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It is entirely possible that the community treatment orders will be dealt with in a fashion that is helpful to patients and professionals and reassures families. The noble Earl referred to his confidence that nursing staff, when the patients are in hospital, or other staff, when the patients are outside hospital, will manage to conduct
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The noble Earl speaks about the nurse explaining everything to the patient. Of course that is what the nurse wants to do. Indeed, the nurse tries desperately to create the space in which to do it. However, when there is a shortage of staff and staff sickness, and agency staff are in—all the sorts of pressures that are the reality of mental health in-patient care—it is not so easy to be optimistic that it will be done in quite that way.
Finally, the availability of the form was mentioned. It is not unreasonable that forms and information of various kinds should be readily available on the internet. This is not the kind of form that is likely to be abused or misused. There is no real reason why it should not be readily available. I can see many a junior doctor or other professional trying to get a form at 12 o’clock at night. Rather than scrabbling through filing cabinets and drawers to find out where the last one was put and finding that the secretary to the ward, if such a thing existed, had not replaced the last form that was used, they can just get on to the internet and download and print the form. I see no reason why they should not immediately be made available and accessible on the internet, with all the other kinds of information that were mentioned earlier.
I applaud the Government for trying to ensure that more and more government information is available on the internet and that there are more and more opportunities for healthcare staff to use the internet. This is laudable, but here is an opportunity to put this into place. If patients could see what is on the forms, what would be wrong with that? Families could see what the form looks like and what information is asked for. There is no disadvantage in that. It is transparent and open, which is only to be welcomed.
Baroness Thornton: My Lords, I am grateful for the thoughtful contributions to this debate. I know that many noble Lords have strong views on mental health and a great deal of expertise in it. I shall pick up some of the key points that were made.
The noble Earl talked about three issues: advocacy, information and the forms. The decision was taken to bring the provisions on IMHA services in England into force in April 2009 because of the need to develop suitable training and commissioning arrangements for those services. That is still the case. Although there is no statutory requirement for services to provide independent mental health advocacy support before
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The noble Earl also asked whether there will be additional funding for advocacy. We are committed to funding independent mental health advocacy, and funding for this, together with commissioning arrangements, will be announced later this year.
On the delay in announcing funding and commissioning arrangements for the services, we have publicly said that these services will be introduced in England in April 2009, and that is still the case. The commissioning arrangements will be announced shortly, and to support the process, comprehensive guidance for commissioners will also be published shortly.
The noble Earl asked whether primary care trusts or local authorities will commission the services and why there has been no announcement. We consulted on this. Different people have different views on who should commission IMHA services, so we want to ensure a system that offers maximum flexibility but delivers a high-quality service. We will announce our conclusion about those arrangements at the same time, so the announcement will be part of the same package.
The noble Earl and the noble Lord, Lord Alderdice, talked about supervised community treatment. We see this as an improvement to after-care under supervision, and we see no reason to delay its implementation on account of the need to take longer to prepare for the introduction of advocacy.
Clearly, IMHAs have to have appropriate training and experience. This will be set in regulations, and we are developing training materials for precisely this purpose. I will confirm the timetable for that later, as I am not absolutely certain at the moment.
Both noble Lords talked about information, which is extremely important for patients and their families. Section 132 of the Act places a duty on hospital managers to provide information to patients both orally and in writing. To help them, the department has provided updated leaflets, which are also on the Department of Health website. Although the use of those leaflets is optional and managers’ own materials can be developed, the materials are there and there is a duty on managers to provide them.
I undertake to look into the availability of the forms, as that is clearly very important, but the information that I have at the moment suggests that the forms have to be purchased. The contractors have assured us that they will be dispatched and that there is no need for panic ordering.
I thank the noble Lord, Lord Williamson, for his kind remarks and for the work that he did, among others, during the passage of the Bill.
