HC Deb 19 May 2004 vol 421 cc1046-54
Mr. Waterson

I beg to move amendment No. 25, in page 67, line 32, at end insert— '(4A) Any person appointed as an ordinary member shall have knowledge and understanding of—

  1. (a) the law relating to pensions and trusts,
  2. (b) the principles relating to—
    1. (i) the funding of occupational pension schemes, and
    2. (ii) investment of the assets of such schemes, and
  3. (c) such other matters as may be prescribed'.

Again, this is an echo of an amendment that we tabled in Committee. On the face of it, the amendment might be thought wholly unobjectionable because all it modestly suggests is that members of the board shall have a knowledge and understanding of things such as the law relating to pensions and trusts and the principles for funding schemes and the investment of the assets of such schemes". One would have thought that those were necessary requirements to become a member of the new organisation's board. Certainly, the feeling in much of the industry was that it would be worrying if those people did not have such qualifications—perhaps not all of them. One needs a suitable blend of people with knowledge of investment, funding and so on, and perhaps with a legal background. It is a matter of sadness—[Laughter.]—and of some hilarity to Labour Members, but lawyers occasionally have something to contribute.

John Robertson

Name them.

Mr. Waterson

The hon. Gentleman is putting me on the spot. Perhaps I could write to him.

Although the Minister gave some explanation in Committee that the Government envisaged that the board members will have the knowledge to carry out their role and that they might undertake training, they seemed unwilling to say so in the Bill. They assume that the appointments procedure will ensure that people have the relevant qualifications. That is fine and I am delighted to hear it, but a further safeguard is needed. Those people will wield enormous powers and be in charge of enormous resources. There are concerns about their powers to make restoration orders and so on. Indeed, there is much controversy about that in the business pages of the newspapers. We need to ensure that the right people are in charge.

I commend the amendment to the House, because it would set the minimum requirements for anyone who wants to become a member of the board. To put it bluntly, we do not want a bunch of the Prime Minister's cronies appointed. We do not want his former flatmates or his chums from the intelligence community. We want people with genuine independence and experience, with a genuine knowledge and understanding of their tasks.

John Robertson

I could not resist taunting the hon. Gentleman, and I have decided to participate in the debate.

On the face of it, the amendment appears to be fairly innocuous. It says: Any person appointed as an ordinary member shall have knowledge and understanding of … the law relating to pensions and trusts". The magic word "lawyer" comes to mind. My concern is no reflection on any hon. Member, especially my hon. and learned Friend the Member for Redcar (Vera Baird), who is obviously very good and much better than any Opposition Member.

Why would we want lawyers involved? Is it because they know everything about the law and its intricacies? It has been said many times that if someone talks to two lawyers, he will get two different answers—so if we had half a dozen lawyers together, we would get half a dozen different answers and would never get anything accomplished. I would amend the amendment by stipulating "as long as it does not apply to lawyers". Perhaps then I would not have a problem with it.

The amendment also refers to the principles relating to … the funding of occupational pension schemes, and … investment of the assets of such schemes, and … such other matters as may be prescribed". Some of the people who would be qualified to take on the job are probably the same sort of people who caused the problem in the first place. Would you, Madam Deputy Speaker, want to employ a lawyer who caused the problem in the first place and ignore the people who are suffering? Trade unions and ordinary lay members should be on the board. It is important that ordinary people are represented. We talked at great length about what we are doing for the ordinary people. The same people should be on the board. It is important that they are listened to.

I have once again made my point about lawyers. If they want to write to me and tell me what they do, that is fine; I shall write to them and tell them what they do not do. In that way, we will get on very well.

My hon. Friend the Minister should not accept the amendment. It would encourage the people whom we least want to encourage to be on the board.

Mr. Peter Pike (Burnley) (Lab)

The hon. Member makes an interesting point. Perhaps he would like to consider what happened as a result of the Belling pension fund fraud. The fund collapsed in 1992 and 200 people who went to prison for making it go bust were solicitors—legal peop1e.

John Robertson

I thank my hon. Friend for that. He makes my case for me.

Would the amendment have the effect of requiring people to take an exam to quality for the board? Would they have to do a written test to prove that they have the knowledge and capabilities to be on it?

Mr. Waterson

We are not suggesting an exam. The hon. Gentleman might wish to reflect on the fact that he is, presumably, supporting parts of the Bill that require trustees to have some qualification. I am relieved to hear that the trustees of our very own parliamentary pension scheme recently sat an exam, which they all passed.

