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I still do not understand entirely one slightly arcane point, although I hope that when I have heard the contribution from the hon. Member for Bournemouth, West (Sir John Butterfill), I will understand it better. It concerns the distinction, in terms of language, between a "pension or future pension" and a "benefit or future benefit", which I understand to be the language of the Pensions Act 1995-if I have got it right. I am not sure whether I understand what possible impact there could be of changing the language from one to the other, other than for the purposes of consistency. If that is the case, I should say that I am normally in favour of consistency, but I shall be interested to hear the arguments on either side. That said, it is not a critical factor, and largely I appreciate the work that has been done, the progress that has been made and the stance taken by the Lord Chancellor.
I shall deal with the amendments relating to IPSA. As I have said from the start, I believe that there are still unanswered questions about the role of the compliance officer. We discussed the matter in Committee, and I was simply told that my concerns had no foundation-and no foundations there remain, because the Lord Chancellor has not put down any amendments about that role.
Mr. Straw: May I take the hon. Gentleman back to his question about the use of the terms "pension or future pension" and "benefit or future benefit"? It is a matter of drafting. "Pension or future pension" is a phrase used in the Parliamentary and other Pensions Act 1987, and the strong advice that I have had is that it is best to stick to that, because it is the foundation of our scheme. "Benefit or future benefit" is used in the Pensions Act 1995. It is a matter of drafting and cleanliness-and nothing else.
Mr. Heath: I thought that that was the case. This is a question of who or what we are going to be consistent with. We cannot be consistent with both, but obviously at some stage, there has been inconsistency between the two enactments-hence the problem.
Returning to IPSA, I was saying that I still have some concerns about exactly to whom the compliance officer will be answerable, if anyone, and about the independence of their role, which will be critical to the operation of the process. I welcome amendment 55, which provides for IPSA to supply guidance, both general and specific, to Members. That function, however, must be separated from that of the compliance officer. The compliance officer cannot provide that advice, because they might find themselves taking a critical view of IPSA's actions, and their independence of action would be frustrated from day one if they were also the source of such advice. That has not been made explicit in the amendment, but no such linkage is suggested by it either. I hope, however, that IPSA will take note of my comments and ensure that the compliance officer is at least at one remove from the provision of any such advice.
The other principal area of amendment in this group relates to the discretion given to the compliance officer in dealing with Members who have been paid sums to which they are not entitled, when IPSA might be wholly or partly at fault. This raises a number of questions. I do not intend to divide the House on this point, but I should like clarification on the definition of fault in this context. Obviously, a simple arithmetical error would constitute a fault, but would a judgment based on
advice that had been misconstrued be seen as a fault? We are getting into a difficult area here, in trying to define fault on the part of IPSA.
We should make a clear distinction between an overpayment in which the Member had had no involvement-for example, when they had claimed for a certain amount and more had been put into their bank account, unbeknown to them-and a case in which a Member had claimed for an item of expenditure to which they were not entitled under the scheme. The key question is whether the Member would have incurred the expenditure, were it not for the advice-or clearance, if we are to put it that way-from IPSA that they took before incurring it. It is not the claim that is the issue but the expenditure. If a Member has simply been overpaid, there should be no question but that they should pay it back. The money is not theirs. Whether they received it because of an error by IPSA is immaterial to the fact that they are in possession of public moneys to which they are not entitled.
There is a strong argument for a degree of discretion in arranging the manner and timetable of the repayment, but we should not afford ourselves any discretion in statute as to whether the money should be repaid at all. After all, we do not allow such discretion to people who are overpaid through tax credits, for example. I regularly meet people who are outraged because, having been overpaid in that way, through no fault of their own, they are then being required to repay the money, often at an inconvenient time, even though they have often spent it, perhaps on their children. This often happens to people who are not very well off. We should not give ourselves any latitude that we do not allow others when it comes to overpayment.
A separate issue involves expenditure incurred as a result of an inquiry as to whether it was properly allowable, the answer to which was yes. The expenditure, which would not otherwise have been incurred, is then made, and subsequently reclaimed. Again, the first responsibility must rest with the individual Member, and not on the advice that they were given. If there is to be a discretion to excuse Members who have claimed money inappropriately from repaying it when the claim is determined to be inadmissible, I would expect that discretion to be used very sparingly, if at all. I can see why it is sensible to have some discretion, but I would like IPSA to issue clear instructions on when it is appropriate to use it. I do not think that its use will be appropriate in most cases.
Mark Durkan: The hon. Gentleman says that the discretion is unlikely to be used, but may I remind him that we are talking only about provisional findings that might emerge from an investigation by the compliance officer? If it were to emerge that something was wholly or partly the fault of IPSA, that should be declared very readily; otherwise, people would always entertain the suspicion that, so long as a matter relating to an MP had been referred and investigated, it would always be the MP and only the MP who had done wrong.
