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Baroness Castle of Blackburn: I cannot but admire the dexterity with which the Minister wriggles out of an earlier statement to the House in which she said at first that there was no manifesto commitment on SERPS. Now, when faced with the text of the manifesto, she has a new evasive technique, which is to say “Oh, but we are retaining SERPS. Mind you, we are altering its entire nature, but it is still SERPS". I know that the noble Lady is far too well informed not to be aware that the whole purpose behind the state earnings-related pension scheme was to give manual workers and blue-collar workers the same right to relate their retirement income to what they had earned when they were at work as middle-class and white-collar workers have enjoyed for years. That was the whole point of it.

I remember Dick Crossman introducing his national superannuation plan to our party conference years ago, saying that he was determined to end apartheid in old age. One of the deepest anxieties I have about this whole pension scheme--so far as it has been unfolded to us; it has been a bit hit and miss--is that it wants to continue apartheid in old age by saying that one class of people is so poor that it must have a

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flat-rate benefit and can never enjoy an earnings-related scheme. On the other hand, there is the curious ambivalence about the Government when they say “Oh, earnings-related schemes are terrible for the poor, but we intend to embody them in the stakeholder pension as one of the main planks". If earnings-related pensions are wrong, why is it that the Government's main policies are based on that?

As to what the Conservatives and Liberal Democrats offer, I must say that we had a remarkable demonstration by them in chorus this evening, paying obeisance to the nanny state. They said “Oh, but this House knows best. We all know best. We cannot allow these benighted people to be led astray into choosing a scheme--SERPS--which we know is not good for them".

I should point out that all that Amendment No. 25 asks for is choice. What has happened to our society that we can sit here dispensing our wisdom and denying people the right to judge for themselves whether the state earnings-related pension scheme suits them best or not? That is all I am asking. I am not saying we should force it on them. Obviously I have more faith in people's right to freedom and in their judgment than any of the noble Lords opposite and my noble friend the Minister.

This is a theme that my noble friend Lady Turner and I have pressed and will continue to press; namely, that people have a right to an informed choice. The more I hear of the Government's plans, the more imperative I think it is for that choice to be retained. There are so many loopholes in the Government's policies. Every time we ask one question the Minister gets up with the same outpourings of enthusiastic eulogies of what the Government will do. Why it is not embodied in the Bill I will never know; we will have to take it on trust.

I do not believe that half of it will work as the Minister said; that all these wonderful increases in pensions will accrue to people by such and such a date in the next century. I do not believe her, because when you break down her figures, you will find that the basic level depends on the basic state pension. The Government earlier rejected Lady Turner's and my plea that the basic state pension can continue to offer a fair share of rising national prosperity only if we restore the earnings rule introduced by the 1974 Labour Government for its annual uprating. Without that, it will shrivel.

I will say this for the previous Conservative government: at least they were honest. They said, “Oh yes, the basic state pension will wither on the vine". We do not say that. We imply that by a kind of miraculous transformation, it will actually flourish. However, as a percentage of earnings, it is destined to shrink. I believe that, by refusing to listen to those of us who have worked very hard on this subject for many years, this Government will suddenly find that their elaborate machinery will come unstuck. The Minister has a right to shake her head, but if she believes she is right, and I am wrong, why not give people the choice? That is all we ask.

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All right, I know that she has so hypnotised this House that there is not much point in pressing this to a vote. I shall withdraw the amendment, but by heavens, I shall not give up the fight.

Amendment, by leave, withdrawn.

[Amendments Nos. 26 and 27 not moved.]

Lord McIntosh of Haringey moved Amendment No. 28:

Page 4, line 13, at end insert--
(“( ) An employer is not, whether before designating a scheme for the purposes of subsection (2) or at any time while a scheme is designated by him for those purposes, under any duty--
(a) to make any enquiries, or act on any information, about the scheme for any purpose not connected with--
(i) ascertaining whether the scheme is for the time being registered under section 2,
(ii) ascertaining the persons to whom it offers membership, or
(iii) enabling him to comply with subsection (3), or
(b) in particular, to investigate or monitor, or make any judgment as to, the past, present or future performance of the scheme.").