John Robertson

I would like to find out how those people did in their exams and whether they got an A, B or C. Were they the best people available or were they the only ones available to sit the exam, which would mean that no one could fail them?

5.45 pm

The hon. Member for Eastbourne (Mr. Waterson) is trying to look after his own in the so-called innocuous amendment. He lambasted many of my colleagues in the trade union movement and, for that matter, ordinary people. I urge my hon. Friend the Minister to do exactly what I would do with it, and not accept it.

Mr. Webb

As I often say before making a speech, I had not planned to say anything.

The amendment is a tease because it requires the board of the pension protection fund to have at least the same knowledge as trustees of a scheme. Given that the PPF is a dirty great pension fund, in which the assets of wound-up pension schemes have been slopped together—presumably to be managed by someone and overseen by the board—I would be horrified if the members of its board did not know anything about pensions. Granted, they do not have to be lawyers; we do not expect trustees of our own scheme to be lawyers, although I suspect that many of them are. It would, however, be incredible if we did not expect PPF board members to have a basic knowledge of pensions law. We are in danger of forgetting the purpose of the PPF. Over time, its assets could build up substantially before they start to fall.

John Robertson

Lest I did not make myself clear, the board members do not have to be lawyers entrenched in pensions law. There are plenty of people in other spheres of business with similar experience Trade unions deal with the trustees of pension funds. My hon. Friend the Member for Hamilton, South (Mr. Tynan) was a trustee of a pension fund, and he is one of the many people who have such experience. They do not have to be lawyers.

Mr. Webb

The hon. Gentleman makes my point for me. Trade unionists who are pension fund trustees are already obliged under the Bill to satisfy provisions duplicated in the amendment. It is not unreasonable to expect trade unionists, members of the public or anyone else who takes responsibility for potentially billions of pounds-worth of assets to be clued up about pensions so that the workers, about whom we are all worried, get their pensions. I accept that they do not have to be lawyers, but the amendment does not specify that they should be.

Mr. Michael Weir (Angus) (SNP)


John Robertson

The hon. Gentleman is a lawyer.

Mr. Webb

I had better be careful, then.

If the amendment did make such a requirement, every trustee of every pension scheme would have to be a lawyer, which is clearly not the Government's position.

Kevin Brennan

Is the amendment not otiose, because appointment to the board of the PPF is a public appointment whereas the appointment of trustees of pension schemes is a private appointment?

Mr. Webb

I cannot understand why we would want to allow the public sector to employ someone who did not understand what a pension was, what investment returns were, or how the law worked.

Kevin Brennan

Would appointments not come under the remit of the Commissioner for Public Appointments, and would therefore have to meet certain minimum standards in any case?

Mr. Webb

They probably would, but I am not sure whether that is wholly reassuring.

Mr. Weir

The hon. Gentleman and the Members arguing against him are all dancing on the head of a pin. I agree with some of the remarks of the hon. Member for Glasgow, Anniesland (John Robertson), but as a lawyer I would be horrified to be asked to advise on pensions law. The assumption that all lawyers know a great deal about pensions law is as flawed as the assumption that trade unionists, for example, do not know about it. Individuals who deal with pensions day in, day out, are the proper people to serve on the board. They should have a knowledge of pensions, whether lawyers or otherwise.

Mr. Webb

We are in danger of becoming obsessed with lawyers. The amendment does not refer to lawyers. It merely refers to knowledge of the law relating to pensions and trusts". I cannot remember the number of members of the board of the pension protection fund. I am open to hand signals, as long as it is not two. The serious point is that if we are speaking about a fairly small number of appointments—10, say—it is entirely appropriate to expect just 10 people to have those skills.

We were worried about the requirement as it relates to trustees. I know that the hon. Member for Bournemouth, West (Sir John Butterfill), who represents our interests as chairman of the trustees of the parliamentary fund, is worried about such an amendment as it relates to every trustee of every scheme, because that would mean that vast numbers of people had to have the required level of knowledge. Surely if we are talking about only 10 people, it is not unreasonable to suppose that we could find 10 people who knew what they were talking about to run the PPF.

Mr. Pike

I was elected as a director of the Philips pension fund before I became a Member of the House. Immediately after I was elected, I and all the members of the work force who had been elected as worker representatives received the necessary training. If someone from the trade unions or the work force did not meet the criteria, would it not be possible to provide them with training? They do not necessarily need to be fully qualified before they become a member of the board.

