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Amendment, by leave, withdrawn.

[Amendments Nos. 113K and 113L not moved.]

Clause 71 agreed to.

[Amendments Nos. 113M and 113N not moved.]

Clause 72 [Finance]:

[Amendments Nos. 113P and 113Q not moved.]

Clause 72 agreed to.

Clause 73 agreed to.

Clause 74 [Non-executive committee]:

On Question, Whether Clause 74 shall stand part of the Bill?

Baroness Noakes: I have given notice that I wish to debate the question whether Clause 74 stand part of the Bill because I would like the Minister to explain why, for a limited-life organisation, which as noble Lord reminded us a moment ago PADA is, such an elaborate mechanism as a non-executive committee is being created. The non-executive committee is a new Labour invention. It can be traced to Mr Ed Balls’s ideas of governance, which saw the light of day in the Bank of England Act 1998. It has since been repeated in some legislation, including the Pensions Act 2004, but it is far from universal practice. For example, the Statistics Board, which was created by statute last year, is not encumbered with one.

I shall not today argue against the concept of the non-executive committee. It is true that the Bank of England experiment has worked only because successive courts of the Bank of England have devised workarounds that bypass the strict letter of that Act. The Government’s latest consultation paper on financial stability promises modernisation of the court. It will be interesting to see whether the modernisation of 1998 has stood the test of time. If it has not, and if the draft banking Bill that we are promised by the Summer Recess contains changes, I may want to revisit that issue.

For today, I am asking the Minister to say why the Government are bothering to set up the elaborate non-executive directors committee. PADA will last until 2012 or a bit beyond—we will come to that later. Other bodies manage without the committee, so why cannot PADA? The board comprises largely non-executives in any event. Even if PADA goes up to its maximum of nine members and all remaining spaces are filled by executive directors, there will still be a majority of non-executives on it. PADA already has the power to set up committees under the 2007 Act. If a non-executive committee is a good idea, PADA can perfectly well set one up without taking up the legislative space that the clause involves. I look forward to hearing the Government’s rationale for Clause 74.

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Lord Tunnicliffe: The Bill will allow the authority’s remit to be extended to enable it to undertake the detailed implementation work necessary to establish the personal accounts scheme, in particular to take forward work on the specification, design, procurement and build of the personal accounts infrastructure. In carrying out this work, the authority will have operational independence and autonomy. It may enter agreements and, with the Secretary of State’s consent, be permitted to borrow money to cover the costs that it will incur in carrying out its functions. In light of this, the measures in this clause are designed to promote good governance, reflecting practice in corporate governance and providing reassurance to Parliament that the authority is managing its affairs appropriately.

Clause 74 supplements Part 2—“Proceedings etc.”—of Schedule 6 to the Pensions Act 2007 and requires the authority to establish a non-executive committee. It also allows the committee to regulate its own procedures and sets out its functions. The committee will consist solely of the non-executive members of the authority, including the chairman. It will be responsible for reviewing the internal financial controls and for appointing and deciding on the remuneration of executive members.

If the committee wishes, it may establish sub-committees—for example, to provide advice or assistance on matters relating to its functions. Any such sub-committee could include persons who are not employees of the authority. This will enable the non-executives to secure any additional expertise or specialist skills that they might require. To provide transparency, the committee will be required to prepare a report on the discharge of its functions. That will be included in the authority’s annual report.

Baroness Noakes: The Minister read out his speaking note very prettily, but he did not answer a single question that I raised. However, I am not going to pursue the matter today.

Clause 74 agreed to.

Lord Tunnicliffe moved Amendment No. 113QA:

(a) in sub-paragraphs (1) and (2), before “employed by the Authority” insert “, if appointed as employees under paragraph 6(6A), are to be”;(b) in sub-paragraph (3)(a), omit “employees who are”.”

The noble Lord said: I shall speak also to government Amendment No. 139C. These amendments seek to give the authority greater flexibility in the appointment of its executive members. The authority will be establishing an occupational pension scheme, which could be one of the largest pension savings schemes in the world.

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This is a task of considerable complexity. The authority needs to be in a position to recruit the best people—strong leaders with expertise and specialist skills in a variety of areas. Recruitment is a matter for the authority and we are seeking this adjustment at the request of the chief executive, who has indicated that it would be beneficial for the authority to have greater flexibility to attract and engage the right candidates for executive posts.

We have previously made it clear, in the Government’s response to the consultation on the personal accounts White Paper, that,

In reviewing its plans, the authority has also had an opportunity to focus on future resource requirements, including the specialist skills and experience needed to deliver the scheme over a very short timescale. Amendments Nos. 113QA and 139C, which makes a small consequential change to Schedule 9, will remove the requirements for executive members to be employees of the authority. This is to enable the authority to broaden the field of potential candidates to include high-calibre individuals who could be deterred by the requirement to give up long-term employment for a relatively short-term appointment. This could encourage, for example, individuals to apply for appointment on loan or secondment from other organisations.

