Previous Section Back to Table of Contents Lords Hansard Home Page

On Question, amendments agreed to.

Lord McKenzie of Luton moved Amendment No. 26:

4 July 2007 : Column 1110

“(b) send a copy of the certified statement and of his report to the Secretary of State as soon as possible.

The noble Lord said: My Lords, as I announced in Committee, the National Audit Office has contacted the Department for Work and Pensions to notify it of a change of policy in relation to the NAO’s role in laying audited accounts before Parliament. The Bill makes clear that the delivery authority will be required to produce an annual statement of accounts and that the Comptroller and Auditor General must then audit them. This will not change.

However, the Bill also states that the Comptroller and Auditor General will then lay a copy of the audited accounts before Parliament. The NAO has brought to our attention that this requirement should no longer be placed on the Comptroller and Auditor General as it is now the policy of each department or audited body to take ownership of publishing accounts and laying them before Parliament. The purpose of this is to move the central government sector into line with the commercial world where it is the responsibility of companies rather than their auditors to file accounts. Government Amendment No. 26 makes this change so that it is the responsibility of the Secretary of State to lay a copy of the audited accounts before Parliament. The change will reflect industry best practice and bring the delivery authority in line with other recently created bodies such as Natural England and the Olympic Delivery Authority, which require the Secretary of State to lay the audited accounts before Parliament. I beg to move.

On Question, amendment agreed to.

Clause 33 [Initial function of the Authority]:

Baroness Turner of Camden moved Amendment No. 27:

The noble Baroness said: My Lords, I shall speak also to Amendment No. 28. The points mentioned in the amendments are designed to ensure that the Personal Accounts Delivery Authority operates in the best interests of members, but without being prescriptive. It is reasonable that these amendments should be made to incorporate these important principles into the scheme and the delivery authority from the outset. It is also important that the points are included now in order that the ability of the potential delivery authority personnel to deliver against such objectives is considered when they are being recruited.

These amendments seek to ensure that the issues central to the benefit of scheme members are put on to the agenda while quite rightly leaving the delivery authority to decide how to fulfil its responsibilities to

4 July 2007 : Column 1111

members. Moreover, I imagine that it would be uncontroversial to suggest that the investment strategy should be in the best interests of members, that members will be given choice, or that the charges are fair and reasonable.

There is another important point in favour of the amendments. As we all know because we have discussed it many times, one of the problems is that people are simply not saving enough for pension provision. We all know why this happens; often people are expected to save for pensions at a time in their lives when they have a number of other expenses. Another reason why some people have been reluctant to put money into pension schemes is that in recent years there have been a number of problems with pension provision and a number of scandals. The result has been that trust in pension schemes has, to some extent, been eroded and people are often reluctant to put their money where they do not feel it is going to be safe and secure. The amendments would ensure transparency; that members’ interests are paramount; and that when they invest in a personal account scheme they can be confident that their money will be safe and that they are likely not to have any worries about it.

I hope my noble friend will look with favour on the amendments or, if he does not like the wording, perhaps come back with something different at a later stage of the Bill. I beg to move.

Lord McKenzie of Luton: My Lords, I am grateful to my noble friend for moving Amendment No. 27 and for speaking to Amendment No. 28.

Baroness Noakes: My Lords, the Minister says that to all of them.

Lord McKenzie of Luton: Indeed, my Lords. I always mean it. The amendments concern the investment policy for personal accounts. I will take the two amendments together as they both relate to investment objectives of the Personal Accounts Delivery Authority.

Amendment No. 27 would require the Personal Accounts Delivery Authority to develop an investment strategy based on industry best practice, in particular in relation to the delivery authority’s approach to corporate social responsibility. Amendment No. 28 would require the objectives of personal accounts in relation to investment decisions and charges to be set out in the Bill.

The December White Paper, Personal Accounts: A New Way to Save, set out a broad overview of the personal accounts scheme objectives, investment expectations and the charging structures. The Government’s response to the White Paper consultation published recently set out our intentions for taking forward the policy on these areas.

It is a requirement of European law that pension schemes must comply with the “prudent person” rule and that investment decisions must be made in the best interests of members and beneficiaries. The personal accounts scheme will be a trust-based occupational

4 July 2007 : Column 1112

pension scheme, run by trustees who will have a duty to comply with European and domestic legislation to manage the scheme in the best interests of members and beneficiaries. We expect that the Personal Accounts Delivery Authority will consider all manner of industry best practice, investment choices and engagement with stakeholders in developing the investment strategy for the scheme.

I hope my noble friend will agree that it is therefore not appropriate to set out specific objectives for the delivery authority to follow as these would constrain its proper consideration of all investment choices. As I have stated on earlier occasions, our proposed Bill, planned for later this year, will set out the finer detail of personal accounts and the remit of the delivery authority. I can reassure noble Lords that we will have the opportunity at that point to discuss in greater detail the proposed plans for investments and charges. In those circumstances, I hope my noble friend will withdraw the amendment.