Mr. Webb

That is a fair point. The hon. Gentleman had the joy of not being a member of our Committee. The point was raised in Committee on the set of provisions relating to general trustees. As I recall, it was acknowledged that a member of the board would not have to have the required knowledge and understanding on day one, but would be expected to acquire it, as the hon. Gentleman suggested.

Whereas trustees are generally volunteers and may not be paid, I would guess, in the case of many pension funds—

Mr. Tynan

I thank the hon. Gentleman for giving way. There was legislation to ensure that trustees were representative of employees as well as management in the company. There was also legislation to ensure that people had the opportunity to become trustees and to be trained after they were elected to the board. The hon. Gentleman seems to be talking himself into supporting the amendment. I would be concerned about that because it is so specific, and there is a danger that it would prevent people from being involved.

Mr. Webb

I will not drag the debate out more than an hour and eight minutes. The arguments that we are now hearing would apply far more to what is in the Bill, which hon. Members on the Government Benches have accepted as requirements of every trustee of every pension scheme in the country, whereas the amendment applies only to the 10 professionals, every one of whom will presumably be paid a salary—a good salary. If Labour Members are willing to accept the conditions in relation to vast numbers of volunteers, we should surely accept the same condition in relation to perhaps 10 well-paid professionals who will be in charge of a very large pension fund.

John Robertson

The issue of professionals has re-entered the discussion. We want everyone whose pension might be affected to be included. Trade unions do that for the ordinary worker, as do lay people who are members of the board of pension trustees. If we go down the road of professionals, the lay person would automatically be discounted, unless he happens to be a lawyer.

Mr. Webb

Perhaps I am not making myself fantastically clear. I appreciate that the debate has a slight "after the Lord Mayor's show" feel to it, but I shall try to clarify my argument. The hon. Gentleman must be happy with the provisions in the Bill relating to trustees, because he voted for them or failed to vote against them. They provide the same hurdle for trustees—all trustees—and he is happy with that. Lay people do not necessarily have those skills, but they can acquire them although they are not lawyers. The hon. Gentleman does not regard that point as a particular hurdle, but he thinks that expecting the people who are paid to look after the pension protection fund to know what they are doing is a huge hurdle.

I have clearly dismally failed to make my point, but at least I feel better about it. It is entirely appropriate that the small number of people whom we expect to perform that important job—they will also be paid good money to do it—are as able to understand pensions and investments as the trustees of schemes up and down the land, which is why I hope that the hon. Member for Eastbourne does not withdraw his amendment.

Mr. Pond

I must begin with a warning to my hon. Friend the Member for Glasgow, Anniesland (John Robertson), which was passed to me by the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Liverpool, Garston (Maria Eagle), who is a lawyer. My hon. Friend the Member for Glasgow, Anniesland asked the hon. Member for Eastbourne (Mr. Waterson) to write him a letter stating what he considers to be the good things about lawyers, but as the hon. Member for Eastbourne is a lawyer himself, my hon. Friend will probably be charged for it.

The hon. Member for Northavon (Mr. Webb) will remember that the PPF board must have a minimum of seven members, whom we expect to be people of standing and understanding. It may well be that some of those people are trade unionists, but we do not expect members of the board to represent particular groups. They are there to represent the interests of pension members across the board and nobody will be ruled out from that process.

This afternoon, the hon. Member for Eastbourne and I hardly need to be separated by the red lines on the carpet that are two sword lengths apart. The Opposition originally proposed the measure in Committee, and we entirely agree with the principle. The hon. Member for Tatton (Mr. Osborne) is probably not in the Chamber this afternoon because he is on the phone sharing his joy with the newspaper in Tatton that the Government agree, in principle at least, with so many of his proposals.

Having said that, I ask the hon. Member for Eastbourne to withdraw the amendment because it is not necessary. The members of the PPF board will be appointed to a number of specific roles, and the appointments must be based purely on the knowledge and experience required to fulfil those roles. The members of the board will have or will be able to acquire the knowledge and understanding to carry out those roles properly. That approach, along with a range of other measures that we have introduced, ensures that board members must not only demonstrate their knowledge in order to be appointed to the board but, as the hon. Member for Northavon says, develop their knowledge and understanding over time. Board members' performance will be reported on regularly, because the Government are keen on performance standards and we want board members' performance standards to improve, just as we want improvement in other areas of public service.

