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Lord Carmichael of Kelvingrove: My Lords, I thank the Minister for his full explanation of the order. Following the last debate, he will be aware that the public need reassurance on the whole question of the slaughtering of animals. We had the problem in relation to beef, and now sheep's food, and the order does not seem to be well timed in that regard. The Minister suggested that the media have a thirst for "going over the top". Because of the timing of the order, they may have a field day tomorrow. However, the Minister's explanation by and large was very full.

I am concerned about a number of points. When the local authorities lose control, how will the order affect the frequency of inspections? Will not there be a loss of local knowledge in regard to the people who work in the abattoirs and slaughterhouses? Will they now be a little removed from the inspectors? As I said, the public need reassurance and I hope that the Minister will make the point that the frequency of inspections will be just as rigid as it is now.

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Is the order introduced not only to tidy up the legislation in relation to slaughterhouses, but also to save money? That seems to be another of its objects. Finally, on the question of slaughtering cattle, I know that the right for owners to slaughter cattle is an ancient right, but that was perhaps more acceptable when farms were more remote and transport was very bad. The situation is different now when one can slaughter an animal in Campbeltown or in the wilds of Kintyre and have it in the city markets extremely quickly. Can the Minister say what control there will be over that? I speak as someone who does not have anything like the knowledge held by the farming community or the Minister, but these are the kinds of worries that the public have. Otherwise, I have every faith that the Minister is doing his best with the knowledge and information that he has. However, I would like some explanation if he can help me on that.

The Earl of Lindsay: My Lords, I am grateful for the general welcome that the noble Lord, Lord Carmichael, gives to this order. I agree with him that every opportunity is needed to reassure the public as to the safety of food and their own health. In moving the order, I hope that I stressed the fact that at no stage in any part of this order are public health or animal health being compromised. We are merely removing duplication where later requirements and measures, with which the industry has to comply, supersede existing and earlier measures.

As regards the frequency of inspection, the Meat Hygiene Service and the State Veterinary Service carry out ever more frequent inspections on the entire industry. Since 20th March there has been a large increase in resources available to the Meat Hygiene Service. It was established in April 1995 as a single agency to enforce hygiene in slaughter in all licensed slaughterhouses. One of its main objectives was to do so consistently across the United Kingdom. It was felt that there was some lack of consistency when each local authority was in sole charge of the operation. The official veterinary service and the meat inspectors are present in all slaughterhouses. That can certainly reassure the noble Lord as regards the principal concern that he had in this area.

The noble Lord was also worried about the loss of local knowledge if some of the local authority controls were removed. The repeal of that power does not affect any other by-laws and neither does it affect planning controls. The local authorities will continue to have the opportunity to be involved to the extent that they feel necessary in the operation of local slaughterhouses. The order is not designed purely to save money; it is designed to save unnecessary bureaucracy and duplication. Where the same job is being done twice we seek to save on bureaucracy and resources and put them to better use.

The noble Lord also asked about owners' private kills. I can reassure him that owners and farmers and others making use of private kills, have to comply with all normal hygiene and animal welfare requirements. It is also worth mentioning that we as the Government

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recently sought views from interested organisations on the continued availability of the private kill provision. We have received a range of responses on that and we shall be considering them very carefully.

On Question, Motion agreed to.

Pneumoconiosis etc. (Workers' Compensation) (Payment of Claims) Amendment Regulations 1996

4.35 p.m.

Earl Ferrers rose to move, That the draft regulations laid before the House on 16th July be approved [28th Report from the Joint Committee].

The noble Earl said: My Lords, I begin by offering my sincere apologies, and those of my department, to your Lordships, for drawing on the patience of the House again to consider these regulations. They were originally laid before the House on 27th June and they were debated by your Lordships on 9th July and by another place on 16th July.

It was during the proceedings in another place on 16th July that it was pointed out by the honourable Member for Makerfield, Mr. McCartney, that the figures in Regulation 2(c) were incorrect. That caused some concern. It was found that a mistake had been made, but it was not possible at that point to tell another place what the correct figure should be.

That being the case, it was decided to withdraw the original draft statutory instrument and to lay a corrected draft. The corrected regulations were therefore laid before the House on 16th July. This will enable the regulations to come into force on the date originally intended of 1st August.

The regulations are being made under the Pneumoconiosis etc. (Workers' Compensation) Act 1979. The purpose of the regulations is to increase by 2.1 per cent. the amounts of compensation which are paid under the Act to those who first satisfy all the conditions of entitlement on or after 1st August 1996.

Regulation 2(c) of the draft statutory instrument had originally stated:

    "in regulation 6(1) (payment where pneumoconiosis is accompanied by tuberculosis), for the amount of £3,575 there shall be substituted the amount of £3,650".
The figure of £3,575 was incorrect. The figure should have been £3,654.

Your Lordships may say that the mistake was rather like the housemaid's baby--it was only a small one. Nevertheless, it should not have been made and I apologise for the fact that it was. With an increase of 2.1 per cent. the figure of £3,650 now becomes £3,731. The regulations before the House today have been amended accordingly. I apologise again to your Lordships for the fact that I ask your Lordships to consider this matter again but, nevertheless, I hope that noble Lords will approve the regulations. I beg to move.

