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The noble Lord said: My Lords, I shall also speak to Amendments Nos. 31 and 32. Government Amendments Nos. 30, 31 and 32 relate to the provisions for the wind-up of the delivery authority. As I made clear in Committee, Clause 35 is included in the Bill as an act of prudencewe would not wish to pre-empt the will of Parliament by taking for granted its approval of a proposed second pensions Bill.
Should this second Bill not receive Parliaments support and it became clear to the Secretary of State that the delivery authority was no longer needed, Clause 35 would enable the Secretary of State to wind up the authority. In doing so, any wind-up order could also make provision for the transfer of the authoritys property, rights and liabilities.
As drafted, the Bill enables transfer to the Secretary of State or to any other person. In Committee, the noble Baroness, Lady Noakes, tabled an amendment that sought to remove any other person, but we did not debate the point. Nevertheless, in the light of her amendment, I have reflected on the provision and concluded that transfer to any other person is not required.
The delivery authority will be funded by grant in aid throughout its initial stage. In the unlikely event that it was necessary to wind up the authority, it would be appropriate for any property, rights or liabilities to be transferred solely to the Secretary of State. Government Amendment No. 30 therefore removes the provision that would enable these to be transferred to any other person, and Amendments Nos. 31 and 32 make consequential amendments to tidy up the clause and to reflect this change. I beg to move.
Baroness Noakes: My Lords, perhaps there is no point in having a Committee stage if I just table amendments, not move them and the Government think about them in this waythis is a magic way of
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(1) Before the end of the six months beginning with the day on which this Act is passed, the Secretary of State must prepare and lay before Parliament a report setting out his estimate of the public expenditure likely to be incurred on the Personal Accounts Scheme during the ten years beginning with the laying of the report.
(2) Before the end of every six months beginning with the laying of a report under this section, the Secretary of State must prepare and lay before Parliament a further report setting out his estimate of the public expenditure likely to be incurred on the Personal Accounts Scheme during the ten years beginning with the end of those six months.
(3) References in this section, in relation to any period of ten years, to the public expenditure likely to be incurred on the Personal Accounts Scheme are references to the expenditure likely to be incurred over that period by the Secretary of State, the Personal Accounts Delivery Authority and any successor body to the Personal Accounts Delivery Authority.
The noble Baroness said: My Lords, the amendment would insert a new clause to require the Secretary of State to publish a report on the costs of the personal accounts scheme every six months. The report would be in the form of a rolling 10-year forecast of public expenditure likely to be incurred. As I explained in Committee, it is modelled on the cost report produced in respect of the identity cards scheme. I explained also in Committee that the amendment was suggested to us by the Association of British Insurers, although we are happy to support it. The cost report on identity cards was a direct result of our similar amendment which won the support of your Lordships House when we considered the Identity Cards Bill.
We believe that concerns about large-scale projects in the public sector are so great that mechanisms have to be found to keep these projects subject to public scrutiny during their gestation and implementation. Too many large-scale projects, in particular those involving IT, have gone wrong, have cost too much and have delivered too little, too late. My noble friend Lord Lucas led a debate on this in your Lordships House a couple of weeks ago, when he laid out the plain fact that the list of failures is very long indeed.
We cannot rely on the Government volunteering information. That has rarely happened in the past. I remember only too well the struggle to obtain the barest outline of the costs of the Dome until well after the damage had been done. Relying on the National Audit Office to reveal the facts after the event is not good enough. We all want this personal accounts
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In Committee, the Minister said that the funding of the personal accounts scheme is a matter not for this Bill but for the next, but I do not think that that is quite right. The delivery authoritys function as set out in Clause 33(1) is to prepare for implementation of personal accounts as well as to advise on the Secretary of States proposals. The Explanatory Notes to the Bill make it clear at paragraph 91 that,
Formulate a commercial strategy for the personal accounts scheme by preparing specific products which comprise a financial, technical and commercial strategy prior to issuing an Invitation to Negotiate.
