Pensions Bill [H.L.]

HL Deb 07 February 1995 vol 561 cc106-208

3.5 p.m.

Lord Mackay of Ardbrecknish

My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, That the House do now resolve itself into Committee.—(Lord Mackay of Ardbrecknish.)

On Question, Motion agreed to.

House in Committee accordingly.

[The CHAIRMAN OF COMMITTEES in the Chair.]

Clause 1 [The new authority]:

Baroness Hollis of Heigham moved Amendment No. 1:

Page 1, line 9, at end insert: ("( ) The Authority shall exercise general supervision over occupational pension schemes and shall in particular—

1. (a) register schemes, such registration to be a prerequisite of Inland Revenue approval;
2. (b) monitor schemes, and enforce compliance with legal requirements, including rules relating to trustees, minimum solvency and disclosure;
3. (c) intervene in scheme administration where the scheme assets appear to the Authority to be in jeopardy;
4. (d) receive and investigate complaints of impropriety in the management of pension schemes or the composition or conduct of the trustees;
5. (e) disqualify from acting in the management of an occupational pension scheme those Who have shown themselves unfit to act and who are not automatically disqualified under section 24, and maintain a public register of those so disqualified;
6. (f) in defined circumstances, monitor schemes that are being wound up or require them to be wound up;
7. (g) give information and advice to the Secretary of State when so requested;
107
8. (h) disseminate information and advice to the public about pension schemes and their administration, pensions legislation and other matters within the scope of the Authority's statutory functions;
9. (i) issue or approve standards and codes of practice.

( ) In the carrying out of its functions, the Authority must ensure that it—

1. (a) has made adequate arrangements for the effective monitoring and enforcement of occupational pension schemes' compliance with their statutory obligations;
2. (b) has made effective arrangements for the investigation of complaints concerning occupational pension schemes; and
3. (c) is able and willing to promote high standards of integrity and practice in occupational pension schemes.").

The noble Baroness said: The purpose of the Bill is to secure occupational pensions, the funding of pensions and to stop fraud. In other words, it is to deliver, as Goode proposed, the pension promised. To deliver that pension promised, three conditions must be fulfilled: first, that schemes are properly funded; secondly, that schemes are overseen by trustees who are trained, independent and fully representative of all interests, aided by professional advisers; and, thirdly, that they, in turn, are overseen by a regulator.

As we argued at Second Reading, our belief is that the Government have weakened all three planks. They have greatly weakened the solvency of schemes—an issue to which we shall return on the third day of Committee. The Government have, to a degree, weakened the necessary balance of trustees—a theme to which we shall seek to return on the second Committee day. Today's issue is our belief that the Government have substantially weakened the role of the regulator.

Today's amendments cluster around the role, function, membership, funding, powers and liabilities of the regulator. We on these Benches admit without embarrassment that our amendment seeks in almost every case to align the regulator in the Government's Bill with the regulator of the Goode Report—the regulator from which, in our view, the Government have retreated. Virtually all our amendments, therefore, seek to reinstate Goode.

We on these Benches have been criticised for not trying to go even further than Goode for, as The Times newspaper argued, if anything, Goode erred on the side of employers. However, in a phrase which I am sure will echo and re-echo throughout our debates, as regards the regulator we believe that Goode got the balance about right.

What did Goode say? I quote from paragraph 4.19.22 of the Goode Report: A major weakness of the present law governing occupational pension schemes is that there is no statutory authority with overall responsibility for their supervision and for enforcement of the legal responsibilities [governing them] … The new legal framework we have recommended depends for its effectiveness on proper supervisory and enforcement machinery. We therefore recommend that the Pensions Regulator should have wide-ranging functions and powers". Quite so, my Lords. Surely, no one can doubt that a strong and effective regulator is crucial, if we are to police abuse, restore confidence in occupational pensions and deliver that pension promise.

The Maxwell scandal and many others have shown that the traditional combination of trust law, Inland Revenue rules and scraps of social security law all jumbled together have so far not always delivered that promise. So this Bill is about how we regulate, not whether we do. It is not about regulation as against deregulation, but about devising effective regulatory structures that secure the interests of scheme members without overburdening everybody with unnecessary bureaucracy. The regulator is the linchpin. Yet—and this is the purpose of this amendment—we do not yet know what it does. We know that it is a long-stop, able to intervene when things have clearly already gone wrong. But it does not yet have a general responsibility to ensure that things do not go wrong in the first place. The Government's regulator is a fire fighter. The regulator as defined by the Goode Report sought to prevent fires blowing up. That is what we seek to do with this amendment.

The amendment is not out of line with what the Government have done on similar Bills in the past. Other Bills establishing regulatory authorities—for example, the Financial Services Act 1986 and the regulators of the utilities such as gas and electricity—have spelt out in the Bill the power, duties and functions of the regulator. To give an example (and the nearest analogy I can find) Clause 48 of the Financial Services Act 1986 sets out very clearly in 12 subsections the rules and regulations regarding the regulator and the conduct of investment business by authorised persons other than financial bodies. Clause 48 lists 12 prospective rules or duties, precisely as this amendment asks. In other words, this amendment follows the Government's own precedent. It is quite extraordinary that the Government should not have done so in the Bill. The regulator will have to keep thumbing through the Act to see whether he has the power to do something which, as all of us would agree, is self-evidently sensible.

The powers that the Government have specified in the Act are inadequate. There are powers to report to the Secretary of State; to remove and replace trustees; to wind up the schemes; to ensure that employers pay over to trustees the benefits that they have collected from members. In other words, there are powers to deal with the transgressions of statutory duties. But what about other powers—such as a power for the regulator to investigate as he sees fit; to secure research—the substance of a later amendment; to spot check; to issue codes of guidance; or to give advice to the public? It really is extraordinary—is it not?—to set up a new regulatory body, the linchpin of this Bill, without setting out in the Bill the duties and the terms of reference of the regulator for all clearly to see.

We know that regulation in the field of finance is not easy. The evidence of personal pensions is there to the knowledge of all of us. We know about the difficulties that the Personal Investment Authority now faces when companies refuse to comply with it. But regulation is easier and far more effective when all parties know where they stand. They are entitled to know what the regulator must do and can do. This amendment simultaneously empowers the regulator and makes his duties, powers and responsibilities clear to those bodies that he regulates.

