MODIFICATION OF PENSIONS LEGISLATION THAT REFERS TO EMPLOYERS

HL Deb 18 October 2004 vol 665 cc186-96GC

(1) Regulations may modify any provision of pensions legislation for the purpose of ensuring that it, or another provision of pensions legislation, does not purport to refer to the employer of a self-employed person.

(2) Where a provision of pensions legislation contains a reference to an employer in connection with an occupational pension scheme, regulations may modify the provision, or another provision of pensions legislation, for the purpose of excluding from the reference an employer who is a person—

1. (a) who does not participate in the scheme as regards people employed by him, or
2. (b) who, as regards people employed by him, participates in the scheme only to a limited extent.

(3) For the purposes of this section—

1. (a) "pensions legislation" means any enactment contained in or made by virtue of—
1. (i) the Pension Schemes Act 1993 (c. 48),
2. (ii) Part 1 of the Pensions Act 1995 (c. 26), other than sections 62 to 66A of that Act (equal treatment),
3. (iii) Part 1 of the Welfare Reform and Pensions Act 1999 (c. 30), or
4. (iv) this Act;
2. (b) a person is "self-employed" if he is in an employment but is not employed in it by someone else;
3. (c) a person who holds an office (including an elective office), and is entitled to remuneration for holding it, shall be taken to be employed by the person responsible for paying the remuneration.

(4) In subsection (3)(b) "employment" includes any trade, business, profession, office or vocation."

The noble Baroness said: The new clause introduces regulation-making powers to modify provisions in pensions legislation referring to employers. The clause is consequential to the new definition of occupational pension schemes in Clause 229. In accordance with the European directive on the activities and supervision of institutions for occupational retirement provision, that definition includes provision for the self-employed to join an occupational pension scheme and, for consistency with Inland Revenue provisions in the Finance Act, it provides that a non-employed person may be a member of an occupational scheme, subject of course to the rules of the scheme.

The effect is that where a scheme member is self-employed or non-employed, certain references to "employer" in pensions legislation may not be appropriate.

Lord Higgins

Which amendment are we on?

Baroness Hollis of Heigham

It is a new clause after Clause 293, set out in Amendment No. 342B. It provides the necessary power to modify the provisions in such circumstances, and so avoid placing legislative obligations on an employer, on whom such obligations are clearly inappropriate. In other words, it covers where someone is self-employed or non-employed. We are trying to fit that into the new European directive rules. I beg to move.

The Deputy Chairman of Committees (Lord Tordoff)

Before the noble Lord replies, can the Minister assist us? The learned Clerk has pointed out that the amendment to Clause 293 which reads:

"Page 222, line 28, at end insert and () Part 7 (cross-border activities within European Union).—"", does not have an amendment number on the Marshalled List. I have already called it and it has been agreed to.

Baroness Hollis of Heigham

I apologise for the inconvenience. I now understand the sotto voce comment of the noble Lord asking which amendment we were on. The amendment is Amendment No. 342B, and I am speaking also to Amendments Nos. 346ZA, 348EZA and 348EA. Amendment No. 342B is very clearly on my groupings list.

The Deputy Chairman of Committees

I understand that. I want to make sure that, having called an amendment that was agreed between Amendments Nos. 342ZA and 342A, I have not made a mistake.

Baroness Hollis of Heigham

May I seek help on that? I did not know how the numbering would go. I apologise to the Committee profoundly. The unnumbered amendment should be Amendment No. 342ZB. It is an error on the Marshalled List. We apparently informed the usual channels about it on Friday and corrected it, but it has not been reflected in the printed paper. None the less, I apologise, in so far as our department was at all responsible.