The Minister mentioned that in the context of a previous amendment. I hope that he will not tell me that this does not involve detailed costing. If we cannot get information from the delivery authority under this Bill, we must wait for the next Bill. We might well be talking about at least another year before a new Bill becomes law and we do not know whether there will be transparency provisions in that Bill. Certainly there will be an information void as a minimum between now and Royal Assent of the next Bill.
In Committee, the noble Lord, Lord Oakeshott, asked very reasonably whether the period of six months was too short. To date, there have been two identity cards cost reports, which are six monthly. The initial one contained no surprises, but the second one, which was available in May, showed that the costs had gone up by nearly £1 billion in six monthsand no one thinks that it will stop there. Therefore, I am rather inclined to think that six months can be a long time if a project is going out of control in any way and that any longer period would not serve the needs of transparency and accountability. I beg to move.
The Earl of Northesk: My Lords, I support this amendment. My noble friend referred to gateway reviews. I am going to bully the Government with a specific question about that until I am blue in the face. Normally, with gateway reviews the Government claim commercial confidentiality. I signally fail to understand why the traffic-light system of gateway reviews should be subject to commercial confidentiality. That simply tells usParliamentwhether a particular IT project is subject to a red, green or amber light.
Lord Oakeshott of Seagrove Bay: My Lords, I thank the noble Baroness, Lady Noakes, for remembering my question in Committee. I am afraid that I still feel on balance that six-monthly reports on this project are too frequent. The identity cards project is such uncharted territory, and it is far more complex and far larger than this. Six months is a reasonable period in the ID cards Bill but in this regard it rather smacks of pulling up the plant frequently to see whether it is growing. I am afraid that I do not support the amendment.
Lord McKenzie of Luton: My Lords, noble Lords will be aware, as has been said, that this amendment was debated in Committee. Several points were raised then, from different sides of the Chamber. The noble Baroness, Lady Noakes, justified her need for more reporting because the Government have, she said,
There was also some concern that if the costs of the scheme were to be covered through some form of government subsidy, this would be unfair to existing pension providers. I do not think that that point has been pushed this evening.
The delivery authority is being set up to engage the necessary expertise to advise on the delivery of personal accounts within a framework set by government. Of course I understand the concerns expressed here today. The Government's track record of delivering on large-scale IT projects has not altogether been a happy one. But it is sometimes easy to forget the track record of the routine work of this departmentthe DWP ensures that state pensions are paid every week or month to around 10.5 million pensioners in the UK and a further 1 million who live outside the UK.
In this initial advisory phase, as we have said throughout the consultation on personal accounts, the delivery authority's sole source of financing will be the Department for Work and Pensions, from grant in aid. As such, the department will be required to report on its accounts in the usual way. I am not sure that a requirement to report on public expenditure in connection with personal accountsfrom the point at which this Bill is passed, and every six months thereafterwould help to ensure that the necessary IT for the personal accounts scheme is delivered. Six months is incredibly frequent; it will be a job-creation scheme for accountants. In this initial phase, the authority will also provide advice and consider proposals on the most effective way to finance the scheme. It has been suggested by some in the industry that any form of government subsidy would distort the market for pension provision. That is not our intention.
We recognise that the personal accounts scheme should not receive state supportthat gives it an unfair competitive advantage over other pension providers. We intend the scheme to be self-financing in the long run through membership charges. However, in the short term, there are likely to be costs arising from a number of activities, such as acquiring the necessary IT and testing it, before the scheme receives any revenue from membership charges.
We are considering a range of funding options for the personal accounts scheme. The optimal financing solution will require balancing our commitment to those who are not covered by existing pension provisionthe 7 million who are not saving enoughwithout adversely impacting on the market for pension provision. We are all well aware of the constraints on the government purse and the need to be accountable to the taxpayer.
Provisions in Schedule 6 require the delivery authority to report annually on its performance and financial positiona requirement that applies equally to other non-departmental public bodies. The delivery authority will be required to provide a report to the Secretary of State, certified by the Comptroller and Auditor General, for examination and approval. I see no benefit in adding further burdens to the comprehensive regime of financial accountability that already exists. The income and expenditure, public or private, associated with the personal accounts scheme, beyond the delivery authority's advisory phase, is not a matter for the provisions in the Bill.
