of costs by Members in cases where IPSA itself was wholly or partly at fault concerning the advice that it offered. It is clear that the Government have reflected on those and other issues raised by right hon. and hon. Members in Committee, and I am pleased that the result is an improvement in the sections of the Bill dealing with IPSA.
On the issue of repayment of overpaid expenses, and the payment of costs by Members, I am pleased that the points raised by my right hon. Friend the shadow Leader of the House have been acted on and addressed in amendments 56 to 62. On the former, it is sensible that the Government have confirmed a discretion on the compliance officer concerning the full repayment of overpaid expenses when the compliance officer has found IPSA to be wholly or partly at fault. Although the discretion is unlikely to be exercised often, it is important that it exists, if natural justice is to be seen to be done, and actually to be done, in cases where incorrect information has been provided to Members who have subsequently acted on that advice in good faith.
We are also grateful that amendment 55 introduces a specific requirement on IPSA to provide further advice when Members request it. After the general election, all Members-whether old hands or newly arrived-will operate under the new regime, but it is inevitable that there will instances when a potential claim by a Member is not a black-and-white issue, no matter how well drafted the guidance from IPSA might be. The provision of advice will therefore help the process. May I say to the Secretary of State that his acceptance, on this issue, of the substance of the amendment tabled by the shadow Leader of the House and myself, in a spirit of cross-party co-operation, is much appreciated?
Then we come to pensions. Since we met in Committee, it has become clear that the Secretary of State has taken on board many of the points raised in the debate, and his amendments are a welcome step in the right direction. For example, they provide for member-nominated trustees on the board of trustees, which will give members a voice concerning their pension rights. As the chairman of the current board of trustees, my hon. Friend the Member for Bournemouth, West (Sir John Butterfill), said, the amendments tabled will provide
"better protection to pension scheme members and better governance arrangements than those proposed at Committee stage."
However, the trustees clearly had some concerns-hence a number of amendments were tabled in the name of my hon. Friend and his colleagues, and to be fair, as we have heard, the Government have accepted a number of them. For example, amendment 90 provides indemnity for the trustees of the fund, past and present. If that was not made explicit in the Bill, we would certainly have problems trying to find people willing to serve as trustees. Amendments (a) and (b) to amendment 64, which allow for more effective selection of member-nominated trustees and a check on the payment of remuneration to trustees, are also highly sensible.
The Government, however, are not so supportive of another amendment tabled by the trustees. The Government have helped to clarify that the scheme will continue to be trust-based in the future, with amendment 64 dealing
with how many trustees are to serve and how they will be appointed. However, the trustees assert that the point of the scheme being trust-based should be made explicit in the Bill, and they seek to do that with amendments 91 and 92. Although the scheme has operated on a trustee basis in the past, given that we are now transferring it to another body, it makes sense to make it as clear as possible that it will continue to be a trustee scheme in the future. On that basis, the Secretary of State might wish to reconsider amendments 91 and 92.
The trustees have also tabled amendment 94, which seeks to ensure that, if IPSA decides in the future to make a payment out of the fund to somebody who has not paid into it, the trustees must give their consent. Although that is an unlikely scenario, the Bill as drafted allows IPSA to do just that, and I am pleased that the Secretary of State has accepted some of the arguments for amendment 94. The trustees also have concerns about the protection of accrued rights, as evidenced by amendments (a) and (c) to Government amendment 76. Again, it is good that the Secretary of State is prepared to hear some of the arguments put forward, and I look forward to hearing what my hon. Friend the Member for Bournemouth, West has to say on that and other amendments.
The issues before us affect all Members, and I am pleased that the Secretary of State has taken note of the various suggestions made in Committee and the amendments before us today. The result is an improved Bill in so far as it relates to IPSA, which is welcome.
Mr. Heath: There is a slight sense of a work in progress about this group of amendments, which is to be entirely expected when trying to translate into legislation the Kelly Committee proposals and to refine the IPSA legislation that we passed earlier in the year.
On pensions, I must say that I was disappointed in Committee that there had clearly been so little prior consultation with the trustees of the pension fund about the shape and detail of the legislation. It seems slightly bizarre that the amendments then tabled apparently had not been thought through properly in conjunction with the trustees such as to allow us to hear what they had to say. However, that was the start of a process that, by and large, has been productive, which is very good news. However, even today the Government amendments before the House are subject to amendments tabled on behalf of the trustees, so clearly the process of reconciling their views had not reached a conclusion when those amendments to the Bill were tabled.
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We heard today that the Lord Chancellor is prepared to accept further amendments tabled on behalf of the trustees, which is good news, because it suggests that we are close to the point at which the two views can be consolidated into a single whole to be put before the House. However, I must say that most Members are not expert in this area and need, I think, the advice of those with much greater experience in order to understand some of the complexities of pension law. Nevertheless, even the least expert Member-probably me-recognised that the previous scheme, which did not provide for board-level representation of recipients of the pension scheme benefits, was out of kilter with what is considered good practice elsewhere. That obviously needed to be dealt with, hence the amendments before us.
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