Lord Higgins

On a related point, at the beginning of our proceedings, we were rather unhappy about how the actual Bill was printed. That was accepted by the Government and the point was taken for the future. When one has five or more lines on the groupings list, each with eight or so government amendments, it is difficult to keep track of what is happening. It is particularly unfortunate in that one is rather inclined to assume that they are all amendments to specific existing clauses. If some of those amendments were new clauses, it would be extremely helpful if, instead of merely stating that the amendment was a government amendment and numbering it, the Marshalled List called it a new clause. That would draw one's attention to the fact. I think that it is the Government Whips Office that is involved. If that is not pointed out, one is rather inclined to assume that the whole group of amendments applies to later clauses and does not include completely new clauses that have suddenly been shuffled in in the middle.

The Deputy Chairman of Committees

I am grateful to the noble Lord. It is true that Amendment No. 342ZB is on the groupings list, but its number is not on the Marshalled List, although the substance of the amendment is. What he asks for would help the Chairman as well as other Members of the Committee.

On Question, amendment agreed to.

Clause 294 [Offences by bodies corporate and partnerships]:

Baroness Hollis of Heigham moved Amendment No. 343:

Page 223, line 19, at end insert— ( ) In this section "Scottish partnership" means a partnership constituted under the law of Scotland.

On Question, amendment agreed to.

Clause 294, as amended, agreed to.

Clause 295 agreed to.

Clause 296 [Protected items]:

On Question, Whether Clause 296 shall stand part of the Bill?

Lord Higgins

Protected items are a matter of some controversy at the moment. I would be inclined to use "privileged items" rather than "protected items". The clause seems to relate only to communications between professional legal advisers. We live in an age of terrorism and so on in which one is obviously concerned about money laundering. It seems pretty difficult in that context for any great money laundering to be going on. I am not sure why communications between advisers other than purely legal advisers—for example, accountants, subject always to subsection (4), which states that the protected item must not further a criminal purpose—are not in a protected or privileged position. The definition seems very narrow, and I would have thought that the safeguard in subsection (4) would have required it not to be as narrow as it is.

Baroness Hollis of Heigham

Clause 295 deals with self-incrimination—

Lord Higgins

Clause 296.

Baroness Hollis of Heigham

I am sorry; I thought that the noble Lord said that he was talking about Clause 295. Clause 296 provides that a person is not required to produce, disclose or permit the inspection of information covered by legal professional privilege, which obviously covers lawyers. Such communications made in contemplation of legal proceedings, or in connection with them, are also protected. That is not covered if there is intent to further a criminal purpose. The clause replicates provision in the Financial Services and Markets Act 2000.

The noble Lord went on to ask why other professional bodies were not covered in the same way as lawyers. As I understand it, there is a longstanding rule on protection of legal advice that could inhibit frank assessment of a person's culpability, legal position and the like. No such protection exists in other legislation for other professionals, such as accountants and actuaries, in the same way, because there is a confidential basis between lawyers and the individual. If I am wrong, I shall write to the noble Lord. If he asked why others should not have it, that would open a much bigger debate, not only for the Bill but for a series of analogous pieces of legislation, including the Financial Services and Markets Act.

Lord Higgins

Is there a distinction between protected items and privileged items'? I was under the impression that communications between my accountant and me were protected or privileged, whichever expression one likes to use. There has been some change in that in relation to money laundering and so on, but I would not have thought that there was any easy way of getting involved in money laundering so far as the Bill was concerned. Anyway, if there were money laundering, it would be covered by subsection (4) on criminal activity. Am I wrong in thinking that communications between one's accountant and oneself are not privileged in that sense'?

Baroness Hollis of Heigham

The noble Lord's original suspicion was right—"protected items" is a term in the Bill for describing privileged items in the context of production of certain information to the register and so on. I am advised that, in effect, there is no difference between the use of those two terms in the context of the Bill. However, I really do not want to be pressed on the wider issue of other professionals. Let me take advice on it. Its implications would be extremely wide. We actually require most of the professionals about which we are talking to whistle-blow. so to allow them to protect or privilege information that they have acquired would not seem appropriate. That seems different from a lawyer's privilege, which is normally invoked when he seeks to protect a client against various charges, civil or criminal.