In closing, let me be clear. The amendments do not alter the requirement that any recruitment process be open and fair. In managing its affairs, the authority will continue to observe best practice guidance set out in Making and Managing Public Appointments and the Office of the Commissioner for Public Appointments code of practice. I beg to move.

Lord Skelmersdale: I must have misheard the Minister, because I thought that he said that Amendment No. 113QA referred to Schedule 9. Of course, it does not—it refers to Schedule 6. The substantive difference in paragraph 6(6) of Schedule 6 to the Pensions Act 2007 that these two government amendments give us is that now PADA may appoint other executive members as employees. First, is that not putting the cart before the horse? Surely it is employees who might be appointed as executive directors under PADA, not vice versa. In any case, is it not the case that under the Companies Act all executive directors are automatically employees? I do not know the answer to this—perhaps PADA does not fall under that Act. If it does, is this amendment really necessary?

As for Amendment No. 139C, removing the words “employees who are” from paragraph 7(3)(a) seems a little odd, since all employees, including executive members under Amendment No. 113QA, are to be paid pensions allowances or gratuities under paragraph 8(2)(a) of Schedule 6 to the 2007 Act, which these two amendments do nothing to alter. All that seems required is the removal of the word “other” in that paragraph heading, so that it reads “Terms and conditions of employees”. Paragraph 8(3) would then surely become otiose.

I have three little questions on the amendment. Paragraph 1(4) of Schedule 6 to the 2007 Act says:

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which I understand it has at the moment—

How many executive members are intended to be appointed? I hope that the noble Lord, Lord Tunnicliffe, will be able to answer that. Secondly, what skills are still to be required? Thirdly—I assume that the answer is yes—will a finance director be included among the maximum number of nine?

Lord Kirkwood of Kirkhope: I add a question or two to the reasonable questions asked by the noble Lord, Lord Skelmersdale. In moving the amendment, the Minister suggested that it was Mr Jones’s idea and, in passing, added a sentence or two as to why that was. I did not catch the burden of that. It would affect my view of the amendment if there was a substantial request from those running the authority. I have a deal of confidence in Mr Jones from what I have seen of him; I have not seen him much, but I think that he knows what he is doing. I would give weight to the reasons that he adduced for the Government requiring this change. Otherwise, I do not think that the case that has been made so far is compelling. The noble Lord, Lord Skelmersdale, has some good questions, which require answers.

Lord Tunnicliffe: I am unable to answer any of the questions asked by the noble Lord, Lord Skelmersdale, at this time, and will write to him with the details; at least I am following his advice. He is right that it should be Schedule 6. PADA is not a company and is not subject to company rules. Paragraph 6(6) of Schedule 6 to the 2007 Act says plainly that executives must be employees. The essence of these amendments is to allow people to be seconded under a service contract to PADA, as members, without having to discontinue employment. They may, for instance, be civil servants; they may be accountants, actuaries or other professionals. It seems that we have decided in the gap that there will be four executive members of the team.

Lord Skelmersdale: I did not ask how many executive members there were; I asked how many members there would be, referring to a maximum of nine under paragraph 1(4) of Schedule 6 to the 2007 Act. However, since we now know that we have four executives, assuming that the seconded people will be non-executive directors, what are they all going to do? I still have not had an answer as to whether there will be a finance director, but I assume that there will be.

Lord Tunnicliffe: My apologies; I thought that the noble Lord had asked how many executive directors there would be. He may not assume that the seconded directors will necessarily be non-executive directors. They may indeed be executives. They will not be employed but will provide their services as part of a service agreement with the company that employs them.

On Question, amendment agreed to.

6 pm

Clause 75 [Winding up of the Authority]:

Baroness Noakes moved Amendment No. 113R:

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The noble Baroness said: This amendment would amend Clause 7, which in turn amends Section 23 of the Pensions Act 2007. We are keen to ensure that the public sector landscape does not get littered with time-expired quangos. During the passage of the 2007 Pensions Act we argued that a time limit should be put on PADA’s existence. Clause 75 updates the 2007 Act but still has no time limit. Accordingly, my Amendment No. 113R says that the Secretary of State can exercise his power to wind up PADA at any time, but must do so no later than the end of 2013.

Since PADA's functions should run out broadly when the new personal accounts pension scheme and auto-enrolment are up and running, it should cease to exist at that point. We could have put 2012 as our drop dead date, but we are already aware that 2012 is looking aspirational at best. We debated that earlier. Therefore, we have put a one-year extension in our amendment. If the Minister has any reason for extending the life of PADA beyond 2013—other than his favourite all purpose reason of “flexibility”—we should be very pleased to hear it.