The noble Lord said: My Lords, your Lordships will recall that we discussed this matter in Committee. There were concerns that an employer might be held liable by employees if the scheme designated under the employer access requirement performed badly, became insolvent, or met with other difficulties. Some of those commenting on the original proposals, including employer representatives, also expressed such concerns.

We said in Committee that we would look at this to see whether we could include a statement in the Bill which addressed the concerns. I am pleased to say that this has proved possible, hence Amendment No. 28.

Even as it stands, Clause 3 does not impose any duty on an employer to designate a scheme which performs to a particular standard. It has never been the intention that employers should have to do more than select a scheme from the register and offer access to it in the way set out in Clause 3. Nevertheless, we want to respond to the concerns that have been expressed and we accept that it is wise to include this extra safeguard to make certain that employers are adequately protected.

The amendment does not, of course, exempt employers from their normal duties towards their employees. For example, if they misinformed employees about the designated scheme, or misled them, a liability could arise under the general law of negligence.

Of course, we hope that employers will take some action if they discover a serious problem with a designated scheme. They could perhaps notify the Occupational Pensions Regulatory Authority or they might tell their own employees. Such actions would be both prudent and proper. But proper compliance with the requirements of this legislation should not, of itself, expose employers to risks of litigation. This amendment is intended to put that beyond doubt. The amendment explicitly protects an employer from

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particular liabilities which might otherwise arise from choosing a designated stakeholder pension scheme under the employer access requirement.

I hope that your Lordships will feel that this amendment is in line with the spirit of our discussions in Committee, and will support it. I beg to move.

Lord Higgins: My Lords, the House is grateful to the noble Lord for tabling an amendment which, as he rightly said, arose from our discussions in Committee. I was somewhat surprised to see it set down in such stark terms, but I believe it is right that the position should be made clear. My understanding is that not only were representations made at the Committee stage but there were also some responses to the Government's consultation brief on employer access. For example, the Institute of Directors said that it was not good enough to say that it would be very unlikely that an employer would be regarded as negligent if a scheme designated in good faith subsequently performed poorly or experienced problems.

Unless I have misread the wording of the clause, it seems to me that the Government have gone beyond what was said earlier and that this positively clarifies the position with regard to the responsibilities, or perhaps I might more accurately say the non-responsibilities, of employers. However, there is one point about which I am not absolutely clear. The Institute of Directors argues that if a scheme is designated, inevitably in the nature of things employees will tend to say to the employer, “You are designating this, but is it or is it not a good thing?". If the employer responds, he will thereby be giving investment advice. This is not a question of whether the employer is being negligent with regard to the laws to which the noble Lord referred in his speech. My understanding is that it would be positively illegal for employers to give that advice unless they were registered as an appropriate financial adviser.

Therefore, I wish to ask the Minister a very simple question. Despite the wording of the amendment, which is intended to be helpful, what is the position if an employer, in the circumstances I have just described, feels that it is difficult not to give some advice to his employees and then finds that he may be responsible for or be held accountable for--put it how you will--the advice which he has given? At the moment it seems that the clause does not cover that point.

10 p.m.

Lord McIntosh of Haringey: My Lords, all I can do is say that the amendment is very clear. It says that the employer is not under any duty to make any inquiries, or act on any information, about the points with which the amendment is concerned or under any duty to investigate or monitor, or make any judgment as to the past, present or future performance of the scheme. The noble Lord is asking me what would happen if an employer who recognises that he is not under any such duty goes ahead and gives advice. The only advice I can give to him is that he does so at his own risk, because employers are no more exempt from the

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general law about financial advisers than anyone else in the country. If they purport to give financial advice, they must be subject to the general law. What we can do, and what we have done, is exempt them from any duty to put themselves at risk in this way.

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