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Moved, That the draft regulations laid before the House on 16th July be approved [28th Report from the Joint Committee].--(Earl Ferrers.)

Lord Graham of Edmonton: My Lords, I thank the Minister for advising me as soon as he could that this procedure would take place this afternoon. He has acted entirely properly and put right what was clearly an oversight, for which he has apologised. With the error being on the right side, we have no objection to the order coming forward again. As the noble Earl said as regards the baby being only a small one, all these things are conceivable.

Noble Lords: Oh!

Lord Graham of Edmonton: My Lords, we on these Benches recognise that it is an error which has been put right as quickly as possible for the benefit of those who have great problems. We are grateful to the Minister.

On Question, Motion agreed to.

Occupational Pension Schemes (Mixed Benefit Contracted-out Schemes) Regulations 1996

4.37 p.m.

The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish) rose to move, That the draft regulations laid before the House on 18th June be approved [24th Report from the Joint Committee].

The noble Lord said: My Lords, on behalf of my noble friend Lord Lindsay I beg to move this order. I am sure that it is for the convenience of the House that we also deal with the draft Occupational Pension Schemes (Pensions Compensation Board Limit On Borrowing) Regulations 1996 laid before the House on 18th June and the draft Occupational Pension Schemes (Requirement to obtain Audited Accounts and a Statement from the Auditor) Regulations 1996, which were laid before the House on 26th June. These regulations are an integral part of the package of measures set out in the Pensions Act 1995.

Pensions are one of the most important ways in which people hold a stake in this country. Almost £600 billion is invested in private pension funds--more than the rest of the European Union put together. We are committed to building on that success.

It is essential that we continue to provide an environment in which private pension provision can flourish. The Pensions Act will play a major part in this. It will give people the security they need to invest for their retirement. It will also introduce greater flexibility for contracted-out schemes so that they can provide benefits in the way that best suits them and their members.

Perhaps I can explain each of the orders in turn. I begin with the Pensions Compensation Board limit on borrowing regulations. Next April the measures in the Pensions Act will introduce a strengthened legal and

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regulatory framework for occupational pension schemes. As I have said, this will improve the security of members' pensions. However, no regulatory system can provide an absolute guarantee against a determined criminal. The new pensions compensation scheme will act as a longstop. Where, as a result of dishonesty, the value of a scheme's assets is reduced and there is no employer to stand behind the scheme compensation can be paid. The compensation scheme will be operated by the Pensions Compensation Board. The board will have responsibility for determining whether compensation is payable, and how much can be paid. The board will come into being on 1st August 1996. It will be chaired by Dr. Julian Farrand, who is also the Pensions Ombudsman.

The board will need to be able to meet urgent calls for assistance and act quickly to limit any financial hardships to scheme members. But it would be undesirable for the board to build up large reserves as a contingency against valid claims. Therefore it needs to be able to borrow from recognised financial institutions. Its borrowing powers will be activated from 1st August, and this will enable the board to raise funds to meet its start-up costs.

The regulations before the House today propose setting the statutory maximum amount that the board may have outstanding in respect of any money borrowed at £15 million. It is not expected that the board will generally need to borrow large amounts. It has levy-raising powers. However, we recognise that the limit needs to be sufficiently high to ensure that urgent and significant calls for help can be met should they arise. The borrowing limit is one control to ensure that the compensation scheme remains affordable. We can also set the maximum amount of the annual levy. As the board is a public body its finances will be subject to government accounting rules and there will be a financial memorandum with the board. In addition, the Comptroller and Auditor-General will audit the board's accounts. The proposed statutory borrowing limit is set at a realistic and affordable level and effective controls will be in place to ensure that the board maintains the highest standards of propriety, regularity and value for money.

I now move to the regulations on contracted-out mixed benefit schemes known as "COMBS". These regulations will enable a single occupational pension scheme to contract out of SERPS on both a salary-related and money purchase basis. Present legislation requires employers who run contracted-out schemes to provide either salary-related benefits or money purchase benefits. They cannot have both types of contracted-out rights in one scheme. A scheme can change the basis on which it contracts out only if the scheme trustees first discharge their liability to pay accrued contracted-out benefits. These new regulations will enable schemes to hold two kinds of contracting-out rights in one scheme. From 6th April 1997 new schemes can elect to contract out as COMBS from the outset. Existing schemes already contracted out on a purely salary-related basis will be able to elect to become

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COMBS from the same date. The option will be extended to cover existing contracted-out money purchase schemes one year later, from April 1998.

Our aim is to maintain the attractiveness of contracting out for employers by allowing them greater flexibility to respond to changes in the financial environment, the labour market and the pattern of pension provisions. Scheme members will also benefit. This will be particularly true where they are free to choose which part of the scheme to join, and whether to move from one part to the other. These new flexibilities will also broaden the options which employers have when designing and setting up a contracted-out scheme.