Baroness Turner of Camden: My Lords, I thank my noble friend for that comprehensive response. I appreciate that there will be an opportunity at some stage in the future to discuss investment and charges. In those circumstances, we can withdraw the amendments today in the confidence that there will be an opportunity for further discussion if that is necessary. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 28 not moved.]

9 pm

Baroness Noakes moved Amendment No. 29:

(a) any relevant proposals about personal accounts within the meaning of section 33;(b) any guidance issued under subsection (6) of section 33.

The noble Baroness said: My Lords, the new clause returns to the issue of transparency about the development of the personal accounts scheme. In Committee we debated a series of amendments that sought to delineate the matters the delivery authority had to have in mind as it formulated its advice to the Secretary of State or prepared for implementation. They covered hugely important areas, such as the effects of personal accounts on existing pension provision or the need to avoid the equivalent of mis-selling of personal accounts to people who will not get enough back, or who should use their money on things such as paying off expensive credit. Another example was the amendment just moved by the noble Baroness, Lady Turner of Camden.

The Minister’s answer then—as it was a moment ago—was that all that would be covered by the next Bill and was inappropriate for this Bill. That answer,

4 July 2007 : Column 1113

in effect, means that we may have to wait for a year or more before the next Bill becomes an Act. That is a year or more with no transparency about the crucial tasks the delivery authority will undertake. We may be able to debate the content of the next Bill, but it does not move forward any transparency about what the delivery authority will be working on.

All we know from the Bill is that the authority can do anything it thinks appropriate in relation to personal accounts but has no other guidance in the Bill. We know that the authority will be concerned with relevant proposals about personal accounts, which the Secretary of State will give them, but there is no provision in the Bill for Parliament, or indeed any other interested stakeholder, to be aware of what those relevant proposals amount to. In addition, the Secretary of State may issue guidance to the authority about the discharge of its function. However, there is no provision for anyone other than the authority to know what is in that guidance. In Committee, the Minister said the guidance could be administrative in nature. If that is the case, I am sure there is no harm in publishing it. The Minister will be aware that the real interest lies not in administrative matters but in the substantive development of personal accounts.

The Prime Minister has made much in his opening days about the need to restore trust in politics and, by extension, in Government. We agree with that; the past 10 years have left public trust damaged. The Minister must know that obsessive secrecy—doing things behind closed doors and not informing Parliament and others about the development of crucial policies—runs wholly counter to the need to rebuild trust.

My amendment would require the Secretary of State to lay before each House both the relevant proposals to be worked on by the delivery authority and any guidance issued under Clause 33(7). No parliamentary approval would be required, so the work of the delivery authority would not be held up, but Parliament would be given the opportunity to seek appropriate debates on the issues being passed from the Secretary of State to the delivery authority. The amendment would also require publication as the Secretary of State thought fit. There are many interested parties outside Parliament who also need to be informed, and many of us throughout the course of the Bill have received representations from many such parties representing very diverse interests.

If the Government are serious about rebuilding trust, let them start today by accepting my amendment. I beg to move.

Lord Oakeshott of Seagrove Bay: My Lords, we on these Benches support the amendment in the interests of transparency—the favourite word of Ministers tonight, I notice. It seems to have overtaken, with a late run, the word “flexibility” in the ministerial briefing stakes.

Baroness Morgan of Drefelin: My Lords, I dare not say that I am grateful to the noble Baroness for tabling the amendment, but I am delighted that we were able to have this discussion now. I hope that I

4 July 2007 : Column 1114

can be flexible with my speaking notes so that I can try to address some of the noble Baroness’s concerns, which I appreciate are important.

I stress that the Government have approached the development of proposals for personal accounts in a very collaborative and consensual way. I strongly believe that that approach is not going to change, and we will continue to work with the network of stakeholders that we have established. We will continue to be open about proposals set out in the White Paper, the consultation and the Government’s response. Our approach is to use the documents that are in the public domain and set out the proposals, combining that with the requirements on the delivery authority to produce an annual report and accounts, to have a management statement which is agreed with the DWP and is public, and to have a financial memorandum. These procedures and processes will create a situation in which the transparency required by the noble Baroness can be delivered.

In Committee, noble Lords indicated that they would return to these topics on Report. The Bill seeks to establish a delivery authority to utilise the knowledge, skills and experience of the private sector to help the Government to understand the commercial and operational implications of policy decisions. In particular, the delivery authority will advise on specific products that comprise a financial, technical and commercial strategy. We want to introduce independent expertise at an early stage to ensure that our proposals are robust and can be implemented successfully.

As Clause 33 indicates, the delivery authority will, during the initial phase, provide advice on relevant proposals as presented by the Secretary of State. As I have indicated, these proposals, including the December White Paper and the DWP’s recent response to the consultation on that paper, are already in the public domain. Furthermore, the debates on the Bill will provide and shape the context within which the authority will work.