Lord Oakeshott of Seagrove Bay

I encourage the noble Baroness to take advice and, if necessary, to write to us on the matter. There is quite an argument going on at the moment between the accountancy and legal professions on whether they are treated on all fours in certain sorts of tax advice schemes, so the issue is topical.

Lord Higgins

I would have thought that that also applied so far as pensions were concerned. Perhaps the noble Baroness will look at the matter carefully before Report.

Baroness Hollis of Heigham

I am grateful for the noble Lords' contributions. I am happy to follow the matter through. However, as someone who is neither a lawyer nor an accountant, if the accountant comes into information by virtue of his role vis-a-vis a scheme, we are imposing certain duties on him, given the production of information to the regulator and so on, that seem rather different from those in which a lawyer would be invoked, in terms of protected or privileged information vis-a-vis a client. I would need to be aware of the extent to which the provisions would undercut the whistleblowing responsibilities; in some cases, I was being pressed to extend those. I shall seek advice on the matter and write.

In court, legal advice on the balance of a case is privileged to prevent self-incrimination. I think that the accountant's position is different, but I am happy to follow up on the matter and see whether I can enlarge on my comments.

Clause 296 agreed to.

Clause 297 agreed to.

Clause 298 [Crown application]:

Baroness Hollis of Heigham moved Amendments Nos. 343A and 343B:

Page 225, line 20, after "303(2)" insert "and (3)".

Page 225, line 28, leave out "Parts" and insert "provisions".

On Question, amendments agreed to.

Clause 298, as amended, agreed to.

Clause 299 agreed to.

Clause 300 [Subordinate legislation (general provisions)]:

On Question, Whether Clause 300 shall stand part of the Bill?

Lord Higgins

It is a little late in the day to say more on the discussion that we had earlier, but I have suddenly realised that we have gone all the way through with these enormous groupings of government amendments and they then turn up later on different clauses. We should consider for the future whether or not government amendments should be grouped in this way.

It is of course at the discretion of the Opposition, the Liberal Democrats or whoever to express a view on how their amendments should be grouped but, on looking at the grouping sheet in front of me on which Clause 300 appears, if the amendments in that whole wodge at the top are going to turn up in later clauses, it might perhaps be as well to consider whether or not the principal one should be put at the head of the relevant clause rather than suddenly having them all up front. This, again, is a matter for the Government Whips Office.

Baroness Hollis of Heigham

I accept that the way in which the groupings list has been laid out has not been helpful to the proceedings. I absolutely accept that. I think that we have all felt some degree of confusion as to which amendment we were talking about and where. This has not been helped by the acoustics in the room.

The problem, of course, is that there may very well be, for example, a paving amendment in Clause 120 and the substantive debate in Clause 130, but the two have to be grouped in order to make any sense at all. Whether there could be some way of indicating rather more logically the sequential flow while indicating where the substantive debate occurs, I do not know. I shall have to consider the issue. It is difficult to handle the proceedings in this way, but I am quite sure that we have to group across clauses. Otherwise we could never have cross-referential amendments—for example, if a new definition cropped up in 17 clauses, we would have to take them all separately. So there are good reasons for grouping across clauses, but I accept that it does not help our onward discussions.

Lord Higgins

It may be that the crib which the Chair has could be made more generally available. However, I wish to say something a little more substantial on Clause 300 which is headed, Subordinate legislation (general provisions) During the passage of this legislation, as with all previous legislation that we have dealt with together, the noble Baroness has been always immensely helpful in doing everything that she can to get the statutory instruments to us in draft form before the later stages of a Bill. There is an enormous amount of delegated legislation in this Bill and I very much hope that she will let us have the drafts of the statutory instruments—at any rate, the main ones with which we are concerned—as soon as she reasonably can.

