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As the noble Lord, Lord Skelmersdale, spotted, it is quite possible that TPAS advisers may already be covered by the existing provision at subsection (6)(c), which includes as a relevant independent adviser somebody who,
- “works at an advice centre (whether as an employee or a volunteer) and has been certified in writing by the centre as competent to give advice and authorised to do so on behalf of the centre”.
However, if, as we suspect, subsection (6)(c) is not sufficient to cover a person appointed by TPAS for this function, it would nevertheless be possible to add them to the list of independent advisers under the order-making power in subsection (6)(d), which authorises the Secretary of State to allow a person of a description specified to act as an independent adviser.
In considering whether persons appointed by TPAS should fulfil this role, we would need to assess whether they had sufficient knowledge and experience of employment law in addition to their pensions expertise. We will have to discuss that in detail with TPAS. We are planning to commission an independent review of TPAS this summer, which will consider how TPAS’s role might change as a consequence of the 2012 pension reforms. The results of that review should prove helpful in the context of whether to use the order-making power in this clause. Therefore, while I appreciate the thrust of my noble friend’s intentions, I believe that the amendment is unnecessary. TPAS-appointed advisers may already be able to act as independent advisers for the purpose of Clause 56, under subsection (6)(c) or, more likely, added to the list under the order-making power in subsection (6)(d). Whether it might be more appropriate for the order-making power in subsection (6)(d) to be used in this way would be best considered once this high-level review of TPAS’s role in the reforms is concluded.
To return to my opening remarks, TPAS advisers already play a vital role and it is likely that that role will become even more important in future. We recognise and value their expertise in the field of pensions advice and look forward to exploring with them how their role will develop to fit the landscape that we are creating in these reforms. I acknowledge that that does not amount to accepting the amendment in the Bill, but I hope that the tenor of my remarks indicates how highly we value TPAS, which we feel should have a role in that connection in future. I urge my noble friend to withdraw the amendment on the basis of those comments.
Baroness Turner of Camden: I thank my noble friend for those comments and the noble Lords, Lord Skelmersdale and Lord Oakeshott, for their support. Obviously the work of TPAS is known to those who are interested in pensions provisions. I am glad that it is acknowledged that that work has been valuable and that it will continue to be valuable. I am glad to learn, too, that this matter is under further consideration, perhaps even with a view to extending the role that TPAS plays. In view of what has been said and the assurances that have been given, I thank everybody
2 July 2008 : Column 260
Amendment, by leave, withdrawn.
Clause 58 [Power to establish a pension scheme]:
Baroness Noakes moved Amendment No. 110A:
The noble Baroness said: We have finally arrived at the personal accounts pension scheme in Chapter 4 of Part 1. Anyone who had half an idea of the new personal accounts scheme—and there are precious few of those—would come to this Bill expecting to find something that said “personal accounts”. They would be mystified because they would find nothing. Instead, the rather anodyne provisions of Chapter 4 and Schedule 1 are entitled “Power to establish a pension scheme”, as if it were any old pension scheme and not one that is destined to be the recipient of billions of pounds of pensions contributions each year. However, we shall not let the apparent blandness of the Bill deter us from probing the way in which the new personal accounts pension scheme will work.
Amendment No. 110A concerns subsection (1) of Clause 58. Under that subsection, the Secretary of State “may” establish a personal accounts pension scheme. My amendment replaces this permission with the requirement “shall”. We often debate may/shall amendments, but this is not a mere debating point. I believe that it goes to the heart of the Government’s intentions about automatic enrolment.
Under Clause 3, employers “must” make arrangements whereby relevant jobholders become active members of an automatic enrolment scheme. Many employers do not have pension schemes at all, especially if one disregards stakeholder arrangements, many of which were never used. However, this auto-enrolment is the primary focus of the Bill. Most employers have schemes that do not currently provide for automatic enrolment and do not comply with the qualifying earnings test; we have already discussed those issues in Committee.
If employers do not make changes to their existing schemes, they will need access to the default personal accounts scheme. Therefore, it is something of a surprise to find that the Secretary of State has the option of whether or not to set up a pension scheme under Clause 58. If he does not do so, the Bill’s aims will be thwarted. More important, the employer duties in the rest of this part of the Bill will be in a dangerous form of limbo. Employers might have to comply with something that is impossible because no personal account pension scheme has been set up. I cannot believe that the drafting of this Bill, as it stands, is reasonable. It does not live out the clear policy intentions laid out by the Government in their various White Papers. I beg to move.
