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Lord Skelmersdale: My noble friend Lord Higgins has already explained the general philosophy of our amendments. As my name is attached to Amendment No. 1 but not to Amendment No. 4, I was slightly surprised to see them grouped; we tabled Amendment No. 1 for a totally different reason. Nevertheless, the noble Baroness, Lady Turner, and I caused unwitting confusion in the Public Bill Office by unknowingly tabling exactly the same amendment within two hours of each other. However, the matter seems to have been resolved. I am most grateful to the noble Lord, Lord Hoyle, and the noble Baroness, Lady Gibson, for agreeing to their names being removed from the amendment.

As I said, we tabled the amendment for totally different reasons. For us, its purpose was to determine two matters. First, what kind of animal is the regulator to be? Am I right to assume that, by virtue of Clause 8, as he will chair a non-executive committee he will himself be a non-executive? Or is it the case that he will be an executive chairman by virtue of his functions transferred from OPRA under Clause 4(1)(a)? There is confusion in my mind. In either event, Part 1 and Schedule 1 together comprise an almost unique form of corporate governance. I shall have more to say about that when we get to Clause 4.

The second reason for the amendment is tied into the first. Clause 2 informs us that there are to be not less than three non-executive members. As my noble friend Lord Freeman said, it is clear that this is a minimum because Clause 2(1)(c) states that there are to be at least five members other than the regulator and the chief executive. If the regulator is to be a non-executive, as I suspect, then the minimum number of people on the non-executive board will be four.

I cannot for the life of me see how so few people can do justice to the work encompassed in Clause 9, for example. Nor indeed are they really non-executive as they can be authorised to do anything that is in the province of the regulator. Be that as it may, what happens if the committee needs to have a vote and it
 
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splits 2-2? Does the chairman have a casting vote? If so, should the Bill make provision for it? If not, then there should be an even number of non-executives other than the regulator. I do not really mind whether there are six, 10 or whatever even number the Minister picks out of the air, but an even number there most certainly should be.

Amendment No. 4, as I said, has been grouped with Amendment No. 1, and I am afraid that I have to agree with the noble Lord, Lord Borrie, on this. I cannot be nearly as complimentary to the noble Baroness, Lady Turner, as I was on the last amendment because I simply do not like shopping lists in Acts of Parliament. However, I would say that she is right in wanting to know what sort of people are to be appointed as non-executive members. Clearly employers, employees and pension fund managers are all suitable people, but the danger of a list is that of leaving out those from other backgrounds.

It further occurs to me that paragraph (b), which refers to employees, could cover employees who are not members of their company pension schemes, which if memory serves me right is not compulsory. Indeed we had quite a lot of chat on that on Second Reading.

For those reasons, I very much look forward to what the Minister has to say.

Lord Oakeshott of Seagrove Bay: Perhaps I can start with a tribute to the noble Baroness, Lady Turner, for her lifetime of service for the members and pensioners of Amicus and of what she and I as former members will remember as ASTMS. I link that also to the work of the noble Baroness, Lady Dean, for the print union members.

I have some sympathy for the amendment. Although I think it is possibly a little rigid as it stands, if it is interpreted in a particular way, might that not solve the problem? Can all these categories overlap? Can people qualify as someone with experience in the management? If the categories could be overlapped so that they were flexible, I would be happy to support the proposal.

One of the noble Baronesses touched on the question—and this a question, indeed a suggestion, also to the Minister—of having seen this advertisement. Can we be assured that no advertisements have yet appeared for the non-executive directors of the regulator, which I think would be very discourteous to the Committee? There are amendments on the composition of the PPF. I believe that it was very discourteous that, before we have even had a chance to consider those amendments, on the very day that we are starting to discuss the Bill, this should have come out. Will the Minister assure us that it will not happen until more time has gone by? I really do think that this is taking things for granted.

Baroness Turner of Camden: Perhaps I can respond to that. I see no reason why some of these categories could not overlap, particularly as far as paragraphs (a) and (d) are concerned. Unions often have members who have had managerial experience; it is certainly
 
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true of my union. There is no reason why the overlap should not be flexible. I do not see any reason why not. The essential point is that there should be representation of those interests.

