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Lord Higgins: It is also surely relevant to consider who is actually going to pay the pensions. As I understand it, that will not be the taxpayer but other pension funds.

Lord Oakeshott of Seagrove Bay: That is absolutely right.

Baroness Hollis of Heigham: Perhaps the noble Lord, Lord Oakeshott, should tell the Committee
 
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what sort of pension scheme he does think appropriate. It is no use simply referring to the FTSE and saying that such schemes are broadly comparable. What type of scheme does he have in mind? Either way, I put it to him that the salary plus pension equals a sum, and I should be very surprised if that total sum—which is what matters to the levy payers, as the noble Lord, Lord Higgins, has said—will change, whether it is carved up with more pension and less salary, or more salary and less pension. Will the noble Lord say what sort of pension scheme he believes to be appropriate?

Lord Oakeshott of Seagrove Bay: In a way, the Minister has just made my case. The whole point is that the levy payers should know where they stand.

Baroness Hollis of Heigham: They will know where they stand in terms of the total remuneration package attached to each individual employee. The noble Lord has accepted that if one went for a different sort of pension scheme one would have to increase pay proportionately. Therefore, the total cost for the levy payers would remain the same. It is a zero sum game, under the noble Lord's own explanation.

Lord Oakeshott of Seagrove Bay: Perhaps the Minister would sit down and listen for a minute and let me finish the sentence. The whole point is that people do not know where they stand with the Civil Service pension scheme, because it has unlimited indexation over long periods. It is very difficult for them to know where they stand.

The Minister has herself said several times in the House, and we would agree with her, that in private sector schemes the sum is probably around 15 per cent—perhaps 10 per cent from employers and 5 per cent from employees. That seems a perfectly reasonable way in which to do things, although I am not seeking to prescribe that today.

Baroness Hollis of Heigham: A DB scheme, in other words.

Lord Oakeshott of Seagrove Bay: It could be a DB scheme or a DC scheme—I am open on that. But so far I have not had any serious response to the points that I have made. I made the point, although not as clearly as I should have done, that the provisions are not being paid for by the taxpayer. It is being paid for by all the private sector pension schemes in this country, and it is perfectly reasonable that they should expect the staff of those administering the scheme to work on comparable terms of service to better private sector employers.

To be frank, unless the Minister is prepared to think more clearly and address some of the serious points that I have made, her answer seems to me dismissive and unworthy, and I can assure her that I shall return to the matter on Report.

Baroness Hollis of Heigham: I shall try not to take umbrage at what the noble Lord has just said. I am sure he is aware of some of the schemes in the private
 
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sector. I can give an example of one scheme. To the best of my knowledge, the Royal Bank of Scotland, which is probably the major financial services player in Europe, has a non-contributory DB scheme. It is quite likely, or at any rate not impossible, that some of the professionals whom we may seek to employ may come from such an employer.

I could produce examples of non-contributory schemes from companies in the FTSE 100; that is pretty common in the financial services industry. I am sure the noble Lord knows that perfectly well. They are at least as generous and in some cases more generous than the Civil Service scheme. They may not be so in all particulars; they may have different retirement ages and different assumptions for dependents. The Civil Service scheme is actually quite mean, in my view, on the matter of dependency. But it is not out of line with many of the best practice leaders, such as RBS, the major player in the private sector. Let us not assume that there is something over there called the Civil Service scheme which is platinum-plated, and that everyone else is living in a much more risky environment. That is not true.

Lord Oakeshott of Seagrove Bay: Perhaps the Minister should have a look at what the amendment actually says. It refers to,

"pension arrangement . . . which shall be broadly comparable to those provided by companies included in the FTSE 100 Index"—

and by that I mean the general range of them. She may be able to find one non-contributory DB scheme in the FTSE 100, but I challenge her to check up and find out how many FTSE 100 companies have non-contributory schemes open to new members. She will find that it is a handful only.

This is a carefully worded amendment that aims at provision in line with general good practice in big private sector schemes. The Minister should concentrate on that, and not try to produce red herrings, such as the one she has just produced.

Baroness Hollis of Heigham: It is not acceptable to say that I am producing red herrings when I have referred to the scheme, of which I have some knowledge, of the major financial player. That scheme, at least on paper, is probably more generous—apart from the retirement age, possibly—than that of the Civil Service.

If the noble Lord seriously wants me to engage in this discussion, he must indicate to me what his scheme would look like. I have not yet heard that from him. I can guarantee that the FTSE 100 Index companies will have at least 10 different sort of schemes. What does he want me to do—to count the number of schemes, of members, or what? If he is serious about his amendment, while I accept that there is a proper issue behind it, he must indicate what such a scheme would look like. Then I can consider the matter. Simply saying that we should have a look at the top 100 companies, at all 10 different schemes, and work something out from that would not be appropriate. It
 
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is incumbent on the noble Lord in moving the amendment to describe what he has in mind and what he believes would be appropriate.

Baroness Noakes: If the noble Lord's amendment were drafted in terms of new entrants, which it should be if he brings it back at Report, I could give the Minister a very clear answer. For new entrants, the usual scheme would be a defined benefit scheme with some employee contribution. I believe that that is what she will find as the emerging norm among all commercial companies, especially those in the FTSE 100 which have responsibilities to control costs on behalf of their shareholders.

Lord Oakeshott of Seagrove Bay: Can I please also ask the Minister about the FSA scheme, which I have now mentioned three times, and on which the Minister is completely ignoring the point?

Baroness Hollis of Heigham: I am very happy to respond on the FSA point. There is obviously a comparison issue. Each NDPB is set up according to its own individual circumstances. The Financial Services Authority compensation scheme, for example, amalgamated a number of existing compensation schemes. The fact that it was not created from a blank canvas will no doubt have affected its design. People came in from different schemes with different pension structures, as far as I am aware.

In addition, the FSA in contrast to the PPF, is a company limited by guarantee and has different overall governance arrangements. Therefore, I do not believe that the comparison with the FSA is the close match that the noble Lord seems to suggest.

Lord Oakeshott of Seagrove Bay: I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Skelmersdale moved Amendment No. 185:

Page 261, line 37, leave out "Neither the Board nor any" and insert—

"( ) The Board shall be liable in damages.
( ) No"

The noble Lord said: I am afraid that the gremlins in the Public Bill Office got at this amendment, too. There should of course be no brackets, and the words should be all on one line.

What I am seeking to probe, although I know that the board is neither the servant nor the agent of the Crown, is whether it is a body corporate that stands freely on its own. I readily understand that it is bad practice for a board not to look after its employees and members and I would not expect them to be liable for damages, but I should be interested to know why the body corporate is not liable in that regard. I beg to move.

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