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Lord Skelmersdale: I am grateful, but not very grateful. I did not hear the noble Baroness mention the independence of the non-executives. Perhaps she could write to me on that. She referred to my merely citing the Bank of England Act. As she will remember well, the Opposition do not have quite the access to research facilities that a Minister of the Crown has. That said, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Higgins moved Amendment No. 30:

Page 2, line 40, at end insert—

"( ) In discharging its functions the Regulator (and, where relevant, the Non-Executive Committee and the Determinations Panel) must act in a way—
(a) which is compatible with its objectives under section 5, and
(b) which is appropriate for the purpose of meeting those objectives.
 
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( ) In discharging its functions the Regulator (and, where relevant, the Non-Executive Committee and the Determinations Panel) must have regard to—
(a) the need to use its resources in the most efficient and economic way,
(b) the principle that a burden or restriction which is imposed should be proportionate to the benefits, considered in general terms, which are expected to result from the imposition of that burden or restriction,
(c) the need to minimise any adverse effects that may arise from anything done in the discharge of those functions, and
(d) the interests of all persons who may be affected (including members, employers and others with an interest in, or an obligation in respect of, the scheme concerned).
( ) The Regulator (and, where relevant, the Non-Executive Committee and the Determinations Panel) shall have regard to the need for openness regarding its activities and shall consult with interested persons and their representative bodies when developing policies procedures and practices."

The noble Lord said: The objective of the amendment is effectively to set guidelines for the way in which the regulator may discharge its function and, to some extent where relevant, the way in which the non-executive committee and the determination committee shall operate. It sets out the fact that the objectives must be compatible with Clause 5 and in a number of other ways, such as the need to use resources most efficiently and the principle that any restriction or burden imposed should be proportionate to benefits. It seems appropriate that the regulator should have some guidelines set out in legislation, and that it should have the need for openness on its activities.

I am trying to remember to what extent that is true so far as OPRA is concerned. My experience has been in relation to particular issues rather than the general extent to which its operations shall be published and public. The guidelines may not be ideal, but they seem the kind of thing that the industry as such—we have had representations on the matter—thinks appropriate to include. I beg to move.

Lord Oakeshott of Seagrove Bay: It is hard to object to the amendment; it seems quite sensible.

Lord Borrie: It does seem hard to object to the amendment. It contains a number of favourite governmental words, such as "openness", "proportionate" and "efficient". I do not know what the inverted commas at the end mean, but, subject to that, the amendment is splendid. However, is it really necessary to add it to the Bill?

Baroness Hollis of Heigham: My advice states that it is not, splendid though the amendment is and despite the seemingly universal assent. The regulator has the functions transferred to it from OPRA and the other functions conferred on it by the Bill. The clause sets out further detail on how the new regulator will discharge its function and reserves certain functions to the non-executive committee. It also reserves the discharge of certain of the regulator's regulatory functions to a special committee called the Determinations Panel, as the Committee is aware. The
 
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regulator's general powers to delegate certain functions are subject to the Secretary of State's power to make regulations.

The amendment seeks to make the regulator more accountable in its policies, procedures and practices. It also aims to ensure that the duties and functions of the regulator discharged to the non-executive committee and the Determinations Panel meet the regulator's objectives specified in Clause 5. That is, indeed, our intention. The proposals for a new regulator have been developed in the findings of the Pickering report of July 2002, the NAO report on OPRA of November 2002 and the quinquennial review of OPRA in December 2002. They all recommended that, in future, the Pensions Regulator should target its resources on those areas where members' benefits were at greatest risk.

That view is supported by the Better Regulation Task Force's Principles of Better Regulation, published in 1998 and revised in 2000, which recommends that regulators be proportionate, targeted, accountable, consistent and transparent. The introduction of statutory objectives is one way to address the criticisms of OPRA. The objectives provide a driving force for the organisation and will allow for flexibility of regulatory approach. In the light of that reassurance, I hope that the noble Lord will withdraw his amendment. We do not think it necessary.

Lord Higgins: That was a rather disappointing reply. As the noble Lord, Lord Borrie, pointed out, the sentiments are admirable and might reasonably provide some guidance to the regulator on the way in which he would operate. There is certainly feeling in the industry that it would be appropriate to have some guidelines. Perhaps those suggested in the amendment are not sufficiently concrete. By Report, we might try to formulate something rather more specific.

Lord Lucas: I want to reinforce some of what my noble friend says. The regulator will not be subject to being sued, so there is not that sort of restraint. There is not even any requirement on him that he not be negligent. It is as well to have that offset to some extent by a set of objectives whereby he can be judged in the court of the public, as it were, where we can all see whether he is doing what he is supposed to do. To have a requirement for openness is absolutely key if we are dealing with someone as protected as the regulator is to be.

It is also important to look at the wider interests of the people whom the regulator is supposed to cover, as opposed to the narrow interests in relation to their immediate pensions. Unless we have these requirements in the Bill, or something very similar to them, we will find that we are dealing with an organisation that is not as accountable or responsible as it should be, as there is no way for the public to judge it or for a body that has suffered at its hands to seek redress. It is enormously important, because of the restrictions on suing, that we have an explicit commitment to openness and breadth of judgment.
 
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Lord Higgins: I am encouraged by my noble friend's intervention. We ought to table a rather more specific amendment when we come back to the matter on Report. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

On Question, Whether Clause 4 shall stand part of the Bill?

Lord Higgins: I shall add a word or two about this clause at this stage. My noble friend Lord Skelmersdale posed a number of specific questions regarding the way in which the regulator will operate and the Minister said that she will write to us about that. The main point he was making was that the Explanatory Notes make great play about the Higgs report on corporate governance in relation to the governance requirements of the regulator, but when one comes to look at the detail, it does not seem to be the case that Higgs is reflected. For example, the case my noble friend gave about whether the non-executives should meet at least once a year to consider the position of the chairman is tremendously important.

Over recent years, we have seen considerable developments in the role of non-executives. I know from personal experience that the relationship between chief executive and chairman can be very important for effective governance in any organisation. I think that the point my noble friend made is important. I also think that the idea of a non-executive committee undermines the unity of the board to some extent; it is not helpful. Having sat on various boards, I think that once the non-executives start getting together, particularly in a formal situation such as a committee, it does not, on the whole, result in the governance being as coherent as it would normally be.

I shall not go over all the specific points made by my noble friend but I think that the claim that this is based on the Higgs report is open to considerable doubt when one goes into the matter. I hope that the noble Baroness will write to us about it. I wonder specifically whether at the moment the arrangements are as correct as they ought to be. We have some doubts about the structure of the regulator, which is obviously very important.

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