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Baroness Turner of Camden: My Lords, my own amendmentAmendment No. 283is grouped with Amendment No. 266. As we have heard this afternoon, Clause 284 has been described as something of an empty box. We know that there will be a financial assistance scheme but the Bill puts no flesh on the bones, and we had a great deal of discussion about that this afternoon. We know the Government's intention, but we do not know what the accepted anticipated liabilities of the FAS will be. We have a cash limit, but we want to know what proportion of benefits will be paid.
The intention of Amendment No. 283 is twofold. First, FAS benefits should be paid at the same level as benefits payable by the PPF in the case of schemes taken over by the PPF after the appointed day. Secondly, the FAS should be adequately funded on actuarial principles to ensure that those benefits are paid. Those actuarial principles will not assume that the FAS will receive in year one what it pays out in year one. It is pre-funded for liabilities which it already knows of or reasonably anticipates in much the same way as an ordinary pension scheme is funded. Benefits will be paid as and when they fall due and actuarial assumptions will be made by the GAD about future financial investment return, inflation and so on, and demographic matters.
It seems to me that Amendment No. 266, moved by the noble Lord, Lord Oakeshott, is reasonable and sensible and my amendment is meant to support that
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concept. I cannot move my amendment; I am simply speaking to it because it is in this group. I wait to hear what my noble friend has to say.
Lord Higgins: My Lords, the noble Lord, Lord Oakeshott, said that this is a modest amendment, and I think that that is so. One feature which has been completely missing from our deliberations has been the Minister standing up and saying, "I accept that amendment". Not once in the whole of the Grand Committee stage did such an event occur; and it has not occurred in the first or second sitting of the Report stage or even now. This is the noble Baroness's opportunity to do so.
I consider the amendment of the noble Lord, Lord Oakeshott, to be admirable. In particular, the publication of such a report would give occasion for those who feel strongly on these issues to assess whether the scheme had worked out as they had hoped. As we said earlier, there has been enormous pressure from Back-Benchers in another place for the introduction of such a scheme. It may well turn out to be, as we hope, a success or it may be a disappointment.
At any rate, a report of this kind will give an occasion for those who are concerned about the issue to express a view on how things have worked out. No doubt, if sufficient pressure is applied, they will be able to obtain an increase in the level of benefits paid and to make a comparison of those benefits and those being paid by the PPF. As I said a moment ago, I think that £400 million will probably be a very inadequate sum, and the report will be able to include an assessment of whether or not that turns out to be so. I strongly support the view expressed by the noble Lord.
Lord Fowler: My Lords, before the Minister fits in, as I am sure she will do, with the proposal of my noble friend, I want to say one word. As the noble Lord, Lord Oakeshott, said, this is a modest proposal. Nevertheless, it is an important proposal and one with which I very much agree.
It raises an important pointthat is, that there should be post-legislative reviews of what we do. As my noble friend Lord Higgins mentioned, we should be checking the progress of the legislation as we go along. Although we have had pre-legislative scrutiny in Parliament, I think that we should consider the far wider use of post-legislative scrutiny. Many of the mistakes and errors which occur when Bills become Acts could have been prevented had such scrutiny taken place. Frankly, I believe that there is a great case for doing that with all legislation but, in particular, there is a strong case for doing so with legislation on pensions.
In a sense, such scrutiny would also serve notice on the government department in question that it was expected to report back. Frankly, Secretaries of State change, and the new Secretary of State does not necessarily regard it as his number one object in life to carry out the work of his predecessor. Rather than concentrating on the No. 1 Pensions Bill, he probably wants his No. 2 Pensions Bill to be brought forward.
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Under those circumstances, the department has a responsibility to report on its stewardshipthat is, on how it has operated the legislation passed.
Therefore, although the amendment proposes a modest step, it is an important one. It would be brilliant if the Minister could now accept a post-legislative review of this pensions legislation as I think that that would be of great benefit.
Baroness Hollis of Heigham: My Lords, on the last point, there is nothing to stop any Member opposite using a Wednesday afternoon debaterather like an Opposition day in the other Housesome time down the line in order to review the operation of the Pensions Bill and to call the Government to account. Again, I am entirely in favour of learning loops, which we normally have through pilot and pathway schemes. There may be other devices and I have no problem with that. But, some time down the line, it would be sensible to have a debate, whether or not it was initiated by the Opposition, as to the efficacy of the Bill and as to whether it was working as Parliament intended. I do not have a problem with that but it will be for your Lordships to determine.
The noble Lord, Lord Higgins, asked why I cannot accept Amendment No. 266. He also said that I had not accepted any others. I have to say that that is a bit rich. When I sat on the Opposition Benches, the only time that any amendment was ever accepted by the government was when a negative regulation was made affirmative. That was the only time that I could be sure that I had the drafting right. At times, we have not been able to get the word "sheriff" rightwith a decision on whether it is "a sheriff" or "the sheriff".
