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The noble Lord raised the issue of the number of prosecutions, and I can confirm that there have been 11, which were not all successful, so he is right that there have been very few. He also referred to the potential of using other legislation to achieve the same effect, and mentioned the Local Government Act 1985. The jury is still out on which would be the best vehicle, so the department is looking at it closely.
The noble Baroness, Lady Scott, was tempted to have a much bigger debate. She opened the door just a crack on the issue of centralisation and burden. I am tempted to send her the 20 departmental simplification plans published on Tuesday 11 December—no one can say they are not up to date—showing how we can reduce burdens on business. For example, in the public sector there are 280 different ways with total net administrative savings of £800 million. The order is an important step forward as a proportionate response in managing change, but it is only one of a number of instruments at our disposal. There is a lot going on, as the noble Baroness said.
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In terms of what happens next, of the 84, 62 consents have been deregulated so far: most of them have been removed. There is the one that we have been debating today and there are four that have completed their consultation and are expected to be introduced to Parliament this Session. Looking at them, it is interesting how wide is the range of issues. They include changes to the individual voluntary arrangement, insolvency services, merger of the Health and Safety Commission and the Health and Safety Executive and second insolvency and individual voluntary arrangements. We are working through that list. I do not think that any of us could hazard how long it will take to get through them all, but that gives us a good idea.
The noble Baroness also asked about other consent regimes. I cannot answer that; it is not within the scope of my extensive briefing; but I am happy to write to her with an answer on that.
I am very grateful to noble Lords, both for their welcome for the Government's response and for the rigorous, intense process, which is full of integrity. I am sure that it will help us to achieve better government.
On Question, Motion agreed to.
European Communities (Definition of Treaties) (Agreement on Enlargement of the European Economic Area) Order 2007
2.36 pm
Baroness Royall of Blaisdon rose to move, That the Grand Committee do report to the House that it has considered the European Communities (Definition of Treaties) (Agreement on Enlargement of the European Economic Area) Order 2007.
The noble Baroness said: I am pleased to move the Motion for this order on enlargement of the European economic area to include Bulgaria and Romania. As the Committee is aware, the Government have put tremendous effort into ensuring that Bulgaria and Romania were able to join the European Union as scheduled on 1 January this year. The order is a formal step towards delivering the benefits of enlargement. The UK can be proud of the major part that it has played in ensuring that conditions were right for EU enlargement to happen. We will continue to promote and support reform in Bulgaria and Romania, helping those countries to fulfil their potential. Bulgaria and Romania are now important partners in tackling global challenges such as climate change, globalisation and security.
The subject of the order, the agreement signed in Brussels on 25 July 2007, together with four protocols that are not the subject of the order, allows the participation of Bulgaria and Romania in the European economic area. The EEA allows Iceland, Norway and Liechtenstein to participate in the internal EU market, bringing benefits to them and us in trade and the free movement of people. It is important to bring the EEA agreement into line with the expanded EU, to create a single market that embraces Bulgaria and Romania, and Iceland, Norway and Liechtenstein—a single market encompassing 30 countries with a population of almost 500 million citizens.
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Through the EEA enlargement agreement, Iceland, Norway and Liechtenstein will make valuable financial contributions to economic and social reform in Bulgaria and Romania. Negotiations on the level of contributions to be made by the EEA states were the primary reason for the delay in Bulgaria and Romania's entry into the EEA, which should have been 1 January, the date of their EU accession. Under the terms of the agreement and four associated protocols, Iceland, Norway and Liechtenstein will contribute €72 million from 1 January 2007 to 30 April 2009 to alleviate social and economic disparities in the enlarged EEA. Norway will also contribute €68 million as additional bilateral financial contributions over the same period.
In addition, the Community has signed two supplementary agreements, with Norway and Iceland respectively, governing additional market access commitments for certain fish projects from those two countries into the Community until 30 April 2009 in order to take account of the addition of Bulgaria and Romania to the single market.
I believe that this is a positive measure for the UK, ensuring effective free trade between European partners. I am sure that we will agree that this is a welcome agreement that supplements part of the EU enlargement process, ensuring that full benefits are available to Bulgaria and Romania. I hope that we will approve the order. I beg to move.
