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Baroness Dean of Thornton-le-Fylde: I too have difficulty with the second paragraph of Amendment No. 177. We are talking about one body here but there are hundreds of bodies in the public sector. If one
 
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looks at them, one would find that they are required by the accounting government department to have an audit committee and various committees that consider good governance. Who decides what is "relevant to the principles"? The answer may be that the board itself decides. But the amendment leaves it open-ended.

I support Amendments Nos. 178 and 179, to which I added my name. The noble Lord, Lord Oakeshott, is right that we discussed the principles of this matter earlier, in a different area of the Bill. This is an even more important area because we are dealing with people's individual contributions and investments. I hope that my noble friend will take note. We will need to return to this matter on Report.

The noble Lord, Lord Higgins, made a very swift move of foot in raising the issue of the sad letters that we are all getting about people who are caught in the abyss between what the Bill provides and issues that have arisen on which there are no clear answers at the moment. That is an issue that we must debate in the Bill. I was considering Clause 274 as the appropriate place but that can be decided. It is the single clause in Part 6 over which the noble Lord, Lord Oakeshott, chided my noble friend at Second Reading because it is so short. It is an area where we will have a debate on principles. We will need to do so.

Lord Lucas: I support what the noble Lord, Lord Borrie, said. I too turned to the Higgs report after our last debate. However, my argument is not what the noble Lord, Lord Borrie, said was made by the Opposition. My argument is that the Government have no business pleading Higgs in aid in the structure of this or the next part of the Bill. The concept of the non-executive committee that has matters reserved to it and that has to take its own decisions is not a Higgs structure. The Higgs report said over and over again that we are talking about a unitary board. Therefore, we cannot say, "This is good because it is Higgs". We must look at it in its own context and ask whether it is good for the regulator. It is not a Higgs structure.

Baroness Hollis of Heigham: There must be some member of the Committee who has not yet spoken. I shall have to trespass on the indulgence of the Committee and make a speech that is far too long. I shall say what I propose to address and then noble Lords can say that I have left something out. Then I shall go on to my speech, which is also extremely long.

I want to be as helpful as I can to the Committee so I shall make a general statement on the government amendments, as asked for by the noble Lord, Lord Higgins, and where we are proposing to go with them. I am happy to do that. Secondly, there is the point raised by the noble Lord, Lord Higgins, and endorsed by my noble friends, about how we see the timetable for different categories of members with pensions possibly at risk and how they fit into the PPF and the financial assistance scheme. I shall share with the Committee the information I have so far on that and where we have got to.

Thirdly, there is a bundle of "shopping list" issues that revisit some of the issues about appropriate skills raised earlier by my noble friend, the CBI, the trade
 
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unions, the investment funds and so on. Fourthly, the noble Viscount, Lord Trenchard, made specific points about overlapping membership and the difference between a fund and a board. Fifthly, the wider discussion on Higgs and corporate governance was fascinating, but I think I can probably get away with ducking it. Finally, I may need to come back to fill in any points that have not been addressed so far in trying to set the context for the PPF. I think I have got it right.

I shall start with a general statement about where we are with the amendments. I accept some of the criticisms of the noble Lord, Lord Higgins, about so many amendments being tabled in this House, which is the revising Chamber. But our dilemma is honourable. We could have deferred the Bill for another year and produced something that was polished, manicured, massaged and whatever other terms one wants to take from beauty salon treatments. We would have produced something conventionally that we could have sent first to the Commons and then this House could have looked at it line by line, clause by clause to see whether it had sufficient clarity and so on. Our dilemma, as my noble friend has emphasised today, is that people are seeing their pensions put at risk.

We have a choice. We can seek to have the Bill in place and the pension protection fund up and running from, I hope, next April. That is in nine months' time. The price for that is that, inevitably, we are asking your Lordships to carry out a much more active and energetic role in accepting an array of amendments that have not had the opportunity to go to the Commons and scrutinise them for the first time.