The package of measures achieves the same outcome as the amendment, and I would even argue that it goes further than that.

Mr. Webb

By refusing the amendment, the Minister leaves himself the option of appointing people who do not satisfy, or who would not be expected to satisfy, those conditions. Why does he want to keep that option open, because that is the effect of refusing the amendment?

Mr. Pond

We have not left ourselves the option of appointing people who do not fulfil the requirements. We expect PPF board members to fulfil the requirements in the same way as trustees.

Kevin Brennan

Is it not the case that if these are indeed public appointments—perhaps my hon. Friend can confirm that—it is a legal requirement that they be appointed on merit, and will therefore have to be the best people for the job?

Mr. Pond

My hon. Friend is correct on that, as on so much else this afternoon. Of course, these appointments will be made through the normal procedure for public appointments, and we will expect the people so appointed to have the abilities and characteristics that are necessary to fulfil their function and to ensure that the PPF provides the level of protection to scheme members that hon. Members want it to achieve.

6 pm

Mr. Waterson

It does not take much to reveal the latent hostility towards lawyers that exists in some parts of this House. I have been accused of many things—in this case, of looking after my own. It might interest the hon. Member for Glasgow, Anniesland (John Robertson) to know that although I am indeed a lawyer, I am a shipping lawyer, so I doubt that I would be much use to the average pension fund and I would certainly not be much use to the board, although I suspect that the prospects of my being appointed to it under the current regime are pretty slim.[Interruption.] It is suggested that I could pass the exam. I have passed lots of exams in my time, but that does not make me a good person.

Mr. Webb

Do not be so hard on yourself.

Mr. Waterson

I thank the hon Gentleman. I am sorry, but it is getting late in the day and my enthusiasm for pensions is waning rapidly.

In their fury at the legal profession, hon. Members misread my amendments. I am not suggesting that a board member has to be a qualified lawyer, actuary, accountant or anything similar, or even that he has to possess an AS-level in pension fund I management, but merely that he has to have a knowledge and understanding of some or all of these matters. I presume that board members will be screened. I am sure that Ministers are not going to get them out of a bus queue, although that must be where they get Ministers from.

Malcolm Wicks

We are very ordinary people.

Mr. Waterson

Who could argue with that?

These people will probably be quite well paid—unlike, as the hon. Member for Northavon (Mr. Webb) pointed out, many current trustees of pension schemes, particularly smaller ones, many of whom are volunteers. One of the many unfortunate side effects of the Bill is that trustees of pension schemes will be professionalised as a result of the very firm, detailed and onerous requirements placed on them, which are supported by, or at least acquiesced in, by the hon. Member for Glasgow, Anniesland. Like the hon. Member for Northavon, I am bemused as to why the people running this super-pension fund should be any different.

Vera Baird (Redcar) (Lab)

Before I go any further, the hon. Gentleman does not have to believe a word I say, because I am of course a lawyer.

There is a major distinction to be drawn here. People who are appointed to be trustees may not necessarily have the kind of qualifications or understanding that the hon. Gentleman would require, but provisions exist for training them. They should be representative. It will obviously be necessary to ensure that a person is capable of running the pension fund before appointing them to do so. The word "otiose" was used before, and that is the right word to apply to the amendment. The hon. Gentleman is worrying about nothing.

Mr. Waterson

"Otiose" is one of those good lawyer's words that 90 per cent. of the population do not understand. "Surplus to requirements" is probably a better way of putting it. I take the hon. and learned Lady's point. I may be making a fundamental error in referring to a pension fund or a pension scheme, because when the Minister was asked in Committee, in the light of the deep concerns of the actuarial profession, who rarely get very excited about anything, whether this was an insurance scheme or a pension fund, he famously replied, "Neither." We still do not know the real answer to that question. Regarding these people as super-trustees of a super-pension scheme may be misleading, but they will have, on any view, some very significant responsibilities.

As is often the case with amendments, it comes down to whether the proposal is needed or otiose. In Committee and today, the Minister has assured me that he agrees with every word of the amendment and that it deals with matters that not only should but will be required of board members. I am prepared on this occasion to take him at his word. However, if any former flatmates of the Prime Minister pop up on the board I shall have something to say about the matter, possibly in an Adjournment debate. For the moment, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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