Baroness Hollis of Heigham

I agree with the noble Lord. I am advised that we are dealing with more than 100 different sets of regulations. Given that we are in the last day in Committee, I wonder whether it would be helpful if I were to circulate two pieces of paper. The first would set out broadly what government amendments we expect to bring back on report as far as we can so far tell. We may not specify the words but we will outline the content—for instance, about moral hazard and so on.

I will also be very happy to prepare, as far as we can, a memorandum setting out the packages of regulations that we expect to introduce and a broad idea of when we may be bringing them to your Lordships' House. Most of them are the subject of consultation with the industry at the moment. I shall be very happy to ask my officials to undertake that work in the gap between Committee and Report stages so that people will know what the rolling timetable will look like, if the Committee would find that helpful.

Lord Higgins

That would be very helpful.

Clause 300 agreed to.

Clause 301 [Parliamentary control of subordinate legislation]:

[Amendment No. 344 not moved.]

Lord Skelmersdale moved Amendment No. 344ZA:

Page 226, line 44, at end insert— ( ) regulations under section 145(10) (winding up of public sector schemes)

The noble Lord said: As the noble Baroness said, there will be something like 100 different sets of regulations following on from the Bill, 17 of which, at the moment, will be affirmative regulations. My intention is to persuade the noble Baroness that there should be 18.

Why? My 18th affirmative regulation concerns the changes to or the abandonment of public sector pension schemes. There is an enormous interest in this issue at the moment as virtually any newspaper article which has reported on the effects of the Turner report—and, indeed, outside of it—has mentioned over the past six weeks or so.

I cannot imagine that the concerns about this perceived unfairness will go away. Therefore there will be enormous interest immediately any public sector scheme is changed. On that basis, it is only reasonable that there should be a debate in both Houses of Parliament about the issue. Of course, the only way one can guarantee a debate in the Houses of Parliament about a particular subject is for the issue to be enacted by affirmative resolution. I beg to move.

Baroness Hollis of Heigham

I do not agree with the noble Lord, Lord Skelmersdale, that in some situations we could be dealing with substantial pension schemes affecting many members.

Let me make two points. First, the Delegated Powers and Regulatory Reform Committee did not consider that the regulations associated with this clause should be introduced under the affirmative procedure. We have tried impeccably to follow its recommendations, as we normally do.

Secondly, there is a practical problem. The reason we are concerned about making these regulations affirmative is that it is likely to slow down the process by which public pension schemes can be wound up. That would have the potential to impact adversely on the financial stability of the scheme. In the worst scenario, this could delay the payment of individual pensions. Given that and the occasional urgency of a situation, we believe that they should remain negative.

However, as with other issues on which I have given an undertaking, I am happy to make sure that the Opposition Benches know when we are laying those negative regulations so that if they feel unhappy about it they will be able to pray against them. We can then have a debate and the regulations will not go through without the opportunity for public scrutiny.

Obviously, some of the bigger ones will be debated, but there could be many small changes or modifications with which I would not dream of troubling your Lordships' House—for example, in regard to some minor changes to survivor's benefit in a small scheme. It would be absurd to be tied in that way.

If the Committee is happy to leave it to the department's judgment about which are the major issues, I shall be happy to notify noble Lords. But we shall still keep them within the negative framework.

Lord Skelmersdale

I find that a rather strange argument. It would be opportunistic, to say the least, if a scheme by negative instrument was laid and the Government did not carry it out until after the praying time. How much would the delay involve?

Secondly, I totally accept that there will be occasions when one public body supersedes another public body for the same purposes—for example, as is about to happen where some of the public bodies attached to the Department of Health are to be amalgamated. In such situations it may well be necessary to change pension schemes and I accept the noble Baroness's argument that there is no great need for an affirmative resolution procedure.

But, having said that, I have taken careful note of what the noble Baroness said about giving the Opposition Front Benches notice of when large schemes are likely to be changed, and I am grateful for that.