So far as I am aware, the CBI and the National Association of Pension Funds have no objection to this amendment. Consumer bodies, from the Consumers' Association and Age Concern to bodies representing scheme members such as the TUC, very much want that clarification. As the National Association of Pension Funds has said, it would like to see far more clarification of the thinking behind the role that the regulatory authority will play. I hope that the Government agree and that they will accept this amendment. I beg to move.

3.15 p.m.

Lord Mackay of Ardbrecknish

As the noble Baroness, Lady Hollis, said in her introduction, the new regulatory authority is the key element in the reforms to the pension industry that are set out in this Bill. Taken together with the other measures in the Bill to improve the administration and security of occupational pension schemes, it presents a formidable barrier against dishonesty and negligence. It will be an independent statutory body, fully accountable to Parliament. It will have all the powers necessary to enforce compliance with the law. It will act swiftly and incisively to protect scheme members and to sanction or remove wrongdoers. And it will have a wide range of investigatory powers to act wherever it has reason to suspect that something is amiss, even where no formal report has been made.

I share the desire of the noble Baroness to give the new authority a comprehensive range of properly targeted duties and responsibilities. The Bill does exactly that, and we shall come to them clause by clause as we examine the Bill. It places clear obligations on pension schemes and gives the authority a range of well-defined powers to enforce them.

But it is neither practical nor desirable for the authority to supervise and regularly monitor over 150,000 pension schemes, most of which are perfectly well run. That would certainly be a recipe for a very bureaucratic and possibly interfering body. It would also add greatly to the cost—cost which has to be passed on to employers via the levy—and it would require, for example, the authority to enforce obligations which are already enforceable under other enactments, including trust law. I do not believe that that would be sensible.

Some of the responsibilities that are outlined in the noble Baroness's amendment would make the authority into an advice and information bureau, which would be a wasteful duplication of the excellent services provided by the Occupational Pensions Advisory Service, and it would describe the authority's responsibilities in such general terms as to open them up to ambiguity and doubt.

In short, the Committee must not be misled into believing that, because it is called OPRA, this authority should, can be or will be some sort of all-singing, all-dancing act. It will be, to employ words that were used at Second Reading, very much there to take on the role of the person who comes in when the whistle has been blown, or, as I said earlier in my remarks, even when there has been no formal complaint, where it feels that there is something upon which it ought to act.

The authority, OPRA, will be robust and effective, and it will have the powers and duties that it needs to protect the security of occupational pension schemes. While I very much appreciate the noble Baroness's desire to help us in our task of making sure that another Robert Maxwell incident does not occur, I do not believe that we need the additions to this clause that are in the noble Baroness's amendment.

Baroness Seear

Surely the weakness in what the Minister has said is that the regulator, as rather loosely defined in the Bill, relies on somebody else to blow the whistle. It will be recognised that there are 150,000 pension schemes. But on these Benches as well as on the Labour Benches we feel very strongly indeed that the regulator must be proactive, and that he must not rely on whistle blowers. We shall discuss this point in relation to a later clause in the Bill. He must be in a position to be completely independent and to take the initiative himself. Otherwise, the regulator will not be able to carry out the functions which, as all sides of the Committee are agreed, he must control to De able to take action in time against any offences which could lead to a recurrence of what we have seen in the past.

Lord Marsh

I tremble to think that I begin my remarks by disagreeing with the noble Baroness, Lady Hollis, on this issue, and I am sorry because I share her views on many matters. However, the amendment states that, The Authority shall exercise general supervision over occupational pension schemes and shall in particular". It makes one wonder what more could have been added if it was to provide detailed supervision of the scheme.

There are two major elements in pension fraud and in fraud generally in the financial services sector. The first is the financial ignorance of most people and their flat refusal to take a serious interest in their own financial affairs. In this area the level of people's naivety cannot be exaggerated.

A second feature is that many of those who transgress in this area over and over again have drawn the attention of those whom they seek to defraud to the regulatory authorities as a sign of their good housekeeping—"I am a member of so and so", so to speak. The regulatory authorities frequently give the impression that they can exercise a degree of supervision which in fact they cannot. That was true in the Barlow Clowes case and in a number of other cases.

A third feature can be exemplified by the Maxwell case, although we all agree that the Maxwell affair was not typical. There were a number of people—not just the trustees—who were in a much better position to exert supervision over what was going on than any outside regulatory authority could have been. There will be court action elsewhere which will decide exactly where the blame lay. But it is not just the trustees in general; board members also have a role to play, as do the auditors and the managers of pension funds who are employees.

With great respect to the noble Baroness, Lady Seear, I differ greatly from her. The provisions of the Bill which deal with whistle blowing and place those direct responsibilities on individuals are a much more likely way of preventing some of the abuses than trying to give a central authority detailed responsibilities in relation to tens of thousands of different schemes.

We do not have an enormous problem with dozens of schemes collapsing every week. But when a scheme collapses it is traumatic in the extreme for those who lose out on it. It is a major issue. The great problem is not the failure of a regulatory authority but the failure of a number of individuals who knew what was going on but for one reason or another did not blow the whistle.

The noble Baroness, Lady Dean, gave a moving example of one particular case. Such things do not happen with no one knowing about them. They happen without the knowledge of the regulatory authority. But certainly they do not normally happen without somebody within the organisation knowing, whatever particular responsibility that person may have.

I share the desire of the mover of the amendment but I agree with the Minister's view. It would provide a false sense of security and it is the wrong area upon which to concentrate.

Baroness Hollis of Heigham

Before we decide what to do about the amendment, will the Minister tell us in what way the Government have retreated from Goode on this issue, and why?

Lord Monkswell

Perhaps I may intervene on this point. The noble Lord, Lord Marsh, put forward some powerful arguments, effectively saying that the regulator can keep control of the situation. That argument strikes a chord with me.

I was concerned that, in his opening remarks, the Minister stated that 150,000 schemes are operating very satisfactorily. How do we know that? That is one of the difficulties. To a large extent the whole business of regulating the pension fund industry is a matter of confidence.

We are trying to ensure that there is a satisfactory regime in which everyone can have confidence. I am not sure that it helps to say that there are 150,000 schemes and they are all operating satisfactorily. We need to put in place some mechanisms that can demonstrate to the public and the scheme members that there is some overview and that some confidence can be placed in it.

