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Lord Craig of Radley: My Lords, is not one brutal lesson of this whole sorry affair the fact that no resolution or ultimatum is worth the paper it is written on if there are not the forces available to carry out and meet those resolutions or ultimatums? Has not the time come, in the face of reality, to stop allowing the political heart to rule its head and to decide whether

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to commit forces in sufficient weight to achieve the right, overall objectives; or to make resolutions which take account of the realities on the ground and match what is asked of the United Nations and UNPROFOR to the forces that they are provided with, and no more?

Baroness Chalker of Wallasey: My Lords, by his remarks, the noble and gallant Lord expressed far better than I could the real situation and the irony involved. No resolution, no rhetoric and no ultimata will resolve the matter; indeed, the only way we can resolve it is to keep people alive and obtain a solution by discussion. I believe that the noble and gallant Lord would agree with me that it is absolutely vital that UNPROFOR does not become a combatant in the situation. We shall only be able to continue on the ground as long as that does not endanger our men beyond reason. At present, there is a very nasty situation in Srebrenica which has, perhaps, developed over a longer period of time during the cease-fire than we realised. However, we have to continue to try to find a solution which is not the use of military force by UNPROFOR.

Lord Mackie of Benshie: My Lords, while I agree with the Minister that a great deal of humanitarian work has been carried out, does she agree with me that the ineffectiveness ensures that such work must go on and on? Surely the noble and gallant Lord who has just spoken gave the right answer; namely, that forces should be provided to ensure that negotiations succeed, if necessary by Britain and France alone. Further, can the Minister say whether it is true that the air strikes ordered against the attacking forces were stopped once two tanks had been destroyed because the Serbs threatened to kill Dutch hostages? If that threat was acceded to and air strikes stopped, does that not endanger hostages all over the world, but especially in Bosnia, at present? Can the Minister comment on the command structure? Am I right in thinking that the command structure consists of two people; namely, the Commander-in-Chief of the forces and the United Nations representative? Is that not a structure for disaster? One person can be in command, three people may be a command structure; but two is impossible.

Baroness Chalker of Wallasey: My Lords, I understand the attraction of ensuring that the forces are sufficient in number to carry out the task given to them. However, given the fact that Britain and France have contributed far more forces than any other country, I am not sure that we should extend the forces still further beyond the recent extension that we announced.

The noble Lord, Lord Mackie, is absolutely right in what he said about the air strikes. Threats were issued against the 43 Dutch hostages. It was on that basis, presumably, that Mr. Akashi was not prepared to go ahead with further air strikes. I can only agree with the noble Lord as regards his mathematics: two people disagreeing will never resolve a situation; but one or three might take a clear decision. Let us hope that we can soon get to some clearer decision taking.

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Pensions Bill [H.L.]

5.15 p.m.

Consideration of Commons Amendments resumed.

147Clause 72, page 47, line 25, leave out from '1987' to end of line 26.
148Clause 77, page 50, line 37, leave out from 'exceed' to first 'the' in line 4 on page 51.
149Clause 78, page 51, line 18, after 'may' insert 'except in prescribed circumstances'.
150Clause 78, page 51, line 21, leave out 'recover the payment, and' and insert 'or'.
151Clause 78, page 51, line 23, leave out from 'excessive' to end of line 24 and insert:
'recover so much of the payment as they consider appropriate'.

Lord Mackay of Ardbrecknish: My Lords, with the leave of the House, I beg to move that the House do agree with the Commons in their Amendments Nos. 147 to 151 en bloc. In speaking to those amendments, perhaps I may speak also to Amendments Nos. 173, 181, 182, 248 to 254, 293, 297 to 308, 317, 334 and 383. All the amendments in the group are concerned with the compensation scheme.

Amendment No. 147 makes it clear that, while the compensation board may borrow from institutions authorised under the Banking Act 1987, it cannot borrow from the Bank of England. The Maastricht Treaty does not permit a public body to borrow from the Bank of England.

Amendment No. 148 is designed to ensure that the amount of compensation payable is not unduly restricted. The amount of compensation paid to salary-related schemes will be the lowest of three amounts. It can be 90 per cent. of the loss; it can be the amount required to restore a scheme to a funding level of 90 per cent. on the date when the scheme applied for compensation; and it can be the equivalent amount at the settlement date, which is the date after which the scheme is unlikely to make further recovery.

Amendment No. 148 removes the reference to one of those three amounts—that is, the amount required to restore a scheme to 90 per cent. funding at the application date. During the period between the application date and the settlement date, the trustees will have been taking action to recover lost assets. They will be under statutory duty to do so. If they are successful, the amount of compensation would take account of the recoveries that they have made, which is only reasonable. But if they are unsuccessful and the scheme is left in a worse position, the amount of compensation would not be sufficient to restore the scheme to 90 per cent. funding. We believe that that is inequitable. That is why we have made the amendment.