Moved, That the Grand Committee do report to the House that it has considered the European Communities (Definition of Treaties) (Agreement on Enlargement of the European Economic Area) Order 2007. 3rd Report from the Statutory Instruments Committee.—(Baroness Royall of Blaisdon.)
Baroness Rawlings: I thank the Minister for introducing this order. As the Minister for Europe noted in another place, this order has strong cross-party support and I would like to add my voice to those welcoming the recent accession of Bulgaria and Romania to the European Union.
The order will give parliamentary approval to an agreement on the enlargement of the European economic area. Specifically, the agreement, which the order ratifies, alters the EEA's arrangements to take account of the recent accession of Bulgaria and Romania into the enlarged EU. As paragraph 4 of the Explanatory Memorandum notes, under the heading “Legislative Background”:
“The Agreement is concluded by the European Community and all its Member States, and must be ratified by each of those States as well as by the Community before it can come into force”.
I am particularly happy to be speaking today on this order, having initiated and taken through the European Parliament all the preliminary Bulgaria-Europe agreements during the five years from 1989 to 1994, when I was a Member there.
If I may, I will mention that only the other day, the Speaker of the Bugarian Parliament, through the Bulgarian ambassador, honoured me with a special award.
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I have a few questions for the Minister on the order. As the Explanatory Memorandum states, the financial contributions and market access concessions that the agreement allows relate to the period from 1 January 2007 to 30 April 2009. As a result of negotiating delays, the agreement was not concluded until after it was due to come into force, so we are, in effect, being asked to approve it retrospectively. First, have any payments been made to date, particularly by the Norwegians, who are the major contributors under the agreement, or has no money changed hands? Secondly, the new agreement is due to expire on 30 Apri1 2009—less than a year and a half from now; what happens thereafter? How will the money be spent and how will the project’s success be evaluated? Fourthly, will this be done by the Norwegian financial mechanism office or by some other body—and, if so, which one?
These countries' accessions have naturally led to a strengthening of ties between these countries and others in the EU, including the UK. These ties will, I hope, encourage all countries to reach standards of environmental protection and good governance, as well as directing investment funds to the areas that need them most. I hope that these advantages will continue after the expiration date of this treaty.
These ties, of course, also extend to cultural and charitable sector exchanges. There are many excellent foundations and charities working between the UK, the EU and Bulgaria and Romania. For example, some deal with street children and orphanages, such as Karen Dom, which was started by the former Foreign Minister and Bulgarian Ambassador Ivan Stancioff. I also mention the all-important and influential Free Democratic Bulgarian Foundation, founded in 1991 privately by Yvonne and Dimi Panitza; it is dedicated to strengthening the democratisation of Bulgarian society. I should declare an interest as being involved with several charities in Bulgaria and Romania and as governor of the American University in Bulgaria. These cultural and social links are one of the great strengths of the EU, giving each country the chance to both help and benefit from each other.
Many more people than was the case a few years ago are involved with these foundations and are taking holidays and investing in these countries. What are the Government doing to encourage more people to be involved and to help with opportunities for young people? For example, young people in particular have the chance nowadays to spend a gap year learning more about both themselves and the world around them. Does the Minister agree that working with these and similar charities would be a worthwhile pursuit? This area is now no longer the forgotten Europe of pre-1990. This debate has, I hope, highlighted the founding principle of the EEA and the EU—the importance of more than just the free market in establishing lasting bonds between countries that have too often found themselves opposing rather than supporting each other. I hope that the order has prompted the Minister to continue to press for the attainment of this principle in future.
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2.45 pm
Lord Teverson: I thank the noble Baroness for her explanation of this order. This side, too, very much welcomes the accession of Bulgaria and Romania: may more of the western Balkans soon follow within a reasonable period. I also must congratulate the noble Baroness, Lady Rawlings, on her contribution, through that very noble institution of the European Parliament, towards this happy outcome. When I first saw this on the schedule of business, I thought that it would be fairly dry stuff, apart from the fact that it talks about important global issues. But one or two things come up.