Baroness Seear

I should reply to the noble Lord, Lord Marsh, since he did not seem to agree with me. What we ask for in ordinary parlance is a belt and braces operation. We do not say that people cannot blow the whistle; we say that, in addition, the regulator should be able to intervene proactively. It is a double safeguard that we want. We do not rule out the other people.

Lord Mackay of Ardbrecknish

Let me respond to some of the points that have been made. I was a little mystified by the question of the noble Baroness, Lady Seear, about the complete independence of the authority and the regulator. In so far as I understand her question, I can assure her that he or she will be independent, reporting directly to the Government and to Parliament.

We have to look at the Bill as a whole. Listening to some of the noble Lords opposite, one would believe that that was the only defence. But we must look at all the other defences that have been put in place in the Bill. As the noble Lord, Lord Marsh, rightly pointed out, primary responsibility rests with the trustees, the auditors and the actuaries. We shall come to that issue later in the Bill. Their primary responsibility will be spelt out in some detail. Because they are in the right position, they will be obliged to blow the whistle if they see or come across something which they feel is suspicious.

Let me repeat that the authority will have a wide range of investigatory powers in order to act when it suspects that something is amiss. It will not need to wait for a whistle blower, so to speak, nor to respond only to a whistle blower. For example, if it has come across a problem in a pension scheme and believes that there may be a similar situation in a similar pension scheme, there is nothing to prevent it moving across.

But there is a great difference between that and the position being urged on me, which is to make the regulator look over and supervise routinely something in the order of 150,000 pension schemes. As the noble Baroness, Lady Hollis, pointed out a few moments ago, the Bill departs from the PLRC recommendations on the issue of routine monitoring. It was recommended that the new regulatory body should require schemes to submit copies of annual reports and other documents on an annual basis. We rejected that on the grounds that it would not be a good use of resources and would add hugely to the expense of the authority. Frankly, we are very doubtful whether the collection of those reports simply sent in to the authority would give the authority any real basis on which to make the kind of judgments which, if we go down the road that noble Lords ask me to go down, they would expect the authority to make.

Therefore, I must ask the noble Baroness to consider withdrawing her amendment. If she does not do so, I must ask the Committee to reject it.

Baroness Hollis of Heigham

I am disappointed by the Minister's reply. He has not addressed the central issue that we are seeking to pursue; namely, the nature of the role of the regulator.

I entirely agree with the remarks made by the noble Baroness, Lady Seear. We are not pursuing the role of the regulator in terms of detailed scrutiny. We are trying to establish on the face of the Bill the compact or contract between the regulator and the bodies that he regulates. This amendment will spell out his duties. That would mean a more active and interventionist role. It would be a general supervisory role, and so on. On the one hand—precisely as the Government themselves wanted under the Financial Services Act 1986, so that there is no precedent here but well established practice—we are trying to establish his duties and responsibilities as one side of the compact; and, on the other hand, that then allows scheme members and new trustees to understand what the function and duties of the regulator may be. They have no way of knowing from the Bill. They do not know what he is entitled to do.

I remind the Committee that at this point in time over two-thirds of existing schemes, covering nearly one-third of all employees, have no elected or nominated trustees. That means that the new trustees are coming in cold. We shall come on later to other points relating to codes of practice. But at the least those trustees are coming on to trustee boards for the first time and are entitled to know what the function, duty and responsibility of the regulator is if they are to seek to bring the scheme up to the best practice that we all want to ensure.

What can be more reasonable than that we spell out in the Bill what the regulator does so that those he regulates know what he intends to do? What can be more reasonable? Why this reticence? Why this hesitation? Why this cloaking in obscurity? Why these shadows? How do we expect new trustees, in schemes for the first time, to operate as we would wish as "whistle blowers" when they do not know the job and Function of the regulator? The Government established that principle in previous legislation and are refusing to put it in place here, even though it has been urged on them by one of the most high-powered and significant committees on pension law reform since the war.

I am disappointed in the Minister's response. It may not be wise to press the amendment today but I can assure him that we shall come back to it. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

3.30 p.m.

Lord Lucas moved Amendment No. 2:

Page 1, line 11, after ("be") insert ("so").

The noble Lord said: It has always been our intention hat my right honourable friend the Secretary of State shall choose and appoint the chairman of the new authority. This technical amendment puts that beyond doubt by adding the word "so". I beg to move.

On Question, amendment agreed to.

Baroness Turner of Camden moved Amendment No. 3:

Page 1, line 11, at end insert: ("( ) The chairman shall be a person who appears to the Secretary of State to have experience of, and to have shown capacity in, the audit and regulation of pension schemes or other aspects of financial services.").

The noble Baroness said: In moving Amendment No. 3 I shall speak also to Amendments Nos. 10 and 11 with which it is grouped. The office of regulator is obviously a key one and that view was confirmed this afternoon by the Minister. The Goode Report recommended that the office of regulator and chair should be held on a full-time basis by an individual with a detailed understanding of the working of pension schemes and the personal authority riot only to enforce statutory requirements but also to develop voluntary standards which should receive wide support.

The new regulatory regime will replace the Occupational Pensions Board, of which I was a member for a long time. The members of that board were, in general, people with a knowledge of the industry and the staff were extremely expert. We had a series of competent and distinguished chairmen including the noble Lord, Lord Allen of Abbeydale, who I am pleased to see in his place this afternoon, and my noble friend Lord Brimelow. The board had plenty of expertise and produced excellent reports. But it did not possess the powers that many people thought it did. Its role was a limited one. People believed that it had more powers than in fact it had and we occasionally came in for unjustified criticism, as I remember we did particularly at the time of the Maxwell scandal.

The new body will have standing and power. It must command the respect and support of the pensions industry as well as the general public. The chair is therefore a key role and it is important that the right sort of person is appointed and acknowledged by all interested parties to have the right status, standing and expertise to carry through that function.

As I said earlier, the amendment is grouped with Amendments Nos. 10 and 11. Amendment No. 10 seeks to remove from the Bill the words, The chairman of the Authority may at any time be removed from office by notice in writing given to him by the Secretary of State". Amendment No. 11 relates to the powers under which the Secretary of State may remove ordinary members of the authority from such membership. The amendments seek to accelerate the authority and independence of the chair or the regulator. We do not believe that it is a good idea that, with apparently little notice except a notice in writing, the chair can be removed by the Secretary of State. It would be much more advisable to have the same provisions applying to him in regard to his removal as apply to other members of the council.

