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Baroness Noakes: I am sure that the noble Lord is aware that the majority of chairmen in the FTSE 100 are not members of a pension scheme. Does he intend by this amendment to ensure that the chairman has no pension?

Lord Oakeshott of Seagrove Bay: No, I do not. The noble Baroness is quite right. This came up in our earlier discussion. I do not seek to make the appointment pensionable or not. But if it is intended that it should be pensionable, then any pension should be funded as I have described. I take no view on whether it should be pensionable or not.

Baroness Hollis of Heigham: I do not think that the noble Lord will be surprised when I say that, not only do I not accept the principle of his amendment, but I am not sure that I sympathise with him at all. He seems to be saying that it should be part of the learning experience of those running the PPF that they should be exposed to a DC scheme, a non-Civil Service
 
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scheme or whatever he might think appropriate as part of getting them to understand the culture of the world in which they operate. This seems to be part of the context; I cannot think of any other decent reason for the amendment. The noble Lord is asking individuals, if it is a DC scheme, to take on the risk, or if it is a scheme without Crown guarantee or one that has different levels of contribution, to face other implications. I am not sure what scheme he would envisage that they join.

Behind his amendment seems to be the thinking that as those running the PPF are dealing with other people's pensions, they should be exposed to the same risks. In a way that is like saying that one cannot be a surgeon unless one has been exposed several times to the operating theatre. I am not sure that I would accept the analogy that one would have had to have gone through it. There are also some practical reasons. It is partly about remuneration. I entirely accept that Civil Service pensions are a particularly attractive part of the remuneration package of anyone joining the Civil Service. We think that if we are seeking to recruit the 100 or so staff that the PPF may require, that is not unreasonable. In turn, pay levels reflect the quality of the pension. That has always been the case.

Secondly, PPF will be a non-departmental public body. Allowing NDPBs to join the Civil Service pension scheme is quite customary. A wide range of bodies also appear in the Superannuation Act 1972, which enables staff of these bodies to receive a principal Civil Service pension. Bodies as diverse as the National Lottery Distribution Fund, the British Library, Culture Online, the Commission for Racial Equality, and the National Consumer Council are all examples of where employees can receive a Civil Service pension.

I shall give an example nearer to home. We have agreed that one body whose staff may also receive Civil Service pensions and is easily comparable to the PPF is the regulator. Payments to the Minister for the Civil Service for regulator staff pensions will be covered by the grant in aid paid to the regulator from the Secretary of State for all administrative staff. The Secretary of State will recover the grant in aid as part of the general levy on pension schemes. It is almost exactly the same as for the PPF. It would also be anomalous for the PPF to offer a DB scheme without a Crown guarantee. If that is the alternative proposed by the noble Lord, such as that for the Arts Council, it would mean that the PPF would become part of the regime it was set up to protect, and would have to pay a levy to itself—even more so since it would be the normal levy-payers who would bear the cost through the administration levy.

The argument that carries most weight with me is the last one I wish to use. We expect staff from the Department for Work and Pensions, the regulator and the PPF to be able to move between the three bodies. They do so now. Staff from OPRA, for example, have been seconded into the Civil Service to work on the Bill and at least one senior official sitting behind me, who has been extremely helpful in assistance with
 
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answering some of your Lordships' more detailed questions, was seconded from OPRA into the Civil Service for the period of the Bill. Whether she will stay with the Civil Service, return to the pension regulator, or whatever, I do not know. But that type of regular movement of staff between these bodies is extremely valuable and would be hindered if there were different terms and conditions of service and different pension schemes.

I do not accept the underlying suggestion that the people running the PPF should be exposed to the same type of risks to which people entering the PPF have already been exposed. I do not believe that it is unusual at all. I do think that it is reflected in the total remuneration package with which we attract staff and it would also impede movement between the three bodies of the department, the regulator and the PPF. For all those reasons I hope that the noble Lord will withdraw the amendment.

Baroness Noakes: The Minister used the obscure argument of movement between the three bodies. But she then talked in terms of secondment, which is the one mechanism that is able to keep the terms and conditions of the host employer throughout that mobility. So it seems that that is not a killer argument.

Baroness Hollis of Heigham: I take the correction. I should have referred to when people actually leave one place and go to the other.

Lord Higgins: Will the staff of the board be on a contributory or non-contributory scheme?

Baroness Hollis of Heigham: It is non-contributory, but I believe that I am right in saying that there is a contribution payment for dependents, which is a voluntary addition. It may be at 1.5 per cent. I am not sure about the details, but it is a largely non-contributory scheme.

Lord Higgins: But the argument for it being a non-contributory scheme, as I understand it, has always been that the salary is adjusted appropriately and that therefore the thing equals out. Would it not be far better and perhaps create a useful precedent if it were a contributory scheme, and then pay the appropriate salary? It is a ludicrous anomaly in the Civil Service system that there is a non-contributory scheme, whereas even Members of Parliament actually contribute.

Baroness Hollis of Heigham: This may be a matter for the Cabinet Office, which could presumably decide to review salaries and change the pension schemes accordingly. However, I encourage Members of the Committee not to trespass down that path today, as we shall make no difference to the levels or structure of Civil Service salaries or pensions, whatever we may say.

Lord Higgins: Would the staff in question all be existing members of the Civil Service?
 
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Baroness Hollis of Heigham: Not necessarily. I take the point made by the noble Baroness, Lady Noakes, about secondment. She was absolutely right. Some of the staff may be currently working for OPRA and some may be newly recruited. We expect about 40 per cent of them to be professionals, such as actuaries and so on, who may have been recruited from the private sector. Others will be administrative staff, and others will have come from OPRA or possibly from the department, so there will be a mixture of staff.

Lord Oakeshott of Seagrove Bay: I regard that as one of the thinnest answers that I have ever heard a Minister give. First, the Minister did not address at all the point that I made, which I should have thought was pretty relevant, about the Financial Services Authority. That was simply ignored. I thank her for pointing out that at the moment there is no amendment to that effect as regards the regulator, and I assure her that I shall rectify that when we get to Report—so that deals with that argument. Indeed, I believe that the argument applies to both cases.

As for the idea that the provisions are somehow simply a matter of carrying on as before and bringing over civil servants, the Minister gave the game away when she said that perhaps 40 per cent of the staff will be from the private sector, including "actuaries and so on".

Baroness Hollis of Heigham: I said "professional". I did not say where they would come from. They may come from the private sector, and 40 per cent are likely to be professionals. My own department, for example, has professionals of the sort described.

Lord Oakeshott of Seagrove Bay: Well, I am delighted that her department has so many spare professionals and actuaries to switch across. But I should have thought that it would have been very important to have major recruitment from the private sector. None of those people will be on the sort of terms that we are discussing, nor would anyone expect them to be.

I have still not heard the argument on the FSA and other parallels, although frankly it would be a lot more interesting than the case of the National Lottery. I quite accept that we are discussing an overall package, which should be in line with good private sector packages. It is ridiculous that civil servants should have these exceptionally generous pension arrangements and such low wages. It would be a good move in setting the provisions up to move towards a more rational structure.

It was a travesty of my argument to say that we are doing what we are doing for educational purposes; we are just saying that the people running the schemes should not be insulated in a completely different cocoon right away from the experience that everyone else in the country has.

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