We continue to develop proposals prior to legislating for personal accounts in a proposed second Bill. In doing so, the DWP will utilise the stakeholder networks it has worked hard to establish, maintaining the open and consultative approach we have developed with interested parties. A good example of our collaborative working approach is the seminars we have held in conjunction with the PPI and other organisations. We will continue to listen to and engage with stakeholders as we take forward proposals for personal accounts. We cannot do this without having the level of transparency for which the noble Baroness is calling. We cannot achieve that engagement without working in that way.

As the delivery authority takes up its role, it, too, will proffer advice on the proposals. But, unlike stakeholders, the authority will do so in an independent capacity and from the perspective of an organisation that will be tasked with creating the infrastructure for the scheme.

We must bear in mind that, in particular, the authority will be considering the design of the infrastructure for the scheme and the preparations for

4 July 2007 : Column 1115

the contracting of services necessary to set it up. To expose the nature of this work, as the amendment suggests, would put the delivery authority at a major disadvantage when it comes to negotiating contracts. Indeed, it would be likely to deter potential suppliers who would be denied confidentiality. I believe that this is one of the key problems with the amendment. This would clearly not be in the interests of the eventual members of the scheme.

As I have indicated, the primary reason for bringing in independent expertise at this early stage is to advise on the viability of policy proposals and the scheme, including the commercial strategy for service contracts. Guidance is a term which describes one way in which the Secretary of State could communicate with the delivery authority about how it carries out its duties—it is not a method of curtailing the independence of the authority in providing advice on proposals. Much of this guidance will be uncontroversial, such as how the authority could present advice to the Secretary of State. However, the delivery authority will be required to produce an annual report and accounts, which is important in terms of transparency. That public document will include details of the authority’s work, the issues it has advised on and the progress it has made towards delivering its remit.

As I suggested earlier, the authority will also be subject to normal non-departmental public body scrutiny and accountability arrangements. The management statement and the financial memorandum, which will be public documents, will provide a clear operating framework. As I have said, these documents will be agreed with the DWP.

I fully accept the spirit in which this amendment was tabled. I stress again that we are, and will continue to be, committed to maintaining the consensus that has been our over-riding approach in developing our proposals for personal accounts. This will not change once the authority is in place. Our White Paper response document quite clearly indicates our expectation that the delivery authority will act in an open and consultative manner. Indeed, in his foreword to that document, the Secretary of State was unambiguous in stating:

I hope that I have reassured the noble Baroness that, in taking forward proposals for personal accounts, we and the delivery authority will be open and transparent in our proceedings. However, as she will readily appreciate, we must also consider the sensitivities around commercial confidentiality that I mentioned. I hope that the noble Baroness will consider withdrawing her amendment.

Baroness Noakes: My Lords, I thank the Minister for that comprehensive reply and the noble Lord, Lord Oakeshott, for his support for my amendment. If I had not heard the Minister’s final sentence, asking

4 July 2007 : Column 1116

me to withdraw the amendment, I might almost have thought that she was agreeing with exactly what I was trying to achieve.

If the delivery authority is to be as committed to transparency as the Minister would have us believe, why can we not include in the Bill a provision that states that its proposals will be laid before Parliament? I accept that there exists a body of proposals at the moment, but other proposals could arise later, which may or may not be made available.

Neither of us is interested in the administrative guidance on how to lay out advice to the Secretary of State—that is not important. What is important is the extent to which guidance is given that constrains or affects the way in which the issues are to be developed. The Minister said that commercial confidentiality was the key and that the authority would deliver the design of infrastructure, which was not appropriate to be in the public domain. However, that is not what my amendment dealt with. It dealt with the proposals and the guidance that the Secretary of State gives to the delivery authority. It was not aimed at advice going in the opposite direction to the Secretary of State—we debated that in the context of the Freedom of Information Act amendment in Committee. The amendment is about being open and transparent not just with stakeholders but also, importantly, with Parliament, which does not want to lose sight of the development of the scheme as it progresses.

The Minister has not addressed the transparency issues that I raised. It is such an important issue that I wish to test the opinion of the House.

9.13 pm

On Question, Whether the said amendment (No. 29) shall be agreed to?

Their Lordships divided: Contents, 30; Not-Contents, 40.

Division No. 3


Barker, B.
Bew, L.
Cope of Berkeley, L.
Craigavon, V.
Falkner of Margravine, B.
Garel-Jones, L.
Goodlad, L.
Harris of Richmond, B.
Howe of Aberavon, L.
King of Bridgwater, L.
Lawson of Blaby, L.
Lee of Trafford, L.
Lester of Herne Hill, L.
Livsey of Talgarth, L.
Mayhew of Twysden, L.
Moynihan, L.
Newby, L.
Noakes, B.
Northesk, E.
Norton of Louth, L.
Next Section Back to Table of Contents Lords Hansard Home Page