I hope that the Minister will realise that we are trying to strengthen the Bill, to heighten the independence and authority of the individual who will be chosen as chair and to make clear that he or she is an individual who has the right weight and authority to carry forward this important and key role. I beg to move.

Lord Mackay of Ardbrecknish

As the noble Baroness, Lady Turner, rightly said, the role of chairman will be particularly important in the authority. It is no doubt agreed between us all that the right individual should be appointed to the job. The chairman must be someone of sufficient stature to command the confidence of both scheme members and the business community that stands behind the occupational pension schemes.

Our intention is that the Secretary State shall choose and appoint the chairman. It is in the interests of pension scheme members that the Secretary of State should also be able to remove the chairman should he or she not prove worthy of the post. We do not expect such a situation to arise and indeed we hope that it will not. But it is only wise in a Bill of this nature—which we trust will last for some considerable time—that we write onto the face of it the powers that the Secretary of State could use in the extreme circumstances in which it may be necessary to step in to remove and replace a chairman.

That is my response to Amendments Nos. 10 and 11. In regard to Amendment No. 3, which attempts to define who the Secretary of State should look at as chairman, I believe that a chairman will be appointed more on the basis of his intellectual and personal qualities, his leadership skills and impartiality rather than necessarily on the basis of his specific qualifications, whether in the field of audit and regulation or any other area of expertise. After all, other members of the authority will be selected for exactly those reasons. Clause 1(3) (c) states that one of the members will be, knowledgable about life assurance business". Another member must appear to the Secretary of State to, have experience of, and to have shown capacity in, the management or administration of occupational pension schemes". And two members must, appear to the Secretary of State to be knowledgeable about occupational pension schemes". There will therefore be members on the authority who are specifically selected for those purposes. That need not necessarily be the chairman.

The noble Baroness, Lady Turner, mentioned the Occupational Pensions Board and she may agree with me that the chairman of the Occupational Pensions Board has almost always been a lay person. It has not previously been felt necessary to select a chairman of the Occupational Pensions Board with the kind of narrow qualifications—if I may so describe them—as drawn in the amendment.

The appointment will be advertised and the recruitment process will be an open and fair one. We will therefore obtain the best possible person to chair that body. I hope that with those assurances of what we are looking for in the person of the chairman, the fact that the post will be advertised and how recruitment will be made, the noble Baroness will feel able to withdraw her amendment.

Baroness Turner of Camden

I thank the Minister for that explanation. I am glad to hear that the intention is that there shall be an open recruitment process and the post will be advertised with a view to appointing an appropriate and properly qualified person.

It was not always the case that the chair of the Occupational Pensions Board was held by a lay person. I remember serving at one time under a distinguished actuary who was a senior partner of a notable firm of actuaries and the deputy chair was always a professional person, in the sense that he was either an actuary or someone who had professional knowledge of the pension scene. It is important that whoever holds this post has the respect of what I may call the pensions industry and sufficient clout with people who operate in the financial services sector for the decisions reached to carry weight.

However, it is not my intention to press the amendment today. I am glad that we have on record the assurances of the Minister in regard to the recruitment process. He is right to say that Amendments Nos. 10 and 11 are subsequent and, so to speak, subsidiary amendments. The amendment I moved was the main one. We shall study the assurances carefully when Hansard is available. With those comments, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Turner of Camden moved Amendment No. 4:

Page 1, line 21, at end insert: ("( ) a member who appears to the Secretary of State to be representative of consumer and public interests;").

The noble Baroness said: The Goode Committee recommended that there should be an advisory committee to support and advise the regulator on issues of general concern to act as a body through which the regulator could consult the pensions industry where appropriate. It would take over the present role of the OPB in giving advice to the Secretary of State both on general occupational pensions issues and proposed legislation. No doubt that is the body referred to in Clause 2 as the authority with a chair appointed by the Secretary of State.

The Goode Committee recommended that the body should represent a wide range of interests, including those of scheme members as well as pension providers. I believe that Clause 3 attempts to meet some of those recommendations. It does not, however, give any status to, or provide for any representation of, consumer interests. The Consumers' Association takes a good deal of interest in pensions issues and gives information and advice to members about pension provision. I recall, too, that on the Occupational Pensions Board there was always present a member who was clearly identified with, and linked to, consumer interests. I hope that the Minister will consider it appropriate to have such a provision in regard to the new advisory body.

I agree with the amendment relating to the representation of pensioners' interests in the name of the noble Baroness, Lady Seear, with which this amendment is grouped. There are a number of organisations representative of occupational pensioners; some have been lobbying Members of your Lordships' House about the Bill. Clearly, pensioners have an interest, perhaps even greater than that of scheme members still in employment. In theory, an employed member can at least look forward to some years of earning capacity, or perhaps even improvements and promotion. A pensioner has reached the end of the road. All that he or she has is the pension and whatever the scheme provides by way of uprating to meet inflation and other contingencies. Security is therefore of paramount concern to the pensioner. As proposed in the second amendment, it seems appropriate that provision should be made for the appointment to the body of a representative of occupational pensioners. I beg to move.

Baroness Seear

The noble Baroness, Lady Turner, has already referred to my Amendment No. 5. I strongly support the idea of having a representative of pensioners on the authority. The Bill lists very worthy people who will be members of the authority for the various contributions they can make. To have a pensions authority without a pensioner on it is rather like playing "Hamlet" without the Prince. I hope that the Minister will consider making provision for an additional member of the authority who is a pensioner. He or she is likely to know things about pensions and the administration of them which may have escaped the attention of some of the other people appointed to the body.

3.45 p.m.

Lord Mackay of Ardbrecknish

The two amendments refer to the constitution of the authority as set out in Clause 1(3). The subsection outlines the kinds of qualifications and the background of those from whom the Secretary of State will appoint the six members of the authority. I should explain how we have come to the conclusion that what we propose is the right number and mix for the authority.