I will resist the temptation at this stage to reopen some of the issues to which the noble Lord, Lord Alderdice, referred in his broader comments, such as the definitions and approved mental health professionals, partly because of the time, partly because noble Lords here are significantly more experienced in these matters than I am, and partly because, as the noble Lord, Lord
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On that basis, I hope that noble Lords will be content with this draft order.
On Question, Motion agreed to.
[The Sitting was suspended from 8.08 to 8.40 pm.]
Pensions Bill
Consideration of amendments on Report resumed.
Clause 123 [Power to amend provisions of Pensions Act 2004 relating to contribution notices etc]:
Lord McKenzie of Luton moved Amendment No. 77C:
The noble Lord said: My Lords, I shall speak also to the other amendments in the group. I hope that noble Lords will forgive me if I take a little time in speaking to these amendments as I hope it will help with subsequent amendments. Perhaps I can also take this opportunity to make clear, given the complexity of these amendments and the time it has taken to bring them together, that if there are residual issues, I accept that we should return to them at Third Reading.
I am pleased to return to the important issue of amendments to the Pensions Regulator’s anti-avoidance powers. Following our debate in Committee in July, the Government have undertaken further detailed discussions with a wide range of key stakeholders. We have listened to concerns that the detail of the new powers should be put on the face of the Bill and we have refined the legislation to ensure that it delivers on our intention to strike the right balance between protecting scheme members’ benefits and ensuring that the legitimate interests of employers and investors are not unduly hampered.
There are a number of interested parties and I am grateful for the helpful and considered input we have received, in particular from the CBI, the British Private Equity and Venture Capital Association, the TUC as well as the NAPF, the Association of Pension Lawyers and the Institute for Turnaround. As I have previously explained, in light of these consultations, the Government have concluded that the most appropriate way of tackling the kinds of risks posed by new business models offering alternatives to insured buy-outs of pension schemes is to amend the regulator’s anti-avoidance powers. But we want to provide certainty for trustees, employers and investors about how the powers will be used. The Government have listened to the concerns raised both in this House and among consultees that the details should be in primary legislation and that there should be an appropriate framework of safeguards to ensure that the powers do not apply indiscriminately to individuals or corporate bodies. This set of government amendments seeks to deliver the detail.
I should like to take noble Lords through some of the key changes, although I believe that we may return to other points later on in the debate. The government amendments will remove Clause 123 and in its place introduce a new clause as set out in Amendment No. 78A which seeks to put the key measures in the
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Before I go on to explain the detail of the government amendments I would like to say a few words about the regulator’s clearance procedure. Clearance is a voluntary process that allows employers and others to obtain a statement from the regulator that it would not be reasonable to use its powers in relation to a particular event. Once given, clearance is binding on the regulator, provided the information that the employer provided is not materially different from the circumstances of the case. This will not change. No clearance statement that was given before the announcement of these proposals will be undone as a result of the amendments that I am proposing today. Further, since 14 April 2008, any clearance statements issued by the regulator would cover the use of the contribution notice and financial support direction powers both as they stand, and as they would be amended by these amendments.
8.45 pm
Turning to the first issue—I should point out that I am referring to paragraphs 1, 2, 3, 4 and 5 of the proposed new schedule—we propose to introduce a new alternative test for the use of the contribution notice power. This is set out at paragraph 2 of the schedule which amends Section 38 of the Pensions Act 2004 and inserts proposed new Sections 38A and 38B. Under Section 38 of the Pensions Act 2004, the regulator may issue a contribution notice where it considers that the main purpose, or one of the main purposes, of an act or failure to act was to avoid the employer’s debt to the pension scheme as set out under Section 75 of the 1995 Act. This test of intent may frustrate the use of the regulator’s powers even in circumstances where intervention may be appropriate. For example, it can be difficult to intervene if a party has simply failed to consider the interest of the pension scheme or the employer’s liability to the scheme, even if the effect of the act was so significant as to reduce to nil the support of the employer standing behind the scheme.