Lord Oakeshott of Seagrove Bay: This clause is at the heart of the Bill. The Government have stated that they have an absolutely firm and clear intention of
2 July 2008 : Column 261
Lord McKenzie of Luton: I thank the noble Baroness for the amendment. I hope to satisfy both noble Lords as to why the Bill is drafted as it is. As the noble Baroness has said, we have now reached Chapter 4 of the Bill, which sets out the legislative framework for establishing personal accounts, one of the cornerstones of the reform package proposed by the noble Lord, Lord Turner.
The Pensions Commission proposes the establishment of a low-cost simple pension scheme for low to moderate earners who are currently without access to a pension. Last year’s Pensions Act established the delivery authority that is to be charged with building this scheme. This year’s Bill provides the legal basis on which the scheme will be built. The scheme will be set up as a trust-based occupational scheme. It will be run by a sole corporate trustee, constituted as an NDPB. This provides accountability both to the Secretary of State and to Parliament. The Bill sets out the framework; the detail of the scheme will be set out in the scheme order, which will be secondary legislation. Further detail will be set out in the non-statutory scheme rules. We intend to consult on the draft order and the rules on the scheme, which will give all interested stakeholders the opportunity to comment well before the scheme is up and running.
Clause 58 gives the Secretary of State the power to establish a pension scheme, ensuring in particular that the scheme is treated as established under a trust. The amendment in the name of the noble Baroness would impose a duty on the Secretary of State to set up the scheme, rather than provide a power to do so. I sympathise with the need for clarity around the Government’s intentions to establish this scheme. Let me be absolutely clear, as was my honourable friend Mike O’Brien in the other place. We will use this power to create the personal accounts scheme and it will be a defined contribution occupational pension scheme.
However, the wording of this clause reflects the view of those drafting the legislation on how best to construct a power that provides for our desired approach of creating the scheme by developing a scheme order that is analogous to a trust deed. The details of the scheme will be set out in the scheme order. It may be either desirable or necessary, sometime in the future, for the Government to amend the scheme order. In accordance with the apparently tried and tested provisions of the Interpretation Act 1978, we will be able to use the power in Clause 58(1), as currently drafted, to do so.
By converting that to a duty, the amendment would—in drafting terms—remove that opportunity, unless we drafted a further power. It would mean that this clause no longer allowed for an amending order, should that need arise. I draw noble Lords’ attention to the fact that if an amending order were to proceed, it would be subject to Clause 32 of the Bill and would require the consent of the trustees. A duty would not, apparently, work in the same way as a power. There cannot be a duty that would require the Secretary of State to amend the order, whether that was needed or not.
2 July 2008 : Column 262
I hope that that rather technical drafting point will allay noble Lords’ concerns. I also hope that the noble Baroness will accept my reassurances that we will use this power to establish the scheme and that the permissive drafting is there to allow for future changes only. On that basis, I hope that she will feel able to withdraw the amendment.
4.45 pm
Lord Oakeshott of Seagrove Bay: The Minister keeps saying “we will”. We, on these Benches, would be very happy if he moved an amendment to say “will” instead of “shall”, but the rest of his argument is gobbledegook.
Lord McKenzie of Luton: It might have been gobbledegook to the noble Lord. The point that I am trying to make is that, if we have a power for the Secretary of State, that power not only enables the Secretary of State to set up the scheme under the order as proposed at the start of proceedings, but can be used subsequently to bring forward the further order, subject to the safeguards in the Bill. We received legal advice that we could not do that in the same way if the power were a duty. That is the reason. I cannot believe that noble Lords would think that we had any intent other than to proceed as we have made absolutely clear. We have a lot of political capital invested in this, apart from the aspirations of millions of people who deserve an entitlement to a decent pension.
Baroness Noakes: I thank the noble Lord, Lord Oakeshott, for his support. I agree that what the Minister said is gobbledegook. I am a plain sort of person; I believe that Bills should say what the Government mean. If the Government say that they are going to set up a pension scheme in order to deliver personal accounts, the Bill should say that they will—whether it is “shall” or “will”. The Government’s argument is that they want to use the power to do two kinds of things: to set the scheme up and later to amend it. That may well be the case, but we should be clear in the Bill that the Government must set up this pension scheme, otherwise the employer duty in Clause 3 is either meaningless or impossible to comply with, which would be unacceptable. The Government could make a further amendment for powers if they wanted to.
Lord McKenzie of Luton: If personal accounts were not to proceed—and that will simply not be the case, as they will proceed—that would preclude the employer duty from proceeding. It is right to say that this would be very difficult without personal accounts. We should not be apart on this. It is abundantly clear that we are going to set up this scheme. I have explained that we have the power rather than a duty because of the ability to make changes subsequently. I really do not see why this is giving rise to such concern.
Baroness Noakes: The problem is that the Minister has just said that the Government could implement Clause 3, which is the employer duty, without having put in place a pension scheme for personal accounts. The Minister is trying to say that he needs the power
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4.47 pm
On Question, Whether the said amendment (No. 110A) shall be agreed to?
