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Viscount Trenchard: My Lords, I support the amendment of my noble friend Lord Higgins. We are unclear about exactly who will be covered by this financial assistance scheme and how the £400 million will be measured. I suspect that if the financial assistance scheme is restricted to only £400 million—or £250 million at the present day value—the level of benefits pensioners receive will be considerably smaller than those under the PPF.

In the light of the decision of the electors in the north-east last Thursday perhaps the £200 million set aside for regional government could more sensibly be redeployed to boost the amount the Government will put into the financial assistance scheme.

Baroness Hollis of Heigham: My Lords, I am sure that that suggestion will be received with enthusiasm in the relevant government departments.

Perhaps I may also ask the House's indulgence to do what the noble Lords, Lord Higgins and Lord Oakeshott, did to some degree, which is to make a slightly more general statement about where we are in our approach to the amendments. That will perhaps allow us to be much tighter in discussion on the subsequent amendments.
 
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I accept, particularly from the Official Opposition Benches, that the way we are handling FAS is not the most desirable. It would obviously give me profound pleasure to be able to bring a polished scheme to the House, which could then be properly scrutinised. To do that, we would probably need to delay the introduction of FAS for another year. That is our dilemma. I think that your Lordships will understand the pressure we are under. The matter came up late in the day as we saw schemes beginning to collapse around us. The provision responds to our concern to offer decent and honourable support to those schemes, which were never intended to come within PPF. The financial assistance scheme has come up late. It is in a broad form. Its regulations will come before your Lordships and will be affirmative. So there will be ample opportunity to scrutinise the matter then.

I wish that we could handle the matter in a different way, but, frankly, we are between a rock and a hard place. The noble Lord, Lord Oakeshott, stated that there is real concern outside. For that reason we thought that it was better to go with a less polished scheme—an outline framework scheme—in order to progress the Bill, and to fill in the detail through affirmative regulations under the full scrutiny of the House. It is not the ideal solution, but it seems to be the least worst in the situation we are facing.

We are discussing Clause 284. We all share the desire to give greater certainty about how and when FAS will operate. Perhaps I may state where we are. Since FAS was announced in May—only five months ago—we have made good progress in identifying the scale and magnitude of an extremely complex problem, involving hundreds of different pension schemes with differing scheme rules and at different stages of winding up.

We have consulted with scheme members and trade unions and have been working with industry experts to gather and analyse data and explore options. Let me give one example. In many schemes perhaps 30 or even 40 per cent of potential beneficiaries are deferred members. Trying to find out exactly what they might be entitled to in working through the scheme system is extremely labour intensive and time-consuming. Many noble Lords have practical experience of operating pension schemes so they will understand that very well.

The report we published in June was based on an information-gathering exercise which enables us to provide estimates but only at scheme level. We are now undertaking an exercise to try to find out the profile of individual members, including deferred members, and the position of schemes' sponsoring employers. That will help us in implementing the FAS. When it goes live we will already hold details of a large number of schemes. So we shall be able—I hope—to progress more quickly towards paying members, which again I know is a matter of concern to noble Lords.

Your Lordships should bear in mind—and those who have previously been on these Benches will understand this—that this is the first time that government have sought to collect such comprehensive information from
 
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private sector occupational pension scheme trustees and actuaries. We do not hold this information as a rule. So we have had to devise systems and processes from scratch in a very short time. Even GAD has sometimes found it difficult to collect this information; so for us to do it on a very different basis is extremely laborious.

We are grateful for all the help we have received. There is a range of options. The first is to collect the information; the second is that there are some difficult policy issues behind what we do. Each option for the structure of FAS could have very different consequences in terms of the security that it would offer to FAS beneficiaries; the certainty it offers to trustees; the value for money it offers in terms of administrative overheads; how we treat fairly members of schemes whose schemes are still in the process; how we use the commitment of taxpayers' money so that those who have been hardest hit receive the most help; and/or should we have a de minimus provision? Should we give more to those closest to retirement? These are all difficult policy issues that we have to deal with and which must rest on the facts of the data we have collected.

The choices are not simple. We are looking at the pros and cons of those options and discussing with the relevant stakeholders.

It is instructive to compare where we are on the FAS with the development of PPF. For PPF we had a Green Paper published in December 2002 and it was announced in June 2003. We are operating FAS in less than five months. So unfortunately we have not been able to develop FAS in order to dovetail tidily with the Pensions Bill. I repeat what I said earlier. We will bring forward all the regulations which flesh out the provision through the affirmative procedure. Therefore, I do believe that your Lordships—admittedly belatedly—will be able to have full parliamentary scrutiny and control. I do not believe that noble Lords would want to say, "We are not going to have the FAS unless we see all the details now". Your Lordships will want FAS, but I am sure that you will also want to ensure that you can have a full debate about the particular details. I can offer your Lordships that.