First, clearly because of my misreading of statutory language, I was unaware that there had been a political union between Bulgaria and Romania. We seem to talk about the Republic of Bulgaria and Romania, but I presume that that is the way these things are written. I am particularly interested in the fact that the accession of the two republics to the EEA seems to have been after that to the European Union. I want to understand how that could happen. It suggests to me that these two republics, although having acceded to the EU, were not members of the EEA legally until this process had finished. I do not understand how that can be the case, so I would be interested in the Minister’s comment on that and what implications it might have had in the interim, if any.
What particularly interests me is the language around the reason for the delay. The EFTA members—particularly Norway and Iceland, important fisheries nations—have obtained market access concessions within fisheries by, it seems to me, wheeler-dealing in terms of extra bilateral payments. I would be very interested indeed to understand what has been going on over the beer and sandwiches in Brussels to cause that. It seems a strange way to go about it. What extra concessions have those important fishing nations had in the European market in return for the—this is obviously the wrong Scandinavian nation—“Danegeld”? I am very interested to know what deal has been done in order to get aid—I am sure that it is highly welcome bilateral additional aid—to these welcome member states.
Baroness Royall of Blaisdon: I am grateful for the strong support for this order shown by both noble Lords this afternoon, and for their informal contributions. I would expect nothing less from two former Members of the European Parliament. I can think of nobody more appropriate to speak for the Opposition than the noble Baroness, Lady Rawlings, who has a strong record in this area. I warmly congratulate her on her award from the Bulgarians. I am also grateful for her exposition of the work of various charities in Bulgaria that strengthen the bonds between our countries. That is of course something we should support. The more soft co-operation we can have, the better.
In response to the noble Baroness’s questions, no payments have been made as yet, but the infrastructure has been put in place and tenders for applications will be available in early 2008. Negotiations will begin in 2008 to allow a new financial mechanism to take place in 2009 when this one expires. Payments will be monitored by the EEA Financial Mechanism Office in Brussels,
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On charities, the British embassy in Bulgaria is engaged with the Bulgarian Government and NGOs to encourage reform in, for example, child care institutions. EU funding is helping to tackle the problems.
The noble Lord, Lord Teverson, rightly queried the provisional application to date. The agreement has been provisionally applied by the European Community since its signing in July 2007. It is unfortunate that the agreement could not enter into force simultaneously with the EC accession. We wish to ensure that this does not happen with future accessions, but I am sure that it is absolutely legal. I do not appear to have a response to the noble Lord’s important question about fisheries, but will write to him.
I have found two paragraphs. Bulgaria and Romania’s EU accession on 1 January 2007 concluded the historic fifth wave of enlargement that saw east and west divided into a reunified Europe. The EEA enlargement agreement ensures that the internal market is extended, allowing Britain’s goods, capital and services to be traded freely across a single market of 30 countries, giving British people and companies the right do business and set up businesses in those countries with minimal difficulty on a level playing field. The House of Lords overwhelmingly supported the legislation, ratifying EU enlargement in 2003, and supported the entry of Bulgaria and Romania into the EU on 1 January 2007. By approving this order on the EEA today, the Committee has an opportunity to reaffirm its support for the inclusion of Bulgaria and Romania in the process of building a competitive and effective Europe.
I can now respond to the question of the noble Lord, Lord Teverson, on fishery products and whether this would hit the UK fishing industry: a good question from the Member of the Committee from the south-west. The UK Government remain committed to free trade and would therefore prefer to see all forms of tariff quotas removed. These issues are of course being dealt with in the context of the World Trade Organisation discussions. The Government are working closely with the British fishing industry to ensure that it is able to compete in international markets. In principle, the tariff concessions on fisheries largely reflect existing trade patterns from the EEA states to Bulgaria and Romania in these projects.
On Question, Motion agreed to.
Financial Assistance Scheme (Miscellaneous Amendments) Regulations 2007
2.55 pm
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord McKenzie of Luton) rose to move, That the Grand Committee do report to the House that it has considered the Financial Assistance Scheme (Miscellaneous Amendments) Regulations 2007.
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The noble Lord said: As Members of the Committee will recall, the Financial Assistance Scheme, which I shall refer to as FAS hereafter, offers help to people who have lost out on their defined benefit occupational pension because their scheme was underfunded when it wound up and the employer is insolvent or no longer exists. The regulations extend this definition further, as I shall explain.