Baroness Hollis of Heigham: Before I speak to the amendments it might be helpful if I gave a brief explanation of the purpose of Clause 2, which deals with membership of the regulator and the reasons for the structure. Afterwards, Members of the Committee can press me on any points that I have left undiscussed.

As the Committee will be aware, the regulator will consist of executive and non-executive members. It will have a chairman—who has not yet been appointed—who is appointed by the Secretary of State. The chairman cannot be either a member of staff of the regulator or of the Pension Protection Fund. So in that sense he is one of the non-executives, as your Lordships surmised perfectly correctly.

The chief executive—the former chief executive of OPRA, Tony Hobman—will be a member of the regulator. The first appointment will be made by the Secretary of State with subsequent appointments to be made by the regulator with the approval of the Secretary of State. Given that we do not yet have a chairman, we have gone down only to the other members.

The chief executive's main function is to ensure that the regulator's functions are carried out efficiently and effectively. The regulator will have at least five other members who are appointed by the Secretary of State. That is the minimum. As I understand it, OPRA has nine members. However, it needs that larger number because it must encompass a determinations panel which, in this regulator, is a separate and independent body. So the numbers are not dissimilar and are perhaps more generous than the old OPRA numbers.

At least two of those five members must be appointed from the regulator's staff. The majority of the board of the regulator must be non-executive members. That will provide appropriate scrutiny of the rest of the board and the regulator's activities. The structure has been chosen deliberately—following Higgs and the various reports coming from Cadbury on corporate governance—to strike a balance between ensuring sufficient flexibility in the skills, knowledge and experience of members, and creating a governing body that is effective and accountable while being kept to the minimum number.

Amendment No. 1 is required in order to increase the minimum number of members of the regulator and thus accommodate Amendment No. 4. Amendment No. 4, requiring board appointments to be subject to consultation with representative organisations of employers and employees, is—as I would hope your Lordships will accept—superfluous and inappropriate. I believe that it places disproportionate emphasis on the interests of employers and employees. Although it follows from the current OPRA structure, the OPRA structure of specified interests was set up in the context of Maxwell in which there was theft of individual members' assets in the name of fraud. My
 
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noble friend was powerful in her exposure of that fraud. Nevertheless, I think that we have moved on from that adversarial context.

I have the same hesitation about shopping lists. Like the noble Lord, Lord Borrie, I was a member of a regional health authority. Because my friends, allies, mates and so on within the then eastern region wanted me on that body, they decided that they had better put me in as a representative of the trades unions. That was fine, although I was a member of the Association of University Teachers and had no connection whatever to any of the health unions which should probably have been represented. We had to fiddle, construct and organise it, and I met regularly with trade union colleagues to take on board their concerns; I did an honourable job. However, it was actually a limitation of capacity rather than a representation of capacity. Like the noble Lord, Lord Borrie, we had to find a way round it very precisely.

The Secretary of State's exercise of the power to appoint members to the board of a statutory public body must in any event be exercised in accordance with administrative law principles, in a reasonable, proper manner, taking into account the interests of the public in general, including the interests of employers and employees.

As I say, noble Lords will be aware that the proposed structure is from the OPRA structure. I do not think that it is appropriate to reproduce such a structure in a very different climate. However, I should like to reassure my noble friend. When discussing this, she may want to consider that we are significantly and, in my view, absolutely rightly strengthening the role of member-nominated trustees from among the ranks of employees and, where appropriate, involving trade union negotiation. That seems to me exactly where we should be strengthening the role of employees' representatives—at the trustee scheme-specific level. I am delighted that we will be addressing that later in the Bill. However, when it comes to the regulator, I think that we would be denying ourselves the capacity to have people with experience who can range across fields without trying to confine ourselves to shopping lists. I hope that my noble friend will accept that.

Appointments to the regulator will be made in accordance with Cabinet Office guidelines, following open competition. There will be nothing to prevent groups representative of employers, or of employees, from encouraging their members to apply. But if such a person were to be successful, it would be on the basis of their abilities alone rather than because they represent a specific interest. We are effectively asking them to operate under trust law rather than to be delegated representatives of a body or sectional interest.

Mindful of the Division Bells, I hope that, with that explanation, my noble friend and noble Lords opposite will feel able to withdraw or not to press their amendments.
 
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[The Sitting was suspended for a Division in the House from 4.9 to 4.19 p.m.]

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