If PADA has not completed its functions by 2013, it will clearly have failed and ought not to be in existence. This deadline in legislation will remind PADA that it needs to get its job done and will also act as a spur to the Secretary of State to ensure that it does so.

Amendment No. 139B is grouped with Amendment No.113R. I shall leave it to the Minister to speak to that amendment, but I hope that he can say why it appears to be positioned in a part of Schedule 9 which deals with safeguarded rights. I beg to move.

Lord McKenzie of Luton: Clause 75, alongside Section 23 of the Pensions Act 2007, provides for the winding-up of the authority once it has completed the task of setting up the personal accounts scheme.

Amendment No. 113R would require the Secretary of State to provide for the wind-up of the authority by the end of 2013. As I have already said, and Tim Jones, the chief executive of the authority, has confirmed, we believe that a 2012 launch for personal accounts is achievable. However, we are still four years away from that commencement date and, as the authority has indicated in its report on its plans for delivery, at this early stage there is inevitably a degree of risk and uncertainty associated with a project of this scale, innovation and complexity.

Furthermore, it is also necessary to consider the arrangements for the handover of the personal accounts scheme to the trustee corporation, which will be responsible for the day-to-day operation of the scheme. The authority will develop a plan setting out the legal, commercial and technical steps that will need to be taken for handover to be achieved successfully. As part of that process, there will be a period during which the authority will need to work alongside the trustee corporation to facilitate the transfer of the infrastructure and processes the authority has developed. It is too early to say at this stage exactly how this handover will work. As the report from Tim Jones’s re-plan showed, the focus of the authority at the moment is on the design of the scheme. Of course, the views of the

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trustee corporation on handover will be extremely important. It would not be wise to pre-empt any decisions on this.

I reiterate that the authority is a time-limited body and there is no intention that it should continue to exist after the trustee corporation has fully taken over the running of the scheme. However, I hope the noble Baroness can appreciate that we do not want to take the risk that the authority could be wound up before this has taken place.

Government Amendment No. 139B is a technical amendment to correct drafting. It simply adds a reference to the subsections that Clause 75 removes from the Pensions Act 2007 in the table of repeals in Schedule 9. Therefore, I am not sure what the noble Baroness was concerned about. If she wants to expand on that, I shall see whether I can help further.

Baroness Noakes: The government amendment is positioned under Part 2 of Schedule 9 headed “Safeguarded Rights”, which seems to have nothing to do with what I understood the amendment was about and certainly nothing to do with the amendment with which it was grouped.

Lord McKenzie of Luton: Quite why the amendments are grouped together is an interesting question. I am not sure how that happened. I believe that the place of the amendment is in Schedule 9. It is a repeal of the subsections that Clause 75 removes from the Pensions Act 2007. I am unclear on the reason for the grouping, although I think I am about to be enlightened—no, it is indecipherable.

Baroness Noakes: I wager that the note says that there is an error in the heading of Schedule 9; we shall see. The Minister keeps telling us that PADA is time-limited, but I have never heard of something that is time-limited without a time limit. The body has been created by statute in perpetuity. We invited the Minister to agree with our amendment on 2013. What about 2015? Perhaps the Minister would consider that.

Lord McKenzie of Luton: It just seems to me not to be a particularly fruitful exercise to bandy around specific dates. We have indicated that we currently plan and expect the scheme to start in 2012. Given the role that the authority has played in the development of the infrastructure and everything that goes with it, anyone should recognise that for it to continue even after the project has been turned over for running by the trustee—a bit of parallel involvement—must be prudent and sensible. Who knows what issues might arise in terms of the background thinking or policy development that went into the creation of the scheme and infrastructure as it will end up. To try to put some arbitrary date on that is not a particularly fruitful use of our time.

We have made it clear that the authority will be time-limited, and that we want personal accounts to start in 2012. We recognise that there will be some overlap, as the authority will need to be on hand to support the trustee corporation in running the scheme. That seems to me to be clear enough and acceptable to noble Lords.

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Baroness Noakes: I am sorry, but the Government keep saying on the one hand that it is time-limited and then refusing to give a time limit. Either the Minister can stop the little white lies about whether it is time-limited, or he can accept my amendment, or a variant of my amendment, which I have generously now extended for an extra two years. I could negotiate for even longer. If we have a time-limited organisation—we are in agreement that we do not want PADA to exist beyond its proper functions—with no time limit, the danger is that it will carry on existing, because it will acquire functions that are within the rather generous description of its functions at the beginning. I will not pursue this now, but we might come back to it on Report. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 75 agreed to.

Clause 76 [Stakeholder pension schemes]:

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