We have tried to keep the provisions as simple and as easy to understand as we can by sticking, where possible, to the existing rules for contracted-out schemes. Therefore, broadly speaking, members of the salary-related side of the scheme will be subject to the salary-related provisions of the main contracting-out regulations, and members of the money purchase side will be subject to the relevant contracted-out money purchase provisions. The employer will also be spared the need to get to grips with a completely different set of procedures when deciding to go down the COMBS route.

Where an internal transfer takes place, the regulations set out the basic requirements with which schemes must comply. We have specified the minimum necessary in order fully to safeguard the rights of members. These contracted-out mixed benefit schemes are a new concept. We shall monitor them closely to see that they are working as intended. But the industry has asked us for them and we expect them to be welcomed as a more flexible contracting-out option.

I turn to the Occupational Pension Schemes (Requirement to obtain Audited Accounts and a Statement from the Auditor) Regulations. They deal with requirements on trustees to obtain audited accounts and a statement from the auditor as to whether contributions have been paid correctly and on time. For ease, perhaps I may simply call them "audited accounts".

Auditing provides an independent view on whether accounts show a true and fair picture. Audited accounts are, therefore, one of the most important controls to ensure pension scheme security. The requirement on pension schemes to have audited accounts was first introduced in 1986. The 1996 regulations update this existing requirement. We have made two significant changes to reflect the importance that we attach to audited accounts. First, trustees will have to obtain them within seven months of the end of the scheme year. This compares with 12 months allowed under existing regulations. It means that they will be available to scheme members much sooner. Secondly, they introduce a criminal sanction on trustees who fail to obtain audited accounts. This brings the requirements on pension scheme accounts more into line with those on company accounts. On summary conviction, trustees will be subject to a fine not exceeding £5,000.

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These regulations strengthen the financial control of pension schemes. They will increase the security of occupational pension funds without imposing unreasonable burdens on employers.

In conclusion, we need to ensure that funded pension provision can continue to flourish into the next century and beyond. As part of a wider package of pension reforms, the regulations which I bring before your Lordships today will make an important contribution to this process. I commend them to your Lordships.

Moved, That the draft Regulations laid before the House on 18th June be approved [24th Report from the Joint Committee.]--(Lord Mackay of Ardbrecknish.)

4.47 p.m.

Baroness Turner of Camden: My Lords, I thank the Minister for his detailed explanation of these regulations. All of them have been accepted in the other place. It is not our custom to oppose regulations in such circumstances; nor do we want to do so in respect of these regulations. There are, however, some points relating to the regulations laid under the Pensions Act which I believe should be made.

First, the Minister will not be surprised to hear from me that some noble Lords are concerned about the general weight of regulations under the new Act. Comments to this effect have already been made by organisations which are active in the pensions industry. I am glad that I am not a professional engaged in the administration of an occupational pension scheme.

At the outset, I accept that this issue is not an easy one. It is desirable that scheme members should have as much protection as possible because their investment in a pension scheme is probably the most important one that they will make and is second only to their investment in house purchase. It is in the interests of everyone that that investment should be properly protected. It is a question of getting the balance right and having sufficient regulation to protect scheme members and their expectations while at the same time not having a regime which is so complex that employers deem it not worth their while to have an occupational scheme at all, thus driving more and more people into personal pensions where their future may not be as assured as it might be under a good occupational scheme--or perhaps they may have no provision at all.

I know that it is the policy of the Government to persuade people to take out private personal pensions, but many have little notion of how much they need to contribute to produce a pension of reasonable size when they reach pension age. Good occupational provision is still the best way to provide for large numbers of people. Very complex legislative requirements may have the effect of inhibiting the growth of such provision. The number of new final salary schemes has already fallen dramatically. It is my understanding that virtually all of the new occupational schemes are money purchase schemes. I am sure that the Government have been advised by the National Association of Pension Funds of its concerns about the complexities inherent in the procedures relating to mixed benefit schemes.

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The Minister has been good enough to explain in detail what on the surface appears to be a somewhat complex situation. I am grateful to him for his explanation this afternoon. I understand that the provisions will require members who want to transfer from money purchase to final salary or whatever to give their consent in such circumstances. Of course there is no objection to that, but the regulations are complex. I am glad that the Minister has said that it is the intention of the Government to make them as simple as possible in the circumstances.

With regard to audited accounts, of course there can be no objection whatever to that requirement. It is perfectly right and proper. However, I raise one point about lay trustees. It is right that there should be member-nominated trustees. We had a good deal of discussion about that matter when we debated the Pensions Bill in this House.

The responsibilities of trustees under the new Pensions Act are considerable. The regulations contain references to such responsibilities, including a provision for fines if they are not complied with. The Minister has referred to that this afternoon. That is all right, I suppose, and I am not complaining about it, but it seems to me that trustees should have some training for the tasks that they will need to perform. I believe that such training should be mandatory in the interests not just of the trustees but of scheme members so that their interests can be protected adequately.

I know that the regulations are not about trustees or their training, but they present another opportunity to put this point to the Minister yet again. I shall be grateful for any response he feels he can make. However, having said that, we offer no opposition to the regulations. They are, in the main, to the benefit of scheme members, and to the whole matter of the safety of members' investments in occupational schemes. We wish them well.

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