Their Lordships divided: Contents, 136; Not-Contents, 133.
Addington, L.
Alton of Liverpool, L.
Anelay of St Johns, B. [Teller]
Ashcroft, L.
Astor, V.
Astor of Hever, L.
Attlee, E.
Barker, B.
Blackwell, L.
Blaker, L.
Bonham-Carter of Yarnbury, B.
Bradshaw, L.
Brittan of Spennithorne, L.
Brookeborough, V.
Brougham and Vaux, L.
Burnett, L.
Byford, B.
Carrington, L.
Cathcart, E.
Chadlington, L.
Chidgey, L.
Colwyn, L.
Cotter, L.
Crathorne, L.
Crickhowell, L.
De Mauley, L.
Dean of Harptree, L.
Denham, L.
Dholakia, L.
Eccles, V.
Falkland, V.
Falkner of Margravine, B.
Feldman, L.
Finlay of Llandaff, B.
Fookes, B.
Forsyth of Drumlean, L.
Fowler, L.
Fraser of Carmyllie, L.
Freeman, L.
Garden of Frognal, B.
Gardner of Parkes, B.
Geddes, L.
Glasgow, E.
Glenarthur, L.
Glentoran, L.
Greaves, L.
Griffiths of Fforestfach, L.
Hamwee, B.
Hanham, B.
Henley, L.
Higgins, L.
Hodgson of Astley Abbotts, L.
Hooper, B.
Howe of Idlicote, B.
Howell of Guildford, L.
Jenkin of Roding, L.
Kimball, L.
King of Bridgwater, L.
Kingsland, L.
Kirkwood of Kirkhope, L.
Lang of Monkton, L.
Lindsay, E.
Linklater of Butterstone, B.
Livsey of Talgarth, L.
Luce, L. [Teller]
Lyell, L.
McAlpine of West Green, L.
McColl of Dulwich, L.
Mackie of Benshie, L.
Maclennan of Rogart, L.
McNally, L.
Maddock, B.
Mancroft, L.
Marlesford, L.
Masham of Ilton, B.
Methuen, L.
Miller of Hendon, B.
Montrose, D.
Morris of Bolton, B.
Moynihan, L.
Neuberger, B.
Neville-Jones, B.
Newton of Braintree, L.
Nicholson of Winterbourne, B.
Noakes, B.
Northesk, E.
Northover, B.
Norton of Louth, L.
Oakeshott of Seagrove Bay, L.
Palmer, L.
Patten, L.
Pearson of Rannoch, L.
Ramsbotham, L.
Razzall, L.
Reay, L.
Redesdale, L.
Roberts of Conwy, L.
Roberts of Llandudno, L.
Roper, L.
Russell-Johnston, L.
Ryder of Wensum, L.
Sandberg, L.
Seccombe, B.
Selborne, E.
Selkirk of Douglas, L.
Selsdon, L.
Sharp of Guildford, B.
Sharples, B.
Shaw of Northstead, L.
Sheikh, L.
Shutt of Greetland, L.
Skelmersdale, L.
Smith of Clifton, L.
2 July 2008 : Column 264
Stewartby, L.
Stoddart of Swindon, L.
Taylor of Holbeach, L.
Teverson, L.
Thomas of Gresford, L.
Thomas of Winchester, B.
Tonge, B.
Tordoff, L.
Trimble, L.
Trumpington, B.
Tugendhat, L.
Tyler, L.
Ullswater, V.
Verma, B.
Wade of Chorlton, L.
Wakeham, L.
Wallace of Saltaire, L.
Walmsley, B.
Walpole, L.
Walton of Detchant, L.
Wilcox, B.
Windlesham, L.
Acton, L.
Adams of Craigielea, B.
Adonis, L.
Ahmed, L.
Anderson of Swansea, L.
Andrews, B.
Archer of Sandwell, L.
Armstrong of Ilminster, L.
Ashton of Upholland, B. [Lord President.]
Bach, L.
Barnett, L.
Bassam of Brighton, L.
Berkeley, L.
Bernstein of Craigweil, L.
Bilston, L.
Borrie, L.
Bradley, L.
Bragg, L.
Brooke of Alverthorpe, L.
Brookman, L.
Campbell-Savours, L.
Carter of Coles, L.
Christopher, L.
Clark of Windermere, L.
Clarke of Hampstead, L.
Clinton-Davis, L.
Cohen of Pimlico, B.
Colville of Culross, V.
Corbett of Castle Vale, L.
Davidson of Glen Clova, L.
Davies of Coity, L.
Davies of Oldham, L. [Teller]
Desai, L.