It is our intention to bring forward further information on the funding options we are considering in a subsequent Bill, subject to the will of Parliament. There will be further opportunity for your Lordships to examine that information. I therefore urge that the amendment be withdrawn. This is not an attempt to withhold any information, but if we are asking for six-monthly financial reporting with 10-yearly projections as well as all the other routine reporting that needs to take place, that really is way over the top.
Baroness Noakes: My Lords, I thank all noble Lords for taking part. I am sorry that the noble Lord, Lord Oakeshott, thinks that six months is too short. I feel that a 12-month backward-looking report which the Minister said was on offeran annual report that by definition looks backwardsis nothing like a substitute for keeping an eye on what is going forward. I do not believe that it is a job-creation scheme for accountants, because if the delivery authority is doing its job properly, it will have long-term projections which are constantly kept under review. This is just a matter of transparency, yet again.
The system needs to beand we all want it to beup and running by 2012. There is high potential for it not to be plain sailing. It may not be as complicated as the ID card scheme, but transactionally it may be more complex as it has to cope with enrolments, people changing employment, and people investing in different kinds of funds and changing them over time. Transactionally, it is quite a complex scheme. If it starts to get out of control, it may need more money to fix it, and who will meet that cost? Will the state meet it or will it be a burden on the scheme? Or it may not be delivered, which we do not want. Transparency
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The noble Lord said: My Lords, we have heard much about transparency during the past few hours. The suggestion that occupational pensions information should be given on pay slips is most definitely an aid to transparency. The instructions given to new public speakers are said to include the diktat, Never begin with an apology. Today I have to break that instructionon reflection, I believe that I have not inserted this new clause into the correct part of the Bill. The Minister will probably tell me that it should more properly be in Part 2, possibly after Clause 31, but I shall leave him to make that statement in due course.
Wherever it appears, the amendment would, in a small but significant way, clear the fog of confusion that surrounds pensions. It is designed to make pensions a more significant part of pay packages, something of which the noble Baroness, Lady Turner, must surely approve, given her support for the fact that pensions are deferred wages. That is something that employers can offer to potential employees as a consideration and something that employees continue to note every time they receive their pay slips. In the private sector, companies will be encouraged to offer competitive pensions and employees will appreciate the benefit to them of opting in to company schemes and contributing to their retirement. It will also point up the advantages of the new personal accounts and pay slips will clearly show where the money is going.
In the public sector, it will also have a positive effect. It is not unusual to hear complaints from civil servants about low wagesindeed, we heard some of them uttered by the noble Lord, Lord Turnbull, earlier today. At the moment, they are able to ignore, and possibly are not even aware of, the valuable pensions that await thembut not their private sector counterpartsupon retirement. With the pension contributions written clearly upon their payslips, employees from both the private and the public sector will be able to make a more informed and accurate assessment of the value of their pay and the rewards they receive for work. My amendment would take little effort to implement and could have a large and positive effect. I hope that the Minister will consider its benefits carefully. I beg to move.
I worry about that a bit, because we know of plenty of examples where employees have alleged that they have made contributions but have in fact had contribution holidays and so on. While I would be quite happy if it just said pension contributions made, I feel a bit dubious about treated as made.
Lord McKenzie of Luton: My Lords, I would like to thank the noble Lord, Lord Skelmersdale, for tabling this amendment. We share his concern that employees should be given appropriate information about their employers contribution to their pensions. However, I believe that the current arrangements meet these objectives.
The Employment Rights Act 1996 entitles employees to receive a written pay statement showing their gross and net pay and itemising all deductions. The purpose of these provisions is to protect employees by ensuring that they know what deductions have been made from their pay and why. They can complain to an employment tribunal if they do not receive a statement, or if all the necessary information has not been given. The tribunal can order the employer to pay compensation if it finds that unnotified deductions have been made. The provisions therefore ensure that employees' pension contributions are shown on their pay statements.
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