In addition, FAS also provides assistance for surviving spouses and civil partners of qualifying members. It is funded by the taxpayer and administered by the Department for Work and Pensions via the FAS operational unit in York. Before discussing the regulations, I shall briefly mention the final report of the Young review, which has been the subject of much speculation over the past week. That review was charged with looking at whether better use could be made of the assets remaining in failed pension schemes to boost the level of FAS payments towards 90 per cent and whether some pension schemes, including those with employers which remain solvent and which are not covered by these or previous FAS regulations, should be admitted to the FAS.
I appreciate that your Lordships are keen to see the Young review’s recommendations on these points, as are affected members. I confirm that the review’s report is now complete and we are currently considering both its contents and our response. The full report will be published early next week but as the Prime Minister announced during yesterday’s Prime Minister’s Questions, we are confident that we will be able to provide a 90 per cent guarantee. We will make a more detailed statement of our intentions alongside the publication of the Young report early next week.
In the mean time the regulations will allow us to provide increased assistance to more members of more schemes while we bring forward changes arising from responses to the Young review’s recommendations. Before explaining what the regulations cover, I think it useful to remind noble Lords that before this Government introduced the Pensions Protection Fund and the FAS as part of the Pensions Act 2004 there was no help available for those who had lost out on their pension because their scheme had wound up underfunded with an insolvent employer. It is true that the FAS, as originally constituted, helped only those within three years of their normal retirement age on 14 May 2004 but in December last, we extended this help to members of qualifying pension schemes who were within 15 years of their scheme’s normal retirement age on 14 May 2004.
This assistance was tapered depending on the member’s distance from normal retirement age. To put the scope of today’s regulations into context, I remind noble Lords that the original FAS would have helped just 15,000 people over its lifetime. Last year’s extension to FAS boosted the number helped to around 40,000 people and increased total funding for the FAS from £400 million to over £2 billion in cash terms. The regulations being discussed today will bring about a further significant extension to the scope of the FAS while we consider the final findings
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This extension increases the Government’s commitment to the FAS to more than £8 billion in cash terms, and means that the FAS will now help about 130,000 people who have lost significant amounts of occupational pension due to employer insolvency. The regulations do away with tapers on assistance so that all qualifying members of qualifying schemes will be eligible for a top-up to 80 per cent of their expected core pension, subject to the cap at age 65. The regulations will get rid of the de minimis, which meant that FAS awards of less than £520 a year were not payable. They raise the cap on assistance from £12,000 to £26,000 a year.
On our plans for the cap, I am sure noble Lords will have recognised that, without indexation, the cap will mean that assistance due to members who will not reach 65 for some time will not retain value before coming into payment. The Government agree that it is not appropriate in the longer term for the FAS cap to remain static. On 21 May 2007, the Minister for Pensions Reform told the other place:
“We intend to ensure that the cap retains its value, even where assessments are made for members who will not be eligible for payment until many years into the future”.—[Official Report, Commons, 21/5/07; col. 1159W.]
As relatively few members are affected by the increased cap, and as any significant effect of non-indexation will not bite for some time, it makes sense to defer associated changes to the cap to be considered alongside any other changes to the way in which assistance is calculated arising from the Young review of pension scheme assets. The amendments that we are proposing will also bring additional schemes, and their members, into the FAS.
Following discussions with affected schemes, we believe that it is right to extend the FAS to members of pension schemes where the trustees believed that it was in the best interests of their members to reach a compromise agreement with the employer. Under these agreements, schemes accepted a lower amount than the full debt owed by the employer on the winding-up of their scheme in order not to tip that employer into insolvency. The regulations ensure that the trustees and employers of such schemes who have acted reasonably in reaching a compromise agreement will be helped. We have yet to receive data for all the schemes that might benefit from this change, but we believe that up to 13,500 members may qualify for assistance. Following an approach by an affected scheme, we have also amended regulations to allow certain small self-administered schemes, which were previously excluded, to be considered qualifying schemes for the FAS.
The Committee will recognise the importance of preserving the assets in relevant schemes until we can bring forward regulations to implement changes arising from the Young review’s final recommendations. We have already implemented some protective measures. The halting annuitisation regulations, which came into effect on 26 September, seek to protect the funds in affected schemes by preventing trustees from purchasing
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