The primary purpose of the Bill is to safeguard the interests of occupational pension scheme members. None of us disagrees with that objective. To achieve it the authority's membership will be varied enough to ensure that it embraces a broad range of expertise and knowledge but is not so large as to be unable to make robust and effective decisions that can be implemented quickly. Under subsection (3) the membership is drawn from a number of groups. Paragraphs (a) and (b) specify members who are representative of employers and employees; paragraphs (c), (d) and (e) mention those with expertise in the management of pension schemes. There is a degree of confusion as to what one is seeking among the membership of a trustee body of an individual pension scheme and what one looks for in an authority that is regulating all pension schemes. I appreciate the point made by the noble Baroness, Lady Seear, that pensioners may have an interest in pensions. I am not sure that, unless they come from one of the backgrounds laid out in the Bill, they will have the necessary expertise to act as the regulatory authority.

I am afraid that I cannot accept the amendments to enlarge the authority or to alter its balance. The six members will be appointed primarily on the basis of their expertise. As I hope I have illustrated by pointing out the background of those people whom the Secretary of State will be considering for appointment, they will bring to the authority a wide range of knowledge and experience. They will not be there to serve in a representative capacity. They will be required to set aside any vested interest they may have.

I have explained the composition. I believe that the employers' representative is the person who will look after, and be particularly mindful of, the interests of both current and future pensioners. We believe that the balance is the right one. It follows the model adopted by the Occupational Pensions Board which has enjoyed a reputation for impartiality and integrity under successive governments. To appoint representatives of particular interest groups or classes of scheme members will cause other groups or classes to feel that they have been unfairly excluded. We will then begin to see an increase in the number of people on the authority. I do riot believe that that is either sensible or wise. It will undermine the authority's independence and objectivity.

For those reasons I feel that we must look to experts with the backgrounds set out in Clause 1 for membership of the authority, not to people who represent specific interest groups in specific pension funds mentioned in the two amendments.

Baroness Seear

Surely the Minister does not wish to give the impression that his mind is closed to all the suggestions which will come from this side of the Committee. I should like to give him the opportunity to think again, if he will, about Amendment No. 5. Perhaps he will examine Clause 1(3) (e) which refers to the appointment of two members who appear to the Secretary of State to be knowledgeable about schemes, one of whom can be a pensioner. At the moment, there is no proposed amendment but if the Minister will at least agree to think again it will not increase the numbers and it will show that he is flexible. I was about to say that flexibility is not always a characteristic of those from north of the Border, but I believe that that would not enhance my case.

I agree that such a person should not be representative of an interest but a pensioner may be able to ask some very awkward questions about what is going on—questions that may not occur to people who are not themselves pensioners.

Lord Eatwell

The Minister's argument is extraordinarily weak. Let us consider the words that he used. He argued that a pensioner would not have the skills and experience to be able to be an effective member of the regulatory authority. He then said that a pensioner would not have the knowledge and expertise. Finally, he argued that the employer's representative would be able adequately to represent the interests of pensioners. We have seen in the past that employers have not necessarily adequately taken pensioners' interests into account. Surely the noble Lard's argument is extraordinarily weak. He cannot stand on such a weak case. It is clear that a pensioners' representative may be very highly skilled and would be chosen by representative organisations because he or she had those skills and that expertise. If we are to have someone who is representative of employers and someone who is representative of employees, surely it is logical, consistent and entirely in tune with the character of the organisation that there should be a representative of pensioners.

Lord Mackay of Ardbrecknish

The noble Lord has made my point for me. Subsection (3) (b) states: a member appointed after the Secretary of State has consulted organisations appearing to him to be representative of employees". That person is likely to be drawn from the people who are involved, directly or indirectly—they could well be officials of a union or something like that—in the pensioners' (either future or present pensioners) interests. If I said in my speech "employers", that was a slip. It should have been "employees". If that is the argument on which I am accused of being on weak ground, I think that I have got on to much firmer ground by underlining the point that am making about the employees' representative being the most likely person. I would hope that we are not looking for someone to represent particular groups. We are looking for people who will look after the whole of the scheme and make sure that the regulations are properly enacted and that if a pension fund is going wrong action is taken to put it right. The pensioners and potential pensioners will see the person who is the representative of the employees as the person who, if one likes, directly represents them.

The noble Baroness, Lady Seear, quite cleverly asked me whether I would consider the point she made about amending subsection (3) (e). I would not like the Committee to think that my mind is always going to be closed. It is never closed to a good argument. As the Bill progresses I may well find some things which I think ought to be taken away and considered. After each day we shall study what has happened and look at what has been said. But I would not be telling the noble Baroness the truth if I said that I would take this point away and think about it in a serious manner so as to change my view. All I would say is that there is nothing in paragraphs (a) to (e) which would prevent someone who was a pensioner coming in.

Of course there may well be pensioners who have a great deal of background in the matter and in fact obey one of these statements. The point I made to the noble Lord, Lord Eatwell, and about which he became so irritated is that the great bulk of pensioners and potential pensioners—I certainly include myself, although perhaps that will change when I have finished the Bill—are not in a position to feel that they could sit on a regulatory authority and make sure that the rules and regulations required in a pension fund would be carried out.

Baroness Seear

The former chairman of ICI is a pensioner.

Lord Stallard

The noble Lord referred to employees. Is it not a fact that sometimes employees' interests are not exactly the same as pensioners' interests? They certainly do not have the same understanding of the problems as active pensioners have. There is a difference between pensioners' interests and the interests of current employees. The noble Lord should take that into account.

Lord Marsh

The noble Lord, Lord Stallard, has put his finger on exactly the danger of this kind of amendment. Pensioners do not act on behalf of all of the people who may in the future depend on the fund. They represent the pensioners. The views of pensioners of one time are not necessarily representative of the interests of people who have yet to become pensioners. The key point in these roles is that people should be responsible to the fund.

Of course the former chairman of ICI is a pensioner. One of the points that makes this amendment probably less crucial is that we are all pensioners. I am pleased to say that I am a member of six pension funds and am in receipt of a pension from each of them. They are all different and the interests are different. The concept which is central to this kind of problem has to be that those concerned are responsible to the fund and that no one represents an interest.

Baroness Turner of Camden

I am disappointed that the Minister has not seen the merit of my arguments and those put forward by the noble Baroness, Lady Seear. The noble Lord does not seem to have replied to the amendment on consumer interests. As I said at the beginning, it was customary for the Occupational Pensions Board to include among its number someone who was identifiable as being representative of consumer interests. I do not see why that should not be possible here. It is important that consumer interests are seen to be adequately represented on the regulatory authority.