The Bill is being developed as it proceeds through the House. This is for two reasons. One is the sense of urgency that everybody shares. We have all received letters to that effect. The second is that when we are trying to respond to that sense of urgency we must involve a wide range of stakeholders outside the department, which is unusual for the DWP. Given those two pressures, we find ourselves in an honourable dilemma. I know that I will have the support of the Committee in seeking to get through it in as honourable a way as possible. We want to see, if Parliament agrees, the Bill in place to give people urgent protection. If that means that your Lordships are asked to go beyond what noble Lords would ordinarily do, then I am sure your Lordships will understand the reasons.

The Bill also has moral hazards. Issues such as pensions liberation are coming up. I do not think that 12 months ago any of us would have recognised the need to address the issue of pensions liberation. In the past 12 months OPRA has put to us that there is a real problem here and a dilemma. It is extremely complicated to resolve it because whatever solution is put in place produces a further problem of appeal rights and so that has to be addressed.

Therefore, there are three reasons why, in good faith, we are developing the Bill as it proceeds: the urgency of the situation for people whose pensions are
 
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at risk; the propriety, appropriateness and value of extensive consultation—which is unusual for my department, although the DTI and other departments are perhaps more accustomed to it—and the fact that things are coming out of the woodwork that we need to address because there may not be an opportunity to do so in another major Bill.

In the main areas of Government amendments, there may sometimes be a list of 20 or 40 amendments because they are consequential. The first bundle is on insolvency practioners. Because insolvency practioners do not want to be involved in the appeal process, we need to produce a rectification process and an appeals process that produces determination in order to take that responsibility away from them. Solving the problem of insolvency practioners generates further problems to which we need a solution. The bundle of concerns expressed by insolvency practitioners about insolvency, to which we are responding, has a cascade effect. That explains some of the complexity of that bundle of amendments.

Secondly, there is a bundle of amendments about pensions on divorce and the PPF. This is extremely complex. The problem is that it appears to be very simple. Lady Seear, Lady Young and others—among them three of my noble friends sitting in the Committee today and the Deputy Chairman of the Committee—were instrumental in persuading the House that pensions were a major part of matrimonial property and should be shared. Eventually, we put legislation through and at the moment that allows pensions to be shared for a clean break or to be earmarked, which is when a pension is being paid when divorce occurs. The problem is: what is the status of a pension that is at risk and is entering the pensions protection fund? Will the judge know about the possible resources that may be added to the depleted pension by virtue of the compensation effect of the PPF? We are asking the judge to take into account something that has not yet happened. That requires revisiting all the family law, divorce and pensions legislation that deals with pension protection, because it was not even contemplated that the pensions protection fund or financial assistance scheme might come into play. We all accept that it should. That is complex, wet towel stuff, but highly desirable, as I am sure we would all agree, because that is obviously a major asset for a couple going through the divorce process.

Thirdly, there is a set of amendments about the scheme rules and distinguishing between scheme rules and rules of the scheme. Sensibly, we are clarifying the language. Rules of the scheme are the rules of the particular scheme, whereas scheme rules may also involve all the legislation that may override the rules of the scheme—for example, equality legislation, European legislation and so on.

Fourthly, there is a complex set of issues associated with survivors' benefits in the PPF. We are still working through some of the implications of that: what happens to survivors' benefits when someone dies during the assessment period? Fifthly, there are
 
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issues about periods of short service in the PPF, transfer rights and deferred pensions. Sixthly, there are technical amendments to the PPF for clarification.

Then there are a number of amendments concerning member-nominated trustees and pension representatives. As the Committee will know, the Government's intention is that there should be a minimum of one third member-nominated trustees. I know that that will be an issue of considerable concern to my noble friends; we will table amendments about that. Finally, we shall introduce amendments ensuring that the Bill is consistent with legislation on winding-up priority orders. As the Committee will know, the Secretary of State made a Statement in June 2003, I think, and, following yesterday's discussion in the Commons, we will need to ensure that that is appropriately incorporated in the legislation.

I hope that that helps the Committee, before I turn to item No. 2 on my shopping list.

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