Amendments Nos. 149 to 151 respond to concerns raised in your Lordships' House, both in Committee and on Report. The compensation board has the power to make payments in anticipation of compensation. The board must be able to do that so that it can act quickly

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to help scheme members who may be in financial difficulties by paying interim payments to their schemes.

The compensation board may then decide that compensation was not, after all, appropriate or that it had made excessive payments. The board, therefore, needs the power to recover the payments that it has made. It is obviously right for the board to be able to do that, because all compensation payments are funded through the compensation levy paid by the schemes.

The issues of concern to your Lordships were, first, the possibility that trustees might be held personally liable; and secondly, that recovery might be sought from individual scheme members. There was also concern about the board's powers to make partial recoveries. I assured your Lordships that it was not the intention for the compensation board to hold trustees of schemes personally liable for repayment or to seek to make recoveries directly from scheme members. I also gave a commitment that we would consider the issues further and bring forward amendments if necessary.

On the first two issues, we have received firm legal advice that recoveries can be made only from the assets of the scheme. Payments will form part of the trust estate, which is separate from the trustee's personal estate; nor can the board seek to recover from individual scheme members. So no amendments are required there. But amendments are needed in connection with the board's power to make recoveries. Amendments Nos. 149 to 151 therefore provide for the board to make partial recoveries in all cases if appropriate.

Amendment No. 149 introduces a power to enable the circumstances in which recoveries can be made to be restricted. We envisage using that power to specify that recovery should not be made where it would result in the scheme being in a worse position than if interim payments had not been made. We have in mind here cases where interim payments have been made and payments made to members, but the compensation board subsequently decides that compensation is not after all payable. That could happen, for example, if the loss was due to incompetence rather than dishonesty.

Closely related is the question of partial recoveries. The board may make partial recoveries only where excessive payments of compensation have been made. There is, though, no specific provision for the board to make partial recoveries where it determines that compensation is not after all appropriate. The board's discretion to make recoveries may be sufficient to cover this but to put the matter beyond doubt we have brought forward Amendments Nos. 150 and 151. We believe that the amendments fully address the concerns raised with us.

Amendment No. 317 will bring the compensation board and the regulatory authority under the direct supervision of the Council on Tribunals in dealing with matters by means of a formal hearing as well as when dealing with reviews. They will act in a quasi-judicial manner when conducting a hearing in a way similar to a tribunal. We believe it right that the council should be able to supervise this function. I also gave a commitment that the compensation board would give

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written determinations in all cases dealt with by formal hearing or review. That is achieved by Amendment No. 305.

Amendments Nos. 181 and 182 take account of the fact that in the course of investigating whether compensation is payable the compensation board may obtain information relating to tax matters from the Inland Revenue or the commissioners of Customs and Excise. The board will not be able to disclose such information to a third party without being given the authority to do so except for the purposes of criminal proceedings. Amendment No. 182 adds recognised professional bodies, within the meaning of Section 391 of the Insolvency Act 1986, to those the compensation board may disclose information to or receive information from. That is important because compensation will be payable only where the employer is insolvent.

We have also, in Amendments Nos. 248 to 254 and 297, restructured the way in which the levy will work. Amendment No. 251 draws a clearer distinction between the levy to meet the costs of the compensation scheme, and the general levy which will meet the costs of the new regulatory authority as well as existing services such as the pensions ombudsman and the pensions registry.

The compensation levy will not be collected from the same schemes as the general levy. Personal pension schemes and schemes where all the members are trustees will not be covered by the compensation scheme. The amount to be collected will be determined in a different way from the general levy too. This is because it will largely be post event and determined by the number of compensable events. That is why we have decided to separate the compensation levy provisions from those of the general levy. Amendment No. 398 makes specific provision for regulations to impose a levy to cover the expenditure of the compensation board.

These regulations will set a framework for determining the compensation levy, including the maximum amount. The board will determine the rate of the levy because it will be in the best position to set the precise rate. However, we intend to set a maximum amount that can be collected. This will enable us to ensure that schemes liable to pay do not face a particularly high levy in any one year. The amendment also includes provision for one year to be taken with another. This will enable recovery of the board's costs to be spread over a number of years. The compensation levy will be paid direct to the compensation board although we envisage that it will, like the general levy, be collected by the pensions registry.

We are also taking a power to allow us to waive payments of the levy in certain circumstances. We intend this in cases where payment of the levy would adversely affect members' entitlements. We envisage that it will apply to some frozen and paid up schemes. However, there is flexibility to prescribe other circumstances should that become necessary. Amendment No. 301 brings the compensation board within the jurisdiction of the parliamentary commissioner for administration. Therefore the ombudsman will be able to investigate complaints of maladministration against the compensation board. With that explanation I commend the amendments to the House.

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Moved, That the House do agree with the Commons in their Amendments Nos. 147 to 151.—(Lord Mackay of Ardbrecknish.)

On Question, Motion agreed to.

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