Mr. Heath:
I should like to make it plain to the hon. Gentleman that I am not talking about the findings. The findings should clearly state whether there was a reasonable case that a Member had been misled by the authority. I am talking about the repayment direction, which is a different matter. As I have said, we do not
extend any latitude to others. Her Majesty's Revenue and Customs do not do so, and the Treasury does not do so via the tax credit system. We must be very careful here. For heaven's sake, if we have learnt one lesson over the past year, it ought to be that we apply the same rules to ourselves as we apply to others. That is the plea that I am making, and I believe that that can be encompassed in the amendments before us today, provided that the discretion is exercised appropriately. But I absolutely agree with the hon. Gentleman that findings that exonerate a Member from blame for a mistake made by others should be made absolutely clear. There should be no question about that, and if it needs to be set out in the way that it has been, that is entirely appropriate. That would not necessarily excuse anyone from repayment, however.
Sir John Butterfill (Bournemouth, West) (Con): The trustees are extremely grateful to the Justice Secretary, who has worked with us tirelessly of late to try to reach agreement on these extremely complex matters. It is important that we do not miss any issues, and that everything is properly understood. The trustees-and, ultimately, pensioners-will face unwelcome and unfair unintended consequences unless we get this right. The trustees have a long track record of trying to act very sensibly-in the interests not only of Members but of taxpayers-in administering the scheme in the past. We have made a number of changes that have resulted in significant savings for the taxpayer.
I can now say that the Bill is much improved; I am confident that there will be good will from IPSA if any matters remain unresolved. There are some instances, however, where the trustees felt it right to bring forward amendments at this stage because of the importance of the issues for members of the scheme and the trustees and because of the need for understanding of matters that need to be shared.
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What I have to say about the Bill should be seen in the context of the fundamental shift that is going to take place, as recommended by Kelly, when future benefits for Members of this House are to be set by IPSA. That is what will happen and as it goes forward, the trustees will be consulted-but only consulted-on any future scheme. Because of the complexity of pensions, however, and the fact that current and former members have accrued rights within the pension scheme that should be protected, the role of the trustees is important for the administration and the management of the scheme in the future. I hope that the trustees will be helpful to IPSA in dealing with the most complex areas.
The trustees have tabled a number of amendments. After discussion with the Secretary of State, we have been quite happy to amend some of them in a minor way. Amendment 91-amendment 92 is related-states that the parliamentary contributory fund is a "trust scheme". We put that in for the reason that we have always understood, as I think has everybody, that it is a trust scheme, so we felt that it would be sensible to show it on the face of the Bill. The Secretary of State has said that he does not think it absolutely necessary because he has confirmed in this place that it is a trust scheme-I am sure that I am not misrepresenting him on that-so we will not press these amendments.
In amendments (a) and (b) to amendment 64, we have put forward some technical amendments to the method of selection of members. Originally, we were in a position of having to go out to every single member-deferred members, retired members and sitting members-and organise a huge ballot, which would have been extremely complex and rather difficult to achieve. It might not have achieved the selection of people with sufficient skills and knowledge to act within the trustee scheme. We are grateful that the Government will accept our amendment, which provides a good deal more flexibility and will work for the benefit of the scheme as a whole. It will, of course, be consistent with section 241(2)(b) of the Pensions Act 2004. Whatever we do about our own schemes in this place, it is important that we comply with the requirements that we impose on everyone else in the nation; it would be wrong if that were not so.
Under amendment (b), the Treasury would have to consent to the use of parliamentary contributory pension fund assets to remunerate trustees. There again, we think it must be right that if IPSA is to provide remuneration or allowances for trustees out of the fund's assets or for spending on other matters that may arise, it must be right to protect the taxpayer by making that particular area subject to the Treasury's consent. I am quite sure that IPSA would not expect anything else.
"the indemnification of the trustees (and former trustees) of the Fund".
As was said earlier, it would be impossible to find anyone willing to serve as a trustee if they did not have an indemnity; indeed, they would be stark raving mad if they did the job without having it. The indemnity will come from the funds. We are grateful that the Secretary of State has agreed to this. Currently, the 1993 regulations provide each trustee and former trustee with an indemnity from the fund's assets, except where prohibited by legislation or in cases of dishonesty, bad faith or recklessness-one hopes that none of those ever arises in the future. Although we should be confident that IPSA would not want to remove this indemnity, it is none the less inappropriate for IPSA alone to have the power to do so without the consent of the trustees.
Amendments 94 and 95 require trustee consent to aspects of proposed IPSA and Minister for the Civil Service benefit powers. Amendment 94 would leave out
"the provision specified in paragraph 24(2)"
of schedule 7 and would insert the stated words in sub-paragraphs (i), (ii) and (iii). I am sorry that these are rather complex amendments and apologise if they are difficult to follow. Amendment 95 would insert
"except the provisions specified in paragraphs 21(1) and 26 unless with the consent of the trustees".
I welcome the Justice Secretary's agreement that paragraph 21(1) of schedule 7, which empowers IPSA or the MCS in relation to the Ministers' scheme to provide
"for the application of assets... in or towards the provision of pensions to be paid otherwise than out of the Fund".
There again, we think that if that happens, it should be subject to the trustees' consent, as it is not appropriate to exercise those powers without the consent of the trustees, who have a duty to safeguard the interests of all the PCPF's members. It is a historic power that has not been used and the safeguard of trustees' consent is necessary.
