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Lord Mackay of Ardbrecknish: I am sorry that, having come to this amendment, we cannot give the knock for knock that the noble Baroness, Lady Hollis, requested on the last one. This is a serious matter of principle. I listened to the points that were made by the three noble Lords who have spoken, and I think there will be quite a gulf between us on this issue.
The effect of Amendments Nos. 194 and 17 would be to prevent the costs of the new regulatory authority being met by the levy on pension schemes and instead require the Secretary of State to make appropriate funds available from taxation. That is usually expressed as being from the Treasury. But of course it is not actually from the Treasury; it is from taxpayers. We do not accept that it is right to burden all taxpayers, many of whom are not members of occupational pension schemes, with the cost of regulating such schemes.
We consider that it is right that the cost of the authority should fall to those who establish and run pension schemes, because they are responsible for ensuring that their schemes are properly run and it is in their interests to promote members' confidence in schemes. We have therefore decided that the authority will be funded by a levy on occupational pension schemes.
Reference was made to the Occupational Pensions Board and the money that currently goes to fund it. The bulk of its work is involved with granting and withdrawing contracted-out status. That work will go to the contributions agency of the DSS, which will continue to pay the costs of administering the contracted-out arrangements. The registry, which is funded by the existing levy, will pass to OPRA and will continue to be funded by levy. A small number of residual OPB functions, mostly concerned with very limited powers to modify schemes, will also pass to OPRA. Therefore I do not think that there is a proper comparison to be made between the Occupational Pensions Board and OPRA.
We are committed to ensuring that the costs of the authority are kept to the minimum that is compatible with effective regulation. It is important that we should be able to apply checks and balances on the authority's expenditure. We therefore cannot accept Amendment No. 14. I also have to resist Amendment No. 13, which would remove the power from my right honourable friend to approve the number of staff which the authority employs.
As to the reference to the Treasury, I am sure that the Committee will be aware of the recent fundamental review which resulted in much greater delegation of authority to other departments of state in matters such as pay and conditions of service. In the light of that review, we shall consider whether references to Treasury approval are appropriate and bring forward any necessary amendments during the Bill's passage. That is the first small concession that I have made, and I appreciate that against the background of the main issue
The argument which has been pressed on us, and which is understandable, is the one that was put by the noble Lord, Lord Marsh; namely, that he who pays the piper calls the tune. Both the noble Lord, Lord Marsh, and the noble Baroness, Lady Hollis, looked to their experience with the press for examples in which the Press Council, in the case of the noble Baroness, found itself dictated to by the press itself threatening to refuse to pay up if it did not like the way in which the council behaved.
There is a major difference here. For a start, the OPRA board, with its full-time chairman and six part-time members, wholly independent and appointed by and accountable to the Secretary of State, will ensure that the authority itself cannot be dominated by one interest group. Fears about its independence in that regard are unjustified.
But, equally, this is not self-regulation; it is statutory regulation, and the levy is a statutory levy, paid not to the body itself but imposed and payable to the Secretary of State. It is to the Secretary of State that the money would be owed. He, in his turn, passes the money over to the authority to run its budget and fulfil its obligations. We believe that these two partsthe composition of the board and the way in which the levy will be imposed via the statutes which one hopes we shall pass in the next few monthswill prevent the "He who pays the piper calls the tune" syndrome applying in this respect. We believe that it is fundamentally correct that the cost of regulating occupational pensions should fall on those who set them up and who run them. We do not believe that it is right that the generality of taxpayersmany of whom will not be fortunate enough to benefit from an occupational pension schemeshould be asked to pay a share of the cost of the regulatory authority. We do not believe that in any wayeither the way in which it is funded or the way in which we propose that it is fundedwill detract from its efficiency and effectiveness.
Lord Monkswell: We need to be a little more concerned about this issue than the Minister seems to indicate. Effectively the Minister suggests that we have a predicated tax; that we are to pay for something out of the public purse but we are to levy a special tax on a special group of people to pay for that disbursement. If one thinks of just about every other sphere of activity in our lives, that principle can be taken right across the board. That is not done, and for very good historical reasons. The Committee needs to be very, very concerned about what I would describe as the thin end of the very dangerous fiscal wedge that the Government effectively describe. Can the Minister advise the Committee as to whether there is any precedent for the sort of action with which we are faced?
Lord Tugendhat: Perhaps I may intervene briefly to take up the point that was made by the noble Lord, Lord Marsh, and also perhaps the point that was made by the noble Lord, Lord Monkswell. I should say, as we have
In a previous incarnation I was chairman of the Civil Aviation Authority. That body has been in existence for a very long time. I believe that it was set up by the Heath government. Certainly, the noble Lord, Lord Boyd-Carpenter, was the first chairman. It operated throughout the period of Labour government, as well as more recently under Conservative government. Although the Civil Aviation Authority's capital expenditure is derived from public funds and it has all the difficulties of dealing with the Treasury that that causes, its regulatory function was financed by those whom it was or isI should use the present tenseregulating. The Civil Aviation Authority is a statutory regulator; but at the same time it levies charges on those whom it regulates.
I listened with great interest to the point made by the noble Lord, Lord Marsh, about the Newspaper Publishers Association and the Press Council, but I must say that I did not have a similar experience at the Civil Aviation Authority. I do not remember any airlines threatening not to pay. It would have been very ill advised of them to do so. No doubt the noble Lord, Lord Boyd-Carpenter, will bear me out on that point.
I make that point because I feel that the presumption that he who pays the piper is a major influence on the regulator need not be the case. No doubt it was the case in some areas of national life. It was not the case in the one of which I speak with personal experience. I agree that that is a very different field from pensions; but the point made by the Minister about personal pension schemes being for their members rather than for the generality of taxpayers should be borne in mind.
I have no idea how the industry or the company with which I am connected will view this matter when it comes up for discussion. But the point about statutory regulation and charging those who are regulated is one that is more complicated than the earlier intervention suggested. There is a successful precedent for it in a quite different field.
First of all, employers do not have to provide occupational pension schemes at all. They do so voluntarily and on a non-profit basis. They are expensive to administer. The Government are increasingly aware that occupational pension schemes will have to be supplemented. Roughly 50 per cent. of the population are covered by occupational pension schemes and therefore the Government are interested not only in maintaining them but also in encouraging them to expand further.
In addition, with regard to solvency and solvency margins, the Bill can impose considerably increased burdens on the providers of pensions. That is against a background in which those providing the pensions administer them voluntarily. They make no profit out of
It seems to me that from every point of view this amendment is pushing what the Minister declares to be a principleI understand thatto a ludicrous point, where it can cause harm to the policies which lie behind the Bill; namely, to make the pension schemes outside the government area wider and more acceptable. It might be understandable if there were a vast amount of money involved, but in this kind of situation it does not begin to make any kind of logic.
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