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Baroness Hollis of Heigham: We missed the noble Lord on a previous discussion when I referred to him on that very subject. Schemes have the power to pay their trustees; they are required to give time off for training and duties and, if they are employees of the company, to continue to be paid during that period. The noble Lord may be right—but we also identified that there could be real difficulties in a correlation between the size of the assets managed and the normal pay of the workforce employee. I made a comparison with local government councillors who face similar
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problems of recompense—what happens when people are very part-time indeed. But there is no obstacle to schemes doing that if they wish.
Lord Oakeshott of Seagrove Bay: Does the Minister intend to deal with my point about Clause 238(2) now, or will she do so when we come to it?
Baroness Hollis of Heigham: I do apologise—did I not do so?
Lord Oakeshott of Seagrove Bay: I do not think so.
Baroness Hollis of Heigham: I did actually do so, but I accept that the acoustics are not brilliant in this room.
The power in Clause 238(2)(b) will be used to allow a period of grace for new trustees.
Lord Oakeshott of Seagrove Bay: Only for that?
Baroness Hollis of Heigham: I believe so. If that is not the case, I shall write to the noble Lord.
Lord Oakeshott of Seagrove Bay: Let me remind the noble Baroness that my specific question was whether there were any circumstances in which the power in Clause 238(2) would be used to water down the very sensible requirements of Clauses 236 and 237. I find it hard to envisage, but I wonder.
Baroness Hollis of Heigham: Given that the whole push is in exactly the opposite direction, the probability of the Government seeking to water down what they are trying to claw up seems unlikely. That is the intent, over and beyond recognising that we need to take people with us and change the culture. I cannot conceive of it, but I am wondering whether there are any assurances that I can give the noble Lord. These are regulations and will be available for the House to scrutinise.
Lord Oakeshott of Seagrove Bay: I am happy to accept "I cannot conceive of it", and thank the noble Baroness.
Baroness Hollis of Heigham: I find it hard to, but I cannot speak for any future government.
Lord Skelmersdale: My few words have turned this into a most useful and educative debate. On education/training, I reassure my noble friend Lord MacGregor that I had no intention of forcing trustees or potential trustees to take exams and get certificates. That is not what we are about. We are about enabling trustees to evaluate the professional advice, whether it be actuarial, investment or even legal.
I note that the noble Baroness said that at the moment the Bill is about encouragement rather than a formal requirement to take up training places. I hope that she is right and that we do not have to come back to this on future occasions. The push is certainly in the right direction, even if it does not end up with the achievement that we would all like to see.
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Clause 236, as amended, agreed to.
Clause 237 [Requirement for knowledge and understanding: corporate trustees]:
Baroness Hollis of Heigham moved Amendment No. 300D:
On Question, amendment agreed to.
Clause 237, as amended, agreed to.
Clause 238 [Requirement for knowledge and understanding: supplementary]:
Lord Higgins moved Amendment No. 301:
"(4) Each of the Regulator and the Board must secure that any individual who exercises any function of theirs has knowledge and understanding of the matters mentioned in section 237(5).
(5) For the purposes of subsection (4), the degree of knowledge and understanding required is that appropriate for the purpose of enabling the individual properly to exercise the function in question having regard in particular to the nature of the duties and objectives of the Regulator of the Board (as the case may be)."
The noble Lord said: The amendment reflects representations from the National Association of Pension Funds. Perhaps I might comment on the debate that we have just had. My noble friend Lord MacGregor pointed out that he was chairman of the parliamentary pension fund. My own experience of that some years ago, when I represented various members' interests, was that every time the fund was in surplus, the Treasury contribution went down, and every time it was in deficit the members' contributions went up. In any event, there have been considerable changes in the scheme since then.
The amendment is related to supplementary requirements on knowledge and understanding. As with the earlier points made, the crucial thing is not to what extent individual trustees have as much knowledge as their advisers, but the fact that they are very ill advised to take on the role, because unless they have taken professional advice from appropriate fund managers or lawyers—I see that the Lord Chairman has been through this as well—they can be extremely vulnerable personally. That is why, however expert the trustees may be, they need to take account of professional advice.
The amendment suggests that the regulator and the board must secure that any individual who exercises any function of theirs—not the trustees of pension schemes, as was mentioned earlier—should have what the amendment suggests—that is, the appropriate degree of knowledge and understanding. This reflects the point of my noble friend a little while ago. This seems to be eminently sensible—what is sauce for the goose is sauce for the gander. If the Government are to require this of members of pension funds, surely they should require it of the regulator and the board as well. I beg to move.
Lord Oakeshott of Seagrove Bay: We support this amendment.
Baroness Hollis of Heigham: I tried to respond briefly just now. I thought that, perhaps, as a result,
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the noble Lord, Lord Higgins would not move the amendment. Otherwise, I would have encouraged him to defer his comments.
The question is: why does the knowledge requirement that we are asking of member-nominated trustees not apply to the regulator? I made my first point, which is that it is about the type of staff involved and that we are dealing with a compensation scheme, not a pension scheme with particular trust rules and so on. So the basis of knowledge of the professionals coming into it will be infinitely more advanced than those of member-nominated trustees, where appropriate. Secondly, their job, functions and responsibilities are in some ways distinctive and different. But the third point is that board members will be appointed with specific requirements set out in the recruitment material and terms of employment to ensure that we get the range of skills that we want. That is why we do not think that this route is the right one to go down.
Clauses 236 to 238 relate to trustees generically, not to specific board members of an NDPB, where they follow the usual public recruitment rules. So I gently suggest that this is a non-issue. If I thought that it was a real issue, I would take it away and fight its corner, but the notion that we would appoint people to do the serious job of the regulator without having confidence that they were appropriately equipped and qualified and professionally trained, where that is also appropriate, seems absurd, given the rules governing public appointments.
So I hope that, with what is a pretty blue sky response, the noble Lord will none the less accept that it will be inconceivable—and I mean that word—that we would appoint or would be allowed to appoint members to an NDPB who did not have the appropriate qualifications, training and support necessary for the job, as outlined by Parliament as and when the Bill is passed.
Lord Higgins: The Minister is inclined to use the expression, "It is a compensation scheme, not a pension scheme", in a number of different contexts. But the reality is that the Pension Protection Fund board will be operating a massive pension scheme. It may be that the proceeds go in the form of compensation—although in fact they go in the form of pensions—but it still has the same problems with regard to investment decisions. In fact, they are on a far bigger scale than a normal pension fund. But the fact that it is on a bigger scale does not mean that it is appropriate to leave it all to experts, as the noble Baroness suggests.
It is also inappropriate that everyone involved—the amendment specifies the individuals involved—should have the appropriate level of expertise. They really do not. The fact that it is compensation being paid out does not make it any different from a pension scheme, either in relation to the fact that it has investment decisions to make or to the fact that what it is doing is paying out pensions. The pensions may be compensation for other pensions, but they are still pensions. I do not think that we can say that it is
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appropriate for them to operate in the way that the noble Baroness has described, with a lot of experts, rather than people who have a fiscal responsibility.
On the point that produced a reaction from the Deputy Chairman of Committees, the noble Lord, Lord Haskel, it is debatable whether the members of the regulator and the board are personally liable if they are not taking advice but making the decisions themselves on the basis of their own expertise. I do not think that the regulator or the board are sufficiently legally distinguishable to ensure that that is not the case. As I said, you take advice when you are a trustee of a pension scheme because you need to be able to say, "I took advice". But if the board or the regulator is not going to do that—this had not occurred to me until now—its legal position is rather doubtful. We ought to give some further thought to that, so the amendment seems appropriate. But I will not pursue the matter.
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