So, with that explanation, I hope that your Lordships will accept the position we are in. I fully accept that it is not desirable. I can perfectly understand that the Opposition have the right to be unhappy with the situation we are in. But to meet the Opposition's wishes would be to delay significantly the introduction of the FAS to those who will most need it. That is the dilemma we are in.

Turning to the amendments—and again perhaps I may give the quickest of oversights—my judgment is that the amendments tabled on Clause 284 fall into four main categories. It may be helpful to your Lordships if I give some indication of how we might wish to respond to the amendments.

The first group is mostly about timetables and dates—for example, Amendment No. 264. I have to say now that we cannot accept the amendments. It may be that your Lordships will have a different view; it may be that the Commons could have a different view. But from these Benches I cannot accept the amendments for strictly practical reasons. The
 
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statutory dates proposed in the amendments are simply not deliverable. I hope to persuade your Lordships that in looking at any legislation introduced by Members opposite—who had a far more extensive run-in period than they are apparently going to allow the Government on these—we have no option, should your Lordships decide to go for the amendments, but to seek to unpick them if we want to implement a sensibly designed workable financial assistance scheme.

I am not predicting how your Lordships will go; I am not trying to predict how the Commons will go; but the Government's position is that we cannot accept the amendments because they are too much of a straitjacket. We simply cannot meet them. They cannot be delivered. It would be foolish of me to pretend otherwise.

There is a second group of amendments where we are willing to consider whether acceptable wording could be put on the face of the Bill—Amendment No. 260 is one such amendment—or whether the concerns could be met through statements in Hansard. The amendments relate to any compulsory levy. I am happy to give reassurances, but if your Lordships are sufficiently concerned, perhaps we could consider whether to return to the matter.

Another such amendment is Amendment No. 266 in the name of the noble Lord, Lord Oakeshott. It requires three-yearly reports to be laid before Parliament on the financial assistance scheme. Whether the noble Lord is content with a verbal assurance or whether we need to revisit the matter we can discuss, but we do not have any substantive policy debate on this at all. We sympathise with where members of the Opposition are coming from. The third group of amendments covers topics where policy is still being developed—I cannot give your Lordships answers on these matters today—such as whether an individual's other income and capital should be taken into account when assessing his assistance from FAS—Amendment No. 261—or whether eligibility for FAS should extend to schemes which wind up all the way to the point where PPF becomes operational. These are topics where we are broadly sympathetic with the concerns that have been expressed, but we cannot yet have our hands tied before a final analysis of the complex problem is completed. Amendments Nos. 261 and 263 fall into that category. We are not unsympathetic, but we are not yet clear about what our final position should be.

Unsurprisingly, I hope to be able to persuade your Lordships that the amendments in the fourth and final category are simply wrong headed. They would require, for example, the scheme to be funded by the Treasury rather than from funds voted to the Department for Work and Pensions. Amendment No. 262 would disregard assistance payments in other income-related benefits. Somebody whose pension scheme had collapsed and gone into FAS would thereby be better off than somebody whose scheme had not collapsed at all. I cannot believe that that is what noble Lords intend, but maybe they have misunderstood the consequence of the amendment.
 
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Those are the four broad categories of amendments. Where I can meet your Lordships' concerns, either through assurances in Hansard or even at Third Reading, I shall be happy to do so. However, there will be some areas where I cannot satisfy your Lordships with the detail that they require—I fear that we shall have to await regulations—and other areas where I hope to persuade your Lordships that the amendments as set out on the Marshalled List are simply misguided.

On Amendment No. 260, which relates to compulsory levy, I made it clear—the noble Lord, Lord Oakeshott, was gracious enough to accept it—that we have no intention to use the Bill to impose a statutory, compulsory levy or charge on private business to fund the financial assistance scheme. I cannot emphasise that strongly enough. However, I am unhappy about the amendment because it would have a second and far more damaging effect. By prescribing that the financial assistance scheme should make payments "entirely from public funds", the amendment would make it illegal for the scheme to receive voluntary donations from the private sector. It may be that that would not happen, but it would nevertheless be made illegal. As the scheme will increase confidence in pensions and benefit industry as a whole, we would like to keep that option open. I am sure that your Lordships will understand why that is so.

We are grateful for the voluntary and valuable expertise that we have had on this matter and we hope that it will be further supported. I cannot stop the noble Lord, Lord Higgins, pressing his amendment, but I can give him a categorical assurance that there will be no compulsory levy. However, the amendment would go further than we would wish and make it illegal for any voluntary assistance in cash or kind to be made available to FAS and it would be unwise to rule that out should organisations or sectors of industry wish to give that help either in cash or in kind. For that reason, I hope that the noble Lord will withdraw his amendment, but if he remains anxious about the matter, there is nothing to stop him or the Government tabling an amendment on the compulsory levy alone at Third Reading. I hope that with that explanation, the noble Lord will feel able to withdraw his amendment. I hope that the House will forgive me for addressing the amendments widely at this stage. I hope later to provide more tailored replies.

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