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Baroness Barker: Members on this side of the Grand Committee have the same sympathy with this amendment as we did with the amendment proposed by the noble Baroness, Lady Turner. They seek to do slightly similar things; to ensure that the regulator has within its corporate structure the relevant experience. However, this amendment perhaps ought to suffer the same fate as that proposed by the noble Baroness, Lady Turner. It would be wrong to treat the two proposals in wholly different ways just because people come from different backgrounds.
That said, the noble Lord, Lord Higgins, has a valid point. Representatives of occupational pension schemes put into this position would have an insight into the work of the board. None the less, for the sake of consistency, perhaps this proposal will receive the same response from the Minister.
Baroness Hollis of Heigham: I am sorry that we were not able to encourage Opposition Members to allow us to group this amendment with Amendments Nos. 1 and 4, because it effectively reproduces the same argument and I am not sure that I can take it very
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much further. At least that will allow me to be not only brief, but possibly slow, which will mean that I shall avoid criticism from the noble Lord, Lord Oakeshott.
The position is the same. The amendment would put an undesirable limitation on flexibility, which is designed to ensure that appointments to the regulator are based purely on the skills and knowledge required and the relative merits of each candidate. Although the regulator will have a role in respect of the Pension Protection Fund, its primary objective is to protect members' benefits. That is best served by an ongoing, properly funded scheme and a solvent employer. It is also worth noting that the regulator has responsibility for many types of schemes, including defined contribution occupational schemes, personal pensions and stakeholder schemes, as well as defined benefit schemes which will be subject to the pension protection levies.
The amendment applies unnecessary pressure to try to introduce what I would call sectional interests, as opposed to breadth of experience. If I can make the distinction, we are on the side of breadth of experience. The arguments are much the same as before. If we agreed the amendment, we would then go down the road of saying, "Here are the employers, here are the employees", and so on. We could not escape that, so I hope that the noble Lord will withdraw the amendment.
Lord Higgins: Again, I find the argument persuasive, so I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
On Question, Whether Clause 2 shall stand part of the Bill?
Lord Higgins: I indicated earlier that whether we opposed Clause 2 or not would depend on the state of play at this stage in the proceedings. I do not propose to say anything further on the matter.
Schedule 1 [The Pensions Regulator]:
Lord Skelmersdale moved Amendment No. 7:
The noble Lord said: Schedule 1 contains the "nuts and bolts" provisions for the appointment of the members and chief executive, the proceedings of the regulator and its funding, accounts and so forth. My first question concerns paragraph 2, which states:
"Where a person ceases to be employed as Chief Executive, he ceases to be a member of the Regulator".
That states the obvious. The question that originally sprang to my mind was, "What happens then?".
It seems obvious that a former chief executive could easily make a most useful contribution to the regulator's activities in a non-executive post. He or she would certainly have the experience for which the noble Baroness, Lady Turner, was looking in her list in Amendment No. 4. If the chief executive were sacked for some misfeasance, by definition he would not have
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that experience, but in the case of a normal retirement why should he not hold such a post, perhaps after a short gap? I beg to move.
Lord Borrie: I should be interested to know from the Minister, on the last point made by the noble Lord, whether after ceasing to be chief executive there is a gap and that person may then be appointed as a member of the regulator; I imagine that he would be. When a chief executive ceases to be a chief executive—if someone else has been appointed at the end of his term of office or whatever—the paragraph may be stating the obvious but makes the matter clear.
On the earlier part of the noble Lord's speech, I would have thought that, certainly immediately after and perhaps for a certain period, it would be inappropriate for the chief executive to be part of the regulator because there is a new man in the job; it is usually undesirable for the previous holder of the office to appear to lean over his successor's shoulder immediately thereafter.
Lord Oakeshott of Seagrove Bay: It must be right that the chief executive ceases to be a member if he is then reappointed as a non-executive. Otherwise the balance would suddenly change between executives and non-executives.
Lord Skelmersdale: I used to think exactly the same as the noble Lord, Lord Borrie. But during my time as chairman of the Stroke Association, I suggested to my fellow trustees that a new chairman of the executive committee be appointed because the other one wanted to retire. Against my better judgment, the new chairman insisted that his predecessor remain on the executive committee. It caused absolutely no problems. It was a matter of personal choice for the new chairman of the executive committee. Perhaps, in a sense, we are both right.
Baroness Hollis of Heigham: I think that there is a great deal of consensus on the matter. As my noble friend Lord Borrie suspected, after a period of time there is no reason why the former chief executive, if that person so wished, could not be reappointed, through public procedures, to membership of the committee as a non-executive director. That would depend on the harmony of views and whether the new chief executive felt in any sense threatened by such an appointment. I suspect it would also depend on the circumstances under which a chief executive left and to what extent he or she continued to command the support and confidence of other members of the board.
As regards the second point raised by the noble Lord, Lord Oakeshott, my understanding is that in such a situation a new chief executive would serve on the board and therefore the balance of non-executive and executive members would be maintained. With that explanation, which does not rule out drawing on
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appropriate expertise if it is done in the proper public way, I hope that the noble Lord will feel able to withdraw his amendment.
Lord Skelmersdale: I am very relieved to hear the Minister's answer. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Higgins moved Amendment No. 9:
The noble Lord said: In moving Amendment No. 9, I shall speak also to Amendment No. 10. Amendment No. 9 relates to paragraph 5(a) of Schedule 1, which states that the regulator may,
"pay to . . . any person who . . . has been a non-executive member such pension, allowances or gratuities as the Secretary of State may determine".
Amendment No. 10 relates to paragraph 5(b), which states that the regulator may,
It seems curious that on the one hand the regulator is to make the payment, but, on the other hand, the amount is to be determined by the Secretary of State. Paragraph 5(b) seems to be a question of the Secretary of State determining what provision should be made. The implication is that the regulator may decide to pay something and the Secretary of State will decide how much, but he may decide to pay some of it and not the rest which, presumably, would then fall to individual members to contribute to the cost of the operation. That seems somewhat convoluted.
If I have understood the paragraph affected by the second amendment correctly, the Secretary of State seems to have been given discretion as to whether or not he pays the whole amount, having determined what the gratuity or pension should be. Perhaps the Minister could clarify the situation.
Baroness Hollis of Heigham: I do not think that there is anything sinister about this; it is conventional. Cabinet Office guidance to departments who are setting up NDPBs—Chapter 7 of NDPBs: A Guide for Departments—states that key decisions, such as the appointment of members and chairs and their appropriate remuneration, allowances and pensions are a matter for departments, and not for the body itself. In other words, members should not be setting their own pay. That is not appropriate. They should follow general guidance about pro rata pay per number of days attached responsibility.
I do not think that businesses funding the levy would want to see members setting their own salaries. They would prefer this to be along the lines of the existing Cabinet Office guidance. With that explanation, I hope that Members of the Committee
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will feel the proposed alternative method is more appropriate and that the noble Lord will feel able to withdraw his amendment.
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