As to pensioners, I agree with everything that was said by the noble Lord, Lord Stallard. In my role as a union official I can remember discussing pension provision with members and finding that there were sharp differences of opinion between people who were in work and had not yet had their pensions and people who were on pensions. Indeed, later in the Bill, when we reach Clause 66, we may be discussing a clause which perhaps worsens the position of existing pensioners compared with what is their position in many trust deeds at the present time.

I think that there is a case for having a representative of pensioner interests. It is noticeable that, in their lobbying of some of your Lordships, including myself, the unions have been telling us that they would like to see pensioner interests represented separately because they acknowledge that they are often not the same interests as those of people who have yet to receive a pension.

I hope that the Minister will think carefully about what has been said in debate today. There is a great deal of interest in the amendment concerning pensioners. I have been lobbied, as I am sure have other noble Lords, by organisations representative of pensioner interests. They have been taking a great deal of interest in the passage of the Bill. There are organisations outside which would be capable of nominating people who are well versed in pensions law generally and who would be well equipped to play a vital part.

Of course, people are not representative in the sense of their individual interests and the group from which they happen to come. What is important is the experience they bring with them to play a part in the authority. It is not that they are specifically representative in the sense of someone who represents and then reports back. We are not seeking that at all. We are looking for people who will bring a broad base of experience to the workings of the authority. Therefore, it is sensible to have the people who are referred to in Amendments Nos. 4 and 5.

I shall not press the amendments at this stage because I do not think it would be appropriate. I nevertheless hope that the Minister will give careful thought to what has been said this afternoon. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 5 not moved.]

4 p.m.

Baroness Turner of Camden moved Amendment No. 6: Page 1, line 24, at end insert ("provided that at all times, at least one-third of those members, to a minimum number of 3, shall be women.").

The noble Baroness said: This amendment proposes that at least one-third of the members, to a minimum number of three on the authority, shall be women. Generally speaking, women have not had a very good deal when it comes to pensions. It is only relatively recently that they have had the right of access to pension schemes on the same basis as men. Older women will no doubt remember that it was quite customary for large, private employers not to accept women into pension schemes until a later age than men. At about the age of 30 when it was assumed that they were well and truly unmarried and likely to remain so, women were then allowed to join the firm's pension scheme. Even so, because of the checkered work pattern of many women—time out for looking after children and perhaps caring for older relatives—it has been difficult for them to build up a reasonable pension entitlement.

In addition we have the problems of divorce to which we shall come later in the Bill. So while the earlier retirement age has often been held up as an advantage for women—perhaps in the eyes of some men that is an unfair dvantage—when looking at pension provision as a. whole it is clear that, just as in the work place, equality in provision has been very late in coming and there are still injustices and anomalies which specifically affect women. Therefore, there seems to be a case for arguing for a minimum number of women on the new regulatory authority. I beg to move.

Lord Mackay of Ardbrecknish

I find myself a little confused by the noble Baroness's argument. I fully understand and appreciate—probably we shall discuss it later in the Bill—the problems which women have had over the years in getting equal rights and, in particular, in building up pensions. I do not believe that these arguments are at all relevant as regards who should make up the regulatory body. Therefore, I believe that we are having this debate at entirely the wrong place.

I always remember what one lady friend of mine in a senior position said when confronted by this question. She posed this question to her inquisitor: "Was I appointed on my merits or was I appointed just because you needed a woman?" 'That is the answer I give on this amendment.

We need six people who have the right qualifications. Frankly, if the best people are all women then so be it: if they are all men, so be it. I am quite sure that the Secretary of State will attempt, as we do in general government policy, to find women with the necessary qualifications in order to meet the main stipulation; namely, to be able to take a full part in the regulatory authority and do the job which needs to be done. I do riot believe that it would be a service to pensioners, to men or women or women in general, to appoint people to a body just because they happen to be female. I hope that the noble Baroness will withdraw her amendment.

Baroness Lockwood

I was not surprised at the Minister's reply to this amendment in view of his response to previous amendments when we were discussing who would be the chairman and other members. All the time he referred to "he". The assumption was that the chairman, the deputy chairman and other members, would be "he". That is exactly the problem which my noble friend is trying to overcome. As the Minister has indicated, women can be very highly qualified. They can be appointed on merit. But this amendment would cause the Secretary of State to look carefully at qualified women nominees and not overlook them by assuming that all the members should be male.

Lord Boyd-Carpenter

I very much hope that my noble friend will not be persuaded to accept this amendment. It is very harmful, in principle, to try to decide in advance on the sex of the persons when appointing to a body of this kind. I am sure that that would be a very bad precedent. If the amendment is to have any effect at all, it must involve sometimes not appointing the best person available and that would he a great mistake. Therefore, I hope that my noble friend will be quite firm on this matter and ask the Committee to reject the amendment.

Baroness Dean of Thornton-le-Fylde

I hope that the Minister will change his mind and accept the amendment. Women find it very derogatory to know that they comprise over 50 per cent. of the population and yet continue to hear remarks that there may not be enough of sufficient ability. It is a very easy argument to put forward. The inference to be drawn is that if three women are asked for they will not be on the list because of ability. It is not mutually exclusive. Of course the decision has to be made on ability, but also on the basis of open and equal access. I suggest that that has not been applied.

For instance, I gather that that has been the policy of government departments for some years now. As the then co-chairman of the Womens' National Commission nearly a decade ago we were pleading with government departments to ensure that women were on lists which were being considered for public appointments. Yet when one looks at public appointments throughout the whole range of government departments one still sees few women being appointed. Of course there are more than there used to be, but they are still insufficient in number.

Rather than saying that this amendment would be a retrograde move, I suggest that it would be an extremely progressive one which would be seen by women in the community as making a real and constructive step as regards pensions. At the moment they are in an inferior position to their male counterparts in society and pension funds. This amendment will he seen as making a genuine, real and constructive step forward in giving to women the right that they should have. Unfortunately, in the structure of too many organisations they do not have that right. This is a new body. It has been quite rightly said at an earlier stage in Committee that the regulatory body is at the heart of the pension changes which we are to see. For that reason I believe it is an extremely sensible amendment.