The Government consider that it is appropriate for the new alternative test to apply where the effect of an act or failure to act was materially detrimental to the likelihood of a member receiving their accrued benefits. I am pleased to say that there was considerable support for this approach from a number of consultees, although some were concerned that this proposal was not adequately targeted. We have taken these concerns seriously and, working with stakeholders, we have therefore introduced the following three important filters in the primary legislation to guide the use of this power.
Paragraph 3 of the proposed new schedule places a requirement on the regulator to set out a statutory code of practice for the circumstances in which it expects to use this power. This is intended to narrow its application and the regulator has already published a draft list of circumstances to provide greater clarity on the approach. There is an established understanding of the role of codes of practice: they are given sufficient
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The public law duties of a body such as the regulator set high standards for the reasonableness of its behaviour. Acting in a way that was contrary to reasonable and legitimate expectations, prompted by a code of practice, would place the regulator at high risk of a successful legal challenge. I therefore believe that we have settled on the best approach. It avoids the uncertainty that might result from a non-statutory guidance and the potential for unnecessary legal dispute that could result from attempting to use legislation to deal with concepts that would be better treated in codes or guidance. I am glad that stakeholders such as the CBI, with which we have worked closely in developing our amendments, share our conclusions.
The second important filter is provided by the factors that we have set out in the Bill at proposed new Section 38A(4). The regulator must consider these factors, where relevant, when determining whether an act or failure is materially detrimental. The test would engage only where there is a material detriment to the likelihood that members will receive accrued scheme benefits. This list of factors is intended to guide the regulator’s considerations and therefore provide greater certainty to the industry. It is a non-exhaustive list and there are two reasons for this. First, the Government intend that employers should be able to put other factors to the regulator for consideration, where relevant, as part of their representations. The regulator has provided us with examples where this has happened and changed the outcome of the case to the extent that no action has been taken. Secondly, the pensions market is evolving, with new solutions being developed to enable sponsors to manage their pension liabilities. New risks of detriment to scheme members may emerge and it would not be possible to cater for all factors that may be relevant to a particular case. The amendment also includes two regulation-making powers to add new factors and to vary this list by amending existing factors. We do not envisage making regulations immediately but they provide flexibility to do so should the need arise.
The third filter is the new statutory defence set out in Section 38B. This is designed to ensure that where the party had undertaken due diligence before the act and considered and, where appropriate, mitigated the material detriment, and could reasonably conclude that the act would not be materially detrimental, a notice on the grounds of material detriment could not be used. The Government’s consultation on powers put forward a statutory defence based on the concept of whether the detrimental effect was reasonably foreseeable by the relevant parties at the time of the event. In response to that consultation and following helpful analysis from stakeholders, particularly the Association of Pension Lawyers, the Government consider
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The Government’s intention is to allow those undertaking business transactions to self-regulate, to a certain extent, even if an act is within the scope of the material detriment test and the circumstances and factors limiting the use of the new power. The Government have therefore modified their approach, taking account of the input received, and the amendment sets out a clear three-step process for establishing the defence. It is based on the circumstances prevailing at the relevant time and on what the person knew, or ought to have known, at that time. It is designed to reflect the current due diligence process that should apply to a sponsor’s consideration of the impact of an act on the pension scheme. That is intended to minimise undue impact on business. This approach would allow the relevant party to demonstrate, with evidence, that it was reasonable to conclude at the time that the effect of the act, or of failure to act, would not be materially detrimental. The government amendment includes a power to vary that defence as appropriate in the light of experience in operation.
This new limb of the regulator’s power to issue contribution notices has important controls that apply in respect of individuals and others. As I have explained, the use of the power would be circumscribed by the circumstances set out in the regulator’s code, and the power would apply only where there had been a material detriment. Individuals could also rely on the statutory defence. Importantly, the government amendments would create two new reasonableness factors for the regulator to consider before considering issuing a contribution notice. These are, first, a new mandatory requirement that the regulator must consider the reasonableness of the party’s actions in the circumstances of the case and, secondly, a new requirement that, where relevant, the regulator should consider whether there was a transfer of value to the party who could be subject to the contribution notice. These new factors create important protections for individuals, including new protection for individuals in relation to the existing powers.