Dixon, L.
D'Souza, B.
Elder, L.
Elystan-Morgan, L.
Evans of Parkside, L.
Falkender, B.
Farrington of Ribbleton, B.
Faulkner of Worcester, L.
Filkin, L.
Ford, B.
Foster of Bishop Auckland, L.
Fyfe of Fairfield, L.
Gale, B.
Gavron, L.
Gibson of Market Rasen, B.
Giddens, L.
Golding, B.
Gordon of Strathblane, L.
Gould of Potternewton, B.
Grantchester, L.
Greengross, B.
Grocott, L.
Hannay of Chiswick, L.
Harris of Haringey, L.
Harrison, L.
Hart of Chilton, L.
Haskel, L.
Haworth, L.
Henig, B.
Hollis of Heigham, B.
Howarth of Breckland, B.
Howells of St. Davids, B.
Howie of Troon, L.
Hoyle, L.
Hughes of Woodside, L.
Hunt of Kings Heath, L.
Janner of Braunstone, L.
Janvrin, L.
Jones of Whitchurch, B.
Judd, L.
Kerr of Kinlochard, L.
King of West Bromwich, L.
Kirkhill, L.
Lea of Crondall, L.
Leitch, L.
Lipsey, L.
McIntosh of Hudnall, B.
McKenzie of Luton, L.
Mallalieu, B.
Mar, C.
Massey of Darwen, B.
Maxton, L.
Mitchell, L.
Moonie, L.
Morgan, L.
Morgan of Drefelin, B.
Morris of Aberavon, L.
Morris of Handsworth, L.
Morris of Yardley, B.
Moser, L.
Patel of Blackburn, L.
Patel of Bradford, L.
Pendry, L.
Pitkeathley, B.
Plant of Highfield, L.
Ponsonby of Shulbrede, L.
Prosser, B.
Puttnam, L.
Quin, B.
Ramsay of Cartvale, B.
Rea, L.
Rendell of Babergh, B.
Richard, L.
Rosser, L.
Rowlands, L.
Royall of Blaisdon, B. [Teller]
Sawyer, L.
Simon, V.
Snape, L.
Soley, L.
Stone of Blackheath, L.
Symons of Vernham Dean, B.
Taylor of Blackburn, L.
Taylor of Bolton, B.
Thornton, B.
Tomlinson, L.
Truscott, L.
Tunnicliffe, L.
Turnberg, L.
Turner of Camden, B.
Uddin, B.
Vadera, B.
2 July 2008 : Column 265
Warwick of Undercliffe, B.
Watson of Invergowrie, L.
West of Spithead, L.
Whitaker, B.
Wilkins, B.
Williams of Elvel, L.
Williamson of Horton, L.
Resolved in the affirmative, and amendment agreed to accordingly.
4.58 pm
Baroness Noakes moved Amendment No. 110B:
(1B) If the Secretary of State believes that he will be unable to comply with subsection (1A) he must lay a report before Parliament setting out—
The noble Baroness said: The Minister will be relieved to know that, for today, this is a probing amendment. The amendment would insert two new subsections into Clause 58, and it is designed to tease out the timing of the introduction of personal accounts.
An amendment addressing timing was tabled by my honourable friends in another place following a less than confident interview given by the chief executive of the Personal Accounts Delivery Authority—PADA—in which he said about the achievability of 2012:
Doubtless, the DWP has by now told him that honesty is not what he is paid for. That interview was around six months ago. It appears from statements made on the Bill in another place by the Minister’s right honourable friend Mr O’Brien that, since then, the chief executive, Mr Tim Jones, has prepared a report on implementation. Mr O’Brien said:
“He now has a credible set of plans that are consistent with starting to deliver the scheme from 2012”.—[Official Report, Commons, 22/4/08; col. 1205.]
At that stage the Minister refused to release Mr Jones’s report, although about a month later 10 pages of double-spaced waffle were placed in the House of Commons Library. I do not know whether that was meant to reassure Parliament but it gave little meaningful information and no reassurance whatsoever.
The Minister in another place was particularly interesting on what 2012 actually meant. Most people had assumed that 2012 meant April 2012, which is the date I have included in my amendment, because to implement the scheme other than at the same time as the tax and national insurance years begin would be pretty difficult, not to mention chaotic. The transitional costs on employers would jump up from the £350 million that the DWP has estimated for implementation because it would be extremely difficult to do it at any other point during the year.
According to Mr O’Brien on Report for the Bill in another place,
- “the plan is to start to deliver in the course of 2012. The scheme will not suddenly appear on one day in 2012 and all be in one place”.—[Official Report, Commons, 22/4/08; col. 1207.]
2 July 2008 : Column 266
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