Baroness Hollis of Heigham

I too support my noble friend on this amendment. I do not believe that there is any division in the Committee. We want a regulatory body which is made up of the most skilled and competent people, representing the greatest breadth of experience, to do this work.

What the Minister has failed to take on board is that we are not saying women are inferior and therefore need a special track onto the board. On the contrary, there are very many highly skilled and able women who have experience of occupational pensions. What we are saying—and what the Minister and the noble Lord, Lord Boyd-Carpenter, have not taken on board—is that women in the labour market and in the pensions world, by virtue of their gender, for the most part have a different experience of how the pension system works than most men. If the regulatory body is to be effective it should ensure that its membership contains the greatest possible breadth of experience. A regulatory body which does not contain women—and it could not and may not under these procedures—will be denied the advantage of the distinctive experience of what is meant by being in the labour market, paying into an occupational pension scheme and enjoying it.

I have all the volumes of the Cabinet Appointments Committee. In almost every other field of public employment that I am aware of the Government are not only anxious to appoint women, but actually list in that document the appointments by gender. The Government believe that significant. Yet why in this measure which affects women, perhaps as much as anything in any other walk of life, are the Government not willing to concede that women have something distinctive to offer which should be reflected in the composition, of the regulatory authority?

Lord Marsh

Obviously this is the wrong time to get involved in this argument because I suspect there is a certain gap which exists—

Baroness Hollis of Heigham

Between men and women!

Lord Marsh

—between the different views. One of the effects of the Government's determination to use active measures to seek to employ or appoint women, as happens with public boards as well, is the embarrassing telephone calls one gets from time to time to this effect: "Do you know of any women who might fill this job because we have been told by the Minister that he is insisting (particularly in the National Health Service) that we have to have women?" That is an insulting way to start off. It would not be liked if it were said of black people and I do not like it when it is said about women.

I have to declare an interest. I chair a company where the company secretary is a woman, the chief legal adviser is a woman and the chief broker is a woman. The new regulatory authority of the PIA has a chief executive who is a woman. There is plenty of evidence now that that barrier has been broken. It is positively damaging to continue with the idea that one has to ensure that women have a little special help before they can get a serious job. If I may say so, some of the noble Baronesses who are taking part in this debate are classic examples of how redundant that approach is.

Baroness White

I have great sympathy with what the noble Lord, Lord Marsh, said. In any normal circumstances I insist that I am not a woman, that I am a person, and I have usually found it a great advantage to be in a conspicuous minority.

In this matter of pensions, where distinctions are made between men and women in the system, I make an exception to my usual position of refusing to join my noble Lady colleagues in some of their objectives. We should be sensible about this. Pensions are different, and I hope very much that the Minister will realise that fact.

Lord Mackay of Ardbrecknish

I must come back to the main point that I have made once or twice in the course of discussing some of the amendments. We are appointing a regulatory body—a body which has huge responsibilities to police a pension scheme. We are not trying to appoint some kind of general representative body; we are looking for people with knowledge and background, and the kind of expertise that we want to bring to this.

I have said "people". We cannot tie down the Secretary of State to how many women he ought to appoint. I apologise to the noble Baroness, Lady Lockwood, if I used the words "he" and "chairman". As far as I am concerned, "he" and "chairman" take in both men and women. I do not think about it in any other way. The Occupational Pensions Board has a good record; currently three out of the 12 members are women, including the deputy chairman. In a previous existence of mine, when I had to make a number of public appointments, I did not go rushing around the countryside looking for women to appoint. I am happy to say that many women were proposed to me who were perfectly able to fill the job. I never counted whether the ratio was 50:50 or 60:40, that did not bother me one way or the other. My only interest was to get somebody who could do the job and handle the responsibility—that is the point—for all the pension schemes and the members of the pension schemes.

That does not mean that we are not going to appoint women, but we should not tie the hands of the Secretary of State and insist that three of the appointments should be women, which is what the amendment proposes. As I said initially, if the Secretary of State were to find more than three women, should he not appoint more than three?

Perhaps I should say in conclusion—at the risk of being accused of making a political point—that I have read occasionally in the newspapers of the trouble that the party opposite has got itself into with its policy on the selection of candidates, where it is trying to enforce just this kind of rigidity. I do not believe that it helps women at all.

Baroness Turner of Camden

I thank my noble friends who have contributed to this interesting debate.

I am not at all surprised that the Minister responded as he did. On the other hand, I carefully noted that he said it was the intention to see whether suitably qualified women could be found to serve on the authority. I am grateful for that assurance.

We are not asking for special consideration to be given to women just because they are women. There are plenty of women with the appropriate skills. Indeed, the noble Lord, Lord Marsh, indicated that there were such women by quoting his experiences in his own company. So there are such women.

There should be open and equal access to this very important new body in order to make sure that the special considerations which apply to women in the pensions area are represented. As has already been stated by my noble friends, pensions are different. It is a separate area, and women have had special problems with pensions. For all those reasons it would be a good idea to have stated on the face of the Bill that there should be representation from women as women—although we accept that they have to be women with the appropriate skills and experience.

Having said that, and having noted the assurance of the Minister that there will be an attempt to fill some of these positions with suitably qualified women, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

4.15 p.m.

Baroness Turner of Camden moved Amendment No. 7:

Page 1, line 24, at end insert: ("( ) It shall be the duty of the Authority to monitor the operation of the occupational pension schemes coming within the scope of this Act, with a view to ensuring that schemes are efficiently and satisfactorily administered in the interests of beneficiaries and to that end it shall appoint suitably qualified persons to act as an inspectorate, to be deployed as the Authority may determine.").

The noble Baroness said: I move the amendment because we made no progress on our first amendment this afternoon. The amendment moved by my noble friend Lady Hollis took from the Goode Report the precise functions that that committee felt to be appropriate. It is essential that there should be some reference to the functions of the new authority set out in primary legislation.

However, since that detailed list of functions was not acceptable to the Minister, we must have another clause written in—perhaps less detailed—which sets out a far more proactive role than is apparently envisaged in the Bill as it now stands.

Reference to the Goode Report indicates clearly that the committee was thinking in terms of a system involving spot checks. Paragraph 4.19.29 states, for example, that the regulator will need the support of a professional staff, and it spells out the sort of staff that will be required. It continues: they will also have a central role in investigating schemes where there have been allegations of impropriety or as part of a programme of spot checks". The report also points out that the new regulator will be taking over some of the functions hitherto performed by the Occupational Pensions Board. As we all know, that board had a much more restricted role.

