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Lord Skelmersdale: That, again, was a very comprehensive review of these orders, which are the first fleshing-out of the skeleton Financial Assistance Scheme in the Act.

Part 2 of the main regulations provides that schemes established in Part 1 should be managed by the Secretary of State, who will naturally delegate to officials. I shall have more to say about that in a moment. There is to be a fund consisting of taxpayers' money to the tune of £400 million—whether this £400 million will come out all at once or in dribs and drabs I have yet to discover; perhaps the Minister will tell me—and money provided by third parties. This surely does not mean the money transferred from the schemes coming in; they already have those assets. My noble friend Lord Higgins and I pointed out in our discussions on the Bill—and, indeed, my noble friend made a note—that no one in their right senses would contribute to the scheme, but we still find that erroneous suggestion in the regulations.

We have the Financial Assistance Scheme simply because the Government were bounced into it by their own Back-Benchers, who knew of many pensioners—some 60,000—who would lose out because their schemes would not be covered by the Pension Protection Fund. It was and is to be backdated to 1 January 1997, ending on 5 April 2005, the date of the establishment of the PPF. However, although the PPF was established on 5 April, it is still, as I understand it, not up and running properly. My guess is that it will take well over a year for that to happen. I noted the Minister's hope that payments from the FAS would be made sometime in September. I hope that he is right, but my experience of such matters is that it can take quite a long time.

How can we tell whether there is a black hole into which schemes might fall—or, indeed, whether there is no black hole but pensioners still lose out? Will—or
 
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indeed does—the PPF make it a priority to take over schemes which are in the process of failing due to an insolvency event? Clearly we have now run out of time for the FAS to take account of such schemes. After all, I am sure there are some schemes where the employer has suffered an insolvency event. What, for example, about the former employees of the Rover car company? Did that firm collapse—in a technical sense rather than in the way we read of in the newspapers—before 5 April or after?

One of the much-vaunted criteria of the scheme was that existing pensioners would continue to get paid, although, from my reading of Schedule 2, not as much as they did before the employer collapsed. Indeed, the Minister has said as much today. Will there be an interruption in their incomes or will they continue to be paid on the normal day?

What about new pensioners? If there is a delay in payment and if the first payments are not coming through until September, how will those unfortunate people who are waiting for their pensions continue to survive? Will pension credits, for example, be available, or does the department have in mind some other mechanism?

These are questions that current, deferred and future pensioners want answered. If the noble Lord cannot answer now, I should be grateful if he would write to me on the subject.

As to the internal review regulations, there clearly has to be an appeal mechanism, which again will be delegated to officials. They will determine whether the criteria in Regulation 2 have been met. I have no questions on the procedural details of the arrangement but it is, of course, important that the review decision is not made by the same official or officials who made the determination in the first place. I hope the Minister can give me that guarantee. After all, in other parts of the social security system that is exactly what happens. A different bunch of officials, if I may describe them in such a way, carries out the review process.

I also notice that the scheme manager must take reasonable steps to publicise the results of the review to any interested person. While I applaud the intention, how is this to be achieved? How will it be possible to detect these interested persons? How and where will the Secretary of State publicise his determinations?

Clearly we shall be watching the development of this scheme very carefully. I hope the Minister will be able to satisfy us that it will work—and work fast—otherwise the Government will have scrambled out of one hole and into another. In this case, I wish the Government well because I do not want that to happen.

Lord Oakeshott of Seagrove Bay: The Minister said that perhaps he needed a L-plate. I am sure that with his enormous experience he does not; he probably just needs to keep a slight eye on the speed limits.

On the regulations, I want to make it clear that our position is that people who would be eligible for benefits under the Financial Assistance Scheme should
 
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receive the same benefits as they would if they were eligible under the Pension Protection Fund. That is simple and straightforward and that is what we are putting forward.

Having said that, I have three or four detailed questions and comments on the regulations. First, I heard the Minister say—the noble Lord will clarify this for me—that the first payments will be made, if possible, by December. The noble Lord said September, but is it September or December?

Lord Hunt of Kings Heath: December.

Lord Oakeshott of Seagrove Bay: Thank you. If anything, that makes the situation worse. I want to press him on the words, "if possible". Under what circumstances does he envisage that it will not be possible? People have been waiting for many months now and I believe there would be outrage—I do not think that that is too strong a word—if it were not possible to make those first payments by December at the latest. I must press the Minister on what possible circumstances there could be that would make the first payments come after December.

Reading the small print, I came across the figure of £16 million for the administration costs of the scheme over the first three years. Given that the scheme is intended to pay out at an average rate of £20 million a year over the next 20 years, that is a simply shocking figure. I know it will come from "unallocated amounts" elsewhere within the DWP budget, but the fact that, over the first three years, the Financial Assistance Scheme will cost 27 pence in administration costs for every pound that will be paid out on an average basis to those who have been robbed of their pensions, serves to highlight how amazingly mean and stingy the whole scheme is. It seems to me that that must be an all-time record. I would be interested to hear whether the Minister has other examples of schemes where the administration costs of a benefit are higher than that. In terms of delay and of costs, I believe that this will stick in the craw of thousands of people who are waiting, often almost in despair, for their first penny-piece from the scheme.

The Minister will correct me if I am wrong, but on the age of eligibility, why should women, whose normal retirement age under their scheme, into which they have properly paid and worked for many years, is 60, have to wait past that age to within three years of 65 to receive their first payments under the Financial Assistance Scheme? Again, that seems to us to be grossly unfair.

Lord Hunt of Kings Heath: I thank noble Lords for those detailed comments and questions, to which I shall endeavour to respond to the best of my ability. I shall start with the question that was raised by the noble Lord, Lord Oakeshott, in relation to women and the decision that payments should commence at the age of 65. The simple answer is that fairly arbitrary limits have had to be put on this scheme. We are talking about a limited budget funded by the taxpayer and we have had to target it as fairly and effectively as possible through one single set of rules. Inevitably,
 
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some decisions have had to be made that might be described as arbitrary. I am afraid that there is no running away from that. It is the same as the issue of three years off the normal retirement age also applying and the de minimis rule—the £12,000 cap. I am sure that if I had come with different figures, noble Lords would already have raised those questions. There is no running away from the fact that, while I am delighted that the FAS has been established, there will inevitably be limits to what it can achieve.

Lord Skelmersdale: There is also the interaction with the EU. I am thinking particularly of an age-related payment; namely, the winter heating allowance, which now applies to the first occupant of a house who reaches the age of 60, assuming they are a married couple.

Lord Hunt of Kings Heath: That may be so, but it still does not detract from the fact that we have had to make some pretty hard rules on this. I am afraid that commencement at the age of 65 is one of them.

On funding, noble Lords have already discussed whether the figure of £400 million is the appropriate provision. It is the best assessment that we have of the resources that are going to be required. Obviously, we will keep that under review, but I can make no promises other than that.

The noble Lord, Lord Skelmersdale, asked about the level of contribution from industry that we might expect. We have had discussions with industry. I am not sure that they have been resolved yet, but we are very keen that industry should offer any support that it may consider appropriate to the FAS fund.

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