Paragraph 26 of schedule 7 empowers IPSA or the Minister for the Civil Service in relation to the Ministers' scheme to make
"Provision conferring functions under the scheme on persons specified in or determined under the scheme",
and I welcome again the Secretary of State's agreement to the amendment. Its purpose is to ensure that all the functions currently exercised by the trustees in conjunction with the relevant experts cannot be changed without the consent of the trustees. Commutation factors are relevant, for example. Although they are nominally brought in by the trustees, they are derived from work done by the Government Actuary's Department, which will periodically clarify what the commutation factors should be in line with changes in the market. We did not feel it appropriate for the trustees themselves to dictate that; it should be done through the use of some independent expert.
It is the same with provisions for ill health retirement. Again, the trustees do not determine whether someone is sufficiently ill to merit it. We go to an outside medical opinion, and whether or not someone is entitled to the ill health retirement will derive from whatever that opinion might be. We think that that is a sensible regime, which we imagine IPSA will wish to continue.
I am losing my place here. Amendment 95 is, of course, consequential on amendment 94. Amendment 93 deals with accrued rights protection. We must be sure that the protection of accrued rights for members who have paid in-for many years in many cases-are suitably robust. The amendment would thus insert after "puts", the phrase "(or might put)". We are pleased that the Secretary of State has agreed to that amendment. It will make the accrued rights protection consistent with section 67A(4) of the Pensions Act 1995, which applies to a modification that would or might affect subsisting rights.
We tabled amendment (a) to Government amendment 74 to ensure that accrued rights would apply to all benefits, not just pensions, because we were aware that some benefits under the scheme were not really pensions. Payment to a widow on the death of a Member, for instance, would not constitute a pension, but would fall within the jurisdiction of the present scheme. We have received assurances that the current drafting of the Bill does not limit accrued rights protection to pensions generally, but includes benefits more widely.
Mr. Straw: That is the phrase used in the Parliamentary and other Pensions Act 1987. "Pensions" obviously includes other rights and benefits that are already being paid. I know, and have been advised, that the phrase is widely drafted, but I am grateful to the hon. Gentleman for accepting that it is better to stick with the language of the original foundation scheme than to adopt language that could, to my certain knowledge, produce consequential problems.
Sir John Butterfill: I am pleased to say that the legal advisers to the trustees have confirmed that that is an appropriate interpretation of the legislation. We will therefore not press the amendment to a vote, and the same applies to amendment 80 as amended by amendments (a) and (b).
We tabled amendments (a) to Government amendment 76 because although in the case of a new scheme all the accrued rights will be covered and secured,
some rights may be contingent. People who retire because of ill health, for example, will not know of their rights before the new scheme starts, because those rights will be contingent on the deterioration of their health. We are grateful to the Secretary of State for supporting the amendment. Many private sector schemes provide similar protection.
If the Government accept the amendment-which I understand that they will-I shall want to put on record the trustees' recognition that the Government wish to empower IPSA to create a scheme relating to the pension benefits that Members of Parliament will earn in future. The protective words being sought in relation to rights that Members have earned are not intended in any way to prevent IPSA from creating such a scheme. However, the trustees consider it important for the contingent rights of serving Members, which have been paid for by Members' contributions, to be protected.
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Mr. Straw: I grateful to the hon. Members for Bournemouth, West (Sir John Butterfill), for North-West Cambridgeshire (Mr. Vara) and for Somerton and Frome (Mr. Heath) for the general welcome that they have given our proposals. I do not need to say much more about them.
The hon. Member for Bournemouth, West was good enough to accept my explanations in respect of his amendments (a) to amendment 76, (b) to amendment 74, (a) and (b) to amendment 80, and amendments 91 and 92. A total of six amendments refer to only two issues, the substitution of "benefits" for "pensions" and the issue of a trust scheme. I hope that in both instances my explanations have been adequate.
The hon. Gentleman was also good enough to confirm the view of the trustees, which I know is also the view of the whole House-I paraphrase his words-that we should stick faithfully to recommendation 43 of the Kelly report, which states:
"The independent regulator should... therefore be given statutory responsibility for setting MPs' pay levels and overseeing MPs' pensions".
The recommendation is more explicit about IPSA's power to set the terms and oversee the administration of parliamentary pensions.
I believe that our proposals achieve the necessary balance. What I am about to say is almost otiose, but it may just be worth my saying it. If it transpires following the election-it will have to be then, but I hope that this will become law-that because of the speed with which we have had to undertake these measures there are some glitches in the drafting, the House will have to return to the matter. However, given the explanations offered by the hon. Member for Bournemouth, West on behalf of the trustees and those offered by me, and given the spirit in which the changes are being made, I hope that that will not be necessary.
Amendment made: 56, page 25, line 7, at end insert
', including findings that the member's being paid an amount under the MPs' allowances scheme that should not have been allowed was wholly or partly the IPSA's fault.'.- (Mr. Straw.)| Next Section | Index | Home Page |