Baroness Hollis of Heigham

If the noble Lord is seriously concerned about this issue and the praying times, I shall be happy to take it away, have a look at it and consider whether we can move on it. I am not yet persuaded, but I shall be happy to take the matter away. There have been so few requests from the Opposition to turn a negative into an affirmative that when points are seriously made I am happy to have another look at the issue.

Lord Skelmersdale

I am very grateful. The only other point I wish to make is that the Delegated Powers and Regulatory Reform Committee of your Lordships' House, the recommendations of which are slavishly followed by Her Majesty's Government, is not the fount of all wisdom in this area. I am not suggesting that I am a fount of any wisdom in this area. Nevertheless, I do not think that it is a condemnation of a suggestion on statutory instruments that it has not come from the Delegated Powers and Regulatory Reform Committee.

Having said that, I am grateful that the noble Baroness will look at the matter again. In those circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Hollis of Heigham moved Amendments Nos. 344A to 346:

Page 227, line 4, at end insert— ( ) an order under section 168(7) (orders relating to amounts to be raised by pension protection levies);

Page 227, line 6, after "order" insert "or regulations"

Page 227, line 18, at end insert— ( ) regulations under section 303(2)(b) (power to extend meaning of employer);

On Question, amendments agreed to.

Clause 301, as amended, agreed to.

Clause 302 agreed to.

Clause 303 [General interpretation]:

Baroness Hollis of Heigham moved Amendments Nos. 346ZA to 348:

Page 228, line 21, leave out from first "of' to "to" in line 22 and insert "persons in the description of employment"

Page 228, line 48. at end insert— "the PPF Ombudsman" has the meaning given by section 200(1);

Page 229, line 3, leave out "47(1)" and insert "47"

Page 229, line 3, at end insert— "the register" has the meaning given by section 53(1);

Page 229, line 5, at end insert— "the Tribunal" has the meaning given by section 96(1);

Page 229, line 5, at end insert—

"(1A) In this Act, unless the context otherwise requires, references to the scheme rules, in relation to an occupational pension scheme, are references to—

1. (a) the rules of the scheme, except so far as overridden by a relevant legislative provision,
2. (b) the relevant legislative provisions, to the extent that they have effect in relation to the scheme and are not reflected in the rules of the scheme, and
3. (c) any provision which the rules of the scheme do not contain but which the scheme must contain if it is to conform with the requirements of Chapter 1 of Part 4 of the Pension Schemes Act 1993 (c. 48) (preservation of benefit under occupational pension schemes).

(1B) For the purposes of subsection (1A)—

1. (a) "relevant legislative provision" means any provision contained in any of the following provisions—
1. (i) Schedule 5 to the Social Security Act 1989 (c. 24) (equal treatment for men and women):
2. (ii) Chapters 2 to 5 of Part 4 of the Pension Schemes Act 1993 (c. 48) (certain protection for early leavers) or regulations made under any of those Chapters;
3. (iii) Part 4A of that Act (requirements relating to pension credit benefit) or regulations made under that Part;
4. (iv) section 110(1) of that Act (requirement as to resources for annual increase of guaranteed minimum pensions);
5. (v) Part 1 of the Pensions Act 1995 (c. 26) (occupational pensions) or subordinate legislation made or having effect as if made under that Part;
6. (vi) section 31 of the Welfare Reform and Pensions Act 1999 (c. 30) (pension debits: reduction of benefit);
7. (vii) any provision mentioned in section 292(2) of this Act;
2. (b) a relevant legislative provision is to be taken to override any of the provisions of the scheme if, and only if, it does so by virtue of any of the following provisions—
1. (i) paragraph 3 of Schedule 5 to the Social Security Act 1989 (c. 24);
2. (ii) section 129(1) of the Pension Schemes Act 1993 (c. 48);
3. (iii) section 117(1) of the Pensions Act 1995 (c. 26);
4. (iv) section 31(4) of the Welfare Reform and Pensions Act 1999 (c. 30);
5. (v) section 292(1) of this Act."