Noble Lords will see that the Government have effectively made a number of concessions in response to pressure, but they have brought back the changes as government amendments to ensure that they work. I have responded in dozens and dozens of ways but am being blamed for the inadequacy of the drafting of opposition amendments. Perhaps I may gently suggest to noble Lords that it is a piece of effrontery to blame me for not taking the amendment on board and thereby ensure that the provision will go before the courts at some point. But I do not blame them for having a go.
At the beginning I said to the noble Lord, Lord Oakeshott, and I repeat it now, that I have no problem at all with three-yearly reviews. I believe that is absolutely right and they may need to be more frequent than that. I have no difficult with that. That part of the amendment is fine, but the rest of it causes me difficulty. I am bothered by the weight that any court could put on some of the words.
The reports that we will expect to be brought forward, and that the FAS will have to publish, will set out how the funds have been used. I expect them to detail the number of members who have received assistance. I do not believe that there is dispute between us on that. But how can a report be made on the adequacy of the funding. Is it the adequacy in the
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eye of the beholder? Or does it mean how the sums have been worked out, which will be in the information about how much people receive? Against whose judgment and whose standards is "adequacy" to be viewed? That is where the polemic comes in, which is why I cannot accept the amendment as it is drafted. That can be judged only against a promise that the Government have made, and we have promised that we shall provide a worthwhile package for those who have incurred the most significant losses.
Secondly, in relation to the amendment tabled by my noble friendAmendment No. 283I am concerned about comparing the FAS level of assistance with that provided by the PPF. At a mechanical level, any Member of your Lordships' House, any member of a trade union or any member of a pension scheme will be able to make that comparison. We know that there will be 90 per cent for members coming within the purview of the PPF. We have always said that the FAS, as my noble friend acknowledged earlier, will be less generous than the PPF and the Minister of State in the other place said:
"it seems unrealistic to expect that assistance will be set as high as future pension protection fund levels, as in future members will benefit from cover paid for by a premium to the pension protection fund".[Official Report, Commons, 19/5/04; col. 991.]
My key point is that scheme members who will benefit from the PPF in the future will enjoy a level of assistance paid for by a levy on all defined benefit schemes. Because there is a levy, the PPF will be able to offer 100 per cent to some categories of scheme memberthose already in retirementand 90 per cent to others. In contrast, the financial assistance scheme benefits from £400 million of funding from the taxpayer. We believe that it is right to use public money in recognition of the severe losses suffered by some scheme members, but it would not be reasonable to expect taxpayers, most of whom are not members of defined benefit occupational pension schemes, to fund assistance to the same generous levels as the PPF.
Let me give an obvious example. The PPF will offer 90 per cent compensation to all those not coming in. With the FAS we might want to take account of how close people are to retirement and, therefore, to what degree they can remedy the situation they are in by a shortfall in the scheme. If someone has been in a scheme for only five or eight years and it collapses, he is in a different position as regards rebuilding than if he is two or three years away from retirement, when clearly there is very little capacity to rebuild. Those are different kinds of considerations.
I might add that Amendment No. 283 would require the FAS to determine levels of assistance according to the rules devised for the PPF. I hope my noble friend will accept that it would be in no one's interests to squeeze the FAS into the regulatory frameworkincluding a regulatorthat has been tailored to fit the PPF. They are different kinds of schemes, and there should be a clear understanding of the water between them, if I can put it like that. This framework has been finely tuned to respond to the needs and concerns of a pensions communitythe PPFthat will contribute
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financially to a compensation scheme. This framework would sit uncomfortably on the shoulders of an assistance scheme financed by the taxpayer. The schemes will be very different.
I return to the original amendment. I have no problem at all with regular reports, whether three-yearly or more frequent, of the FAS. I would expect that to happen anyway. I would expect the FAS to include what I would call the objective information about how many members have been helped, what level of assistance they have been given and so on. However, words like "adequacy", particularly when tested in a court, might seem to imply some other form of judgment with which I would be unhappy and could not accept on the face of the Bill.
With the set of signals coming from the Governmentthey are not confused but involve "on the one hand" and "on the other hand"I hope that the noble Lord, Lord Oakeshott, will be able to withdraw his amendment. At Third Reading he may wish to return with a more tailored amendment, which pins down the issue on regular reporting, while leaving out words such as "adequacy", let alone a comparison with the PPF. People would have no difficulty with that because they would be able to put the two reports side by side. I seek to resist the linkage that one can measure the adequacy of one by the payments of the other. With those comments, I hope that the noble Lord will feel able to withdraw his amendment and, when the time comes, I hope that my noble friend will not press her amendment.
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