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The noble Lord said: My Lords, a constant theme of the proceedings on this Bill has been its inclusion of great chunks of detail of which we knew nothing—to a great extent, we still do not know. There has been general agreement among the Front Benches today that this is a skeleton clause. In my book, that gives skeletons a bad name, because at least archaeologists can discover an enormous amount about skeletons. On this occasion, we are very limited in our ability to discover anything. Before the noble Baroness opposite explodes, I should add that, on many, many occasions, there are very good reasons for that.
Having got that off my chest, I shall now deal with the three amendments, all of which probe the phrase,
Under Clause 284(2), on the financial assistance scheme, a "qualifying member" is somebody,
"who, at such time as may be prescribed, is a member of the scheme in respect of whom the scheme's pension liabilities are unlikely to be satisfied in full because the scheme has insufficient assets".
I seek to establish the start date not of the scheme itself but of the pensioners, deferred pensioners and so on who will become eligible to be covered by the scheme.
Subsection (2)(b) states that a "qualifying member" is someone who,
In other words, one assumes, the subsection refers to a deferred pensioner of the scheme. Will the start date be the same as I asked previously or is it some other time?
Again, subsection (2) states that a "qualifying pension scheme" is one,
A scheme of a prescribed description is the subject of another amendment, which I shall move shortly. Is that "time as may be prescribed" the same as the start date—in other words, the backdating of the eligibility for falling into the scheme—or is it some other time?
The Minister has given the impression that both Opposition parties are asking questions on their own behalf; in this case, we are not. We were originally led to suppose that 60,000 people were waiting on the noble Baroness's every word—everything that she could possibly say to describe the operation of the scheme. Since then, the figure has been revised to 63,000. The most recent estimate by the department is 65,000. For all we know, by the time the scheme starts—whenever that may be—there may be more.
Having listened to the discussions earlier, a point occurred to me about the fact that the £400 million is supposed to last 20 years. During the past 20 years there must have been several actuarial revisions of life expectancy. In the next 20 years, presumably, there will again be several revisions of actuarial life expectancy. Therefore, it is extremely difficult for the Government or anybody else to work out exactly what we are in for. In this case, I am prepared, as is my noble friend, to buy what I can only describe as a pig in a poke; but the more flesh the noble Baroness can put on to that particular pig, the less unhappy will those 65,000 members be. I beg to move.
Baroness Hollis of Heigham: My Lords, I shall do my best to answer some quite detailed questions. The noble Lord is right to say that they are matters of concern.
This group of three amendments all refer to the powers taken in Clause 284 to describe who would be a qualifying member for the purposes of the financial assistance scheme (FAS). In particular, each amendment seeks to remove powers that would enable regulations to prescribe time frames relating to aspects of member qualification. The clause is littered with regulations, precisely because it is a framework—the noble Lord does
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not like the word "skeleton", so perhaps he would prefer the term "framework". I do not like the words "pig" and "flesh"; we need not go that far.
Noble Lords have already voiced frustration at the lack of detail. I shall clarify our intention in taking the powers that the amendments seek to remove, and illustrate the ways in which we would like to use them. I shall take them in the order in which they are laid.
Amendment No. 269 removes the power to prescribe in regulations the time at which a member must actually be a member of a pension scheme, in order to be considered for financial assistance from the scheme. When the clause was introduced, it was deliberately drafted to support a wide range of options for the design and delivery of the financial assistance scheme. Noble Lords will note, for example, that subsection (3) enables the scheme to be set up as a trust or in some other way; and for the Secretary of State, a prescribed body or some other person to be scheme manager.
The power to which the amendment refers was included in case, as development work, data-gathering and consultation on the scheme progressed, there was a good case for limiting assistance to those who had been members of their scheme before a certain date—for example, before 6 April 1988, when employers could choose to make membership of their occupational pension scheme a condition of employment. However, I can assure the noble Lord that this is not now the approach that we intend to pursue. We do not intend to determine people's eligibility for the FAS based on the dates at which they were members of their schemes. I hope that that is helpful.
Noble Lords will appreciate that there remain very many complex and detailed points to sort out when drafting the regulations. We will seek the technical input of pensions industry colleagues to ensure that we have covered all bases for the variety of different situations in which winding-up companies find themselves. It is much messier and more complex than the "clean slate" enjoyed by the PPF. Given the unique circumstances of the FAS, where we are doing much of the detailed work and consultation after rather than before taking primary powers, it would not be prudent to restrict our flexibility to make as yet unforeseen technical adjustments by removing this power. As we originally intended, we do not think that we will move in that direction, but we want to ensure that we have the power to do so, rather than coming back to the House again needing primary powers.
Amendment No. 271 would remove our ability to prescribe in regulations that some people, who had been members of schemes at some point in the past, would not qualify for assistance from the financial assistance scheme. There are two reasons why members could have ceased to be members of a scheme. First, the scheme could have been fully wound up. Such a scheme does not, by definition, have any members at all. I assure noble Lords that we have always intended to allow people who were members of schemes that have already wound up to qualify for the
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FAS. Indeed, the Bill recognises that. However, members could also have ceased to be members because they voluntarily transferred out of their scheme, whether the scheme has already wound up or not. It could also be the case that people voluntarily accepted transfer values that were reduced as a result of their scheme being underfunded at that point. That could have happened many years prior to the scheme starting to wind up.
However, the option has always been available to leave transfer values in the scheme in question—provided that they have been there for two years. We are still considering whether the FAS should offer assistance to those people. That includes considerations about how it might be administered and assessments of the potential impact on funds available to help scheme members who left their accrued rights with their scheme.
The amendment would prevent our prescribing that members who took a transfer value at some point in the past would not qualify for the FAS. We continue to explore whether we would like to use the power in the Bill that would enable us to do that.
Amendment No. 273, would remove our ability to prescribe dates on or by which a member of an occupational pension scheme must meet certain conditions in order to qualify for the FAS. For example, we would be obliged to include all scheme members irrespective of their age at a particular date thereby leaving smaller amounts of available funds to assist the older members who are in no position perhaps to rebuild. That would remove one way in which we could provide significant help to those who face the most significant losses.
It is an important principle that great amounts of assistance from the FAS are provided to those who are least able to make up their loss. Should all members of occupational pension schemes potentially qualify for assistance from the FAS, it would mean that the FAS would be forced to cater for cases where negligible, if any, assistance would be provided.
The negative consequences of such a situation should not be underestimated. The FAS would be forced to deal with possibly thousands of cases where the assistance to be provided potentially would be less than the costs of considering the claims. They would be quite small sums such as £100 or £200. That would increase the administrative costs on the FAS, thereby reducing the amount available for assistance to older members, surely an undesirable effect. It would wipe out a sector.
I hope that my explanation of our intention in taking these powers has been helpful. I am sorry that I have spoken at such length, but I have gone into detail. I accept the significance of the amendments. I hope noble Lords understand the framework within which we hope to make use of the powers. With that extremely detailed explanation, I hope that the noble Lord, Lord Skelmersdale, will be able to withdraw his amendment.
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