Page 229, line 7, leave out "and 5" and insert "to 7"

Page 229, line 8, after "include" insert"— (a)

Page 229, line 8, at end insert "; (b) such other persons as may be prescribed

On Question, amendments agreed to.

Clause 303, as amended, agreed to.

Clauses 304 to 306 agreed to.

Clause 307 [Commencement]:

Baroness Hollis of Heigham moved Amendment No. 348A:

Page 230, line 39, leave out "to 5" and insert "to 7"

On Question, amendment agreed to.

On Question, Whether Clause 307, as amended, shall stand part of the Bill?

Lord Higgins

As this clause is about commencement, I cannot resist the temptation to say a word about it as we are about to stop. This has been a very long and prolonged Committee stage, which has been carried out with a determination to improve the Bill as far as possible. We shall certainly try to do so at the Report stage and Third Reading.

It would be ungracious to conclude the proceedings without expressing our thanks to the noble Baroness, who has flown solo, so to speak, throughout the proceedings. She has done everything possible to provide satisfactory answers to the various points that we have raised. I thank the Government Whip who has assisted in our proceedings. But it has been a virtuoso performance and we look forward to massive concessions at later stages of the Bill.

Clause 307, as amended, agreed to.

Clause 308 [Extent]:

Baroness Hollis of Heigham moved Amendments Nos. 348AA to 348G:

Page 231, line 14, leave out ", (5) and (6)" and insert "and (5) to (8)"

Page 231, line 14, after "200" insert "(other than paragraphs (b) to (d), (f) and (g) of subsection (4), subsection (6) so far as relating to any of those paragraphs and subsections (7) and (8))"

Page 231, line 14, after "201" insert ", 202(2A) and (2B)"

Page 231, line 14, leave out "and 203" and insert ", 203 and (Pension sharing)"

Page 231, line 23, at end insert— ( ) Part 6 (financial assistance scheme for members of certain pension schemes),

Page 231, line 26, leave out from "sections" to "and" and insert "286(1) and (2), 287, 288(1) and (2)"

Page 231, line 26, after "288" insert ", 293"

Page 231. line 26, after "288" insert ", (Modification of pensions legislation that refers to employers)"

Page 231, line 27, leave out "291" and insert "292.

Page 231, line 30, after "sections" insert "304(2),"

Page 231, line 34, after "304" insert "(1)"

On Question, amendments agreed to.

On Question, Whether Clause 308, as amended, shall stand part of the Bill?

Lord Oakeshott of Seagrove Bay

I associate these Benches with the remarks of the noble Lord, Lord Higgins. I feel rather like a schoolboy breaking up for half-term. We shall be back again shortly. I thank not only the Minister and my noble friend Lady Barker, but the Back-Benchers from other parties—some of whom are not in their places—who have played a vigorous part in our proceedings, particularly those who are still in their places. It has been a good spirit so far. I am sure that we will return refreshed after a brief holiday.

Lord Higgins

I am happy to agree with that, and to thank my noble friend Lord Skelmersdale. I am also inclined, rather like the "Last Night of the Proms", to thank the gallery. It is somewhat depleted this evening, but we have had a massive attendance during the course of our proceedings. The lack of press coverage is something about which I will say nothing.

Clause 308, as amended, agreed to.

Clause 309 [Northern Ireland]:

Baroness Hollis of Heigham moved Amendments Nos. 348GA and 348GB:

Page 232, line 1, after "liabilities" insert ", or modification of a term of a contract of insurance,"

Page 232, line 4, leave out ", (5) and (6)" and insert "and (5) to (8)"

On Question, amendments agreed to.

Clause 309, as amended, agreed to.

Clause 310 agreed to.

Schedule 12 [Minor and consequential amendments]:

Baroness Hollis of Heigham moved Amendments Nos. 348H to 348N:

Page 304, line 2, at end insert—