If, as the Secretary of State has said, the recommendations of the Goode Report in relation to the regulator have been accepted, then an apparatus for the conduct of spot checks must be in place. This will require the appointment of suitably qualified people.

No one can say with any certainty that the kind of scandal we had in the Maxwell affair will never happen again. I agree with those who have said that, in general, most pension schemes are well and effectively monitored, perform a very good service and provide a very good degree of security for the people who belong to them. Nevertheless, because of the scandal and the ripples that flowed from that and other, less serious, cases which have arisen, it has been necessary to introduce the system set out in the Bill.

The mere existence of a system of spot checks, plus the staff to carry them out, might deter people who are tempted to take risks in the manner of Maxwell. A spot check could well reveal the existence of malpractice before anyone—even the trustees—could be aware that things were going wrong.

Although the Minister was unwilling to accept the detailed list of functions set out in the first amendment moved by my noble friend, I hope he is prepared to look more favourably on the present amendment which seeks to spell out a more proactive role for the regulator than appears to be the case in the Bill as it stands. I beg to move.

Baroness Seear

I very much support this amendment, which is also in my name, simply as a matter of logical presentation which should appeal to the Minister. If we look at the Bill we go straight into: There shall be a body corporate called the Occupational Pensions Regulatory Authority". The Minister has been living with this Bill, sleeping with it, and thinking of nothing else for weeks and weeks. No doubt to him it is perfectly clear when he reads it what it is talking about, but anybody picking up the Bill and just reading that will very reasonably say, "What on earth is this regulatory body? What is it supposed to do?" It is surely logical at the beginning of a Bill which is introducing an organisation such as this authority to say, briefly, in a matter of half a dozen lines or a little more, exactly what it is, what it has to do, and what its authority is. That is all we are asking.

I underline what the noble Baroness, Lady Turner, said. We are also trying to emphasise that the authority has a proactive role to monitor. While that may be what the Minister takes exception to—and I hope that he does not—he must agree that on the face of the Bill should be a clear, short statement of what the authority is there to do and why it is there. That is what this amendment contains, and I very much hope that the Minister will feel able to accept it.

Lord Mackay of Ardbrecknish

It is tempting to agree with the noble Baroness, Lady Seear, that we could put quickly into the Bill what it will do and so no one would need to read beyond Clause 1. If I have had to read beyond Clause 1 night by night, as the noble Baroness suggests, I do not see why everyone else should not have to read beyond Clause 1.

Baroness Seear

That is what you are paid as a Minister to do. Other people reading the Bill are not in the same position.

Lord Mackay of Ardbrecknish

The point, as with so many Acts of Parliament, is that what the Bill is about cannot be quickly ascertained from one or two clauses. One has to look at what the whole Bill does. I have made the point before that our defences against a Maxwell Mark 2 are not just contained in the OPRA; they are contained in various provisions throughout the Bill. I shall therefore resist the temptation to think about introducing a general, all-encompassing paragraph which would explain to the ordinary reader—I wonder how many ordinary readers of government Bills and Acts there are—what the Bill sets out to do. The explanatory note exists to do that in terms more understandable to the layman.

The point about the amendment is not that it sets out what it is envisaged the authority should do in the rest of the Bill; it gives it an additional responsibility. I dealt with that issue on Amendment No. 1 when the same point arose. Should this regulatory body have an obligation to monitor, on an ongoing basis, month by month, or week by week—I am not sure which—150,000 pension schemes? I have already accepted, in response to the noble Baroness, Lady Hollis, that we depart from the PLRC recommendations on the question of routine monitoring. I have explained why. It is that I do not believe that the bureaucracy and costs would justify it. It is much more important that the regulatory authority should concentrate its attention on those schemes where—as the phrase is—the whistle has been blown or on those schemes which, acknowledging the wider interest it will build up over time, give it cause for concern, and that it should investigate those in particular rather than spend lots of time, energy and money monitoring schemes which are being run adequately.

I understand fully the noble Baroness's desire to have a belt and braces operation here; I do not believe that it would be sensible. I am not sure how I mix this metaphor, but the authority would become so obsessed with just monitoring that it would cease to act in the purposeful and direct way that we all want to see when a scheme which may be going wrong is brought to its attention.

Lord Ezra

As a matter of presentation, it is wrong that a Bill of this importance should start by saying that an authority is to be appointed, leaving the reader or user of the legislation to plough through the whole document to find out what it does. I can mention many Acts of Parliament in which authorities and bodies are set up and where, in a normal, logical, course of events, a summary of their functions and duties is set out.

I lived most of my active life with the 1946 Coal Industry Nationalisation Act, now, perhaps, a bit of a museum piece. Section 1 of that Act—I can repeat it almost word for word—set out clearly what the newly formed National Coal Board was to do. Can the Minister get his staff to look at similar legislation and point out those occasions when an important body is set up as the objective of the legislation and its functions are in no way described until one has been right through the Bill? That is a wrong approach. It is a form of legislation which is reprehensible. It is going back on what should be the objective of government in official documents, especially Acts of Parliament—clarity and convenience.

Baroness Hollis of Heigham

I support the remarks of the noble Lord, Lord Ezra. On this issue the Government's voice, and presumably their vote, is on the side of obscurity versus clarity; on the side of leaving it unknown rather than having it made public; and on the side of inviting all 11 million or 15 million members of pension schemes to plough through a Bill rather than have it up front.

What are the Government frightened of? Why are they so reluctant to follow their own precedent in similar legislation in spelling out what are the duties, functions and purposes of a regulatory authority? Why do they expect that in this case—it is a Bill which probably affects more citizens of this country than most that come before the House—people should not know where they stand? Our only assumption can be that the Government want to keep power to themselves, not just in the form of knowledge but in the form of power to make regulations so that they may seek to shift policy after the event. The Government's position on the issue of clarity, information, and guidance to trustees is already clearly on the side of concealing what they are entitled to know.

The Earl of Clanwilliam

The generality of the suggestion by the Opposition that there should be more clarity on the face of the Bill is one with which I have some sympathy. Nevertheless, on this issue it would be folly to ask the