The government amendments also include a number of other important changes to the regulator’s powers to ensure that they operate effectively. We intend to remove the words,
from the second limb of the existing contribution notice test. The current test sets an inappropriate evidential hurdle: it requires the regulator to prove that a person’s intent was to avoid a debt and to prove that the act was undertaken in bad faith. That can be almost impossible to prove; evidence of bad faith can be concealed, or it may not exist.
It is important to recognise that “good faith” does not currently apply in relation to the first limb of the existing test—that is, where a party is seeking to avoid recovery of a debt. Indeed, it is this other ground, which has never included a good faith element, that the regulator tells us is usually the relevant ground for employer-related actions, which would usually be the
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The absence of that requirement in that situation has not placed any undue burdens on sponsors or individuals. During our consultation, no one provided evidence that this has led to situations where the regulator has used its powers unfairly. However, I understand the concern that there must be a balance, and we must avoid any undue or disproportionate impacts on business. For that reason, further safeguards have been designed in response to the specific concerns raised. Those additions, which are set out at paragraph 7 of the proposed new schedule, will provide greater certainty and ensure that business is not hampered. The safeguards include both the new reasonableness factors that I have just referred to and a requirement that, where relevant, the regulator should consider the effect of the act, or failure to act, on other creditors and the likelihood of their being paid. This is an express requirement on the regulator that, where relevant, it should consider any detriment to the scheme in the context of a wider environment. That would apply in particular, for example, in situations where companies are in distress.
The amendments also introduce a new alternative test for financial support directions. This is a correction to an anomaly in the trigger for the use of this power but it will not extend its range. I note that there are some amendments in relation to good faith and the changes to the FSD power; perhaps we will have the opportunity to discuss these further in the course of debate.
We also want to enable the regulator to direct a contribution notice or financial support to the relevant scheme following a bulk transfer. This would apply only where the test for using these powers would have been satisfied had the transfer not happened. The provisions are designed to correct an unintended effect of the current legislation that puts members’ benefits and the PPF at risk. New Sections 38A(5), 39B(8) and 43B(8) set out three regulation-making powers. These powers are intended to deal with situations relating to the calculation of debt, the method of transfer and the destination of members; that is, the scheme or arrangement into which they are transferred. In particular, new Sections 39B(8) and 43B(8) provide regulation-making powers to apply the new provisions—Sections 39A and 43A—to arrangements other than standard transfers from one scheme into another to enable the regulator to continue to protect members’ benefits where the transfer or other arrangements could put those benefits at risk and to ensure that the regulator’s powers remain effective in an innovative market.
Regulations made under these three new powers would require consultation under Section 317 of the 2004 Act, and are subject to the affirmative procedure. New Sections 39B(10) and 43B(10) and paragraph 16 of the new schedule provide that for the first set of regulations made under new Sections 39B(8) and 43B(8), the resulting regulations will have retrospective effect to the date of tabling the amendments—that is, 20 October 2008. The Government consider that that is crucial to
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New Section 39B(10) provides that the retrospective effect of the regulation-making power would apply in a more limited way to subsequent regulations, which would have effect from the date the Government announce their intention to make such regulations. New Section 43B(10) provides the same in respect of financial support directions.
I emphasise that the regulation-making powers at new Sections 39B(8) and 43B(8) are targeted. They are limited to situations where there is a transfer, and relate only to ensuring that the previously unforeseen gaps in the current legislation that the Government are attempting to address with these specific amendments remain closed. The powers are circumscribed; they are not Henry VIII powers to amend the primary legislation. More importantly, regulations made under this power would not affect the overwhelming majority of employers; they would apply only to those cases where the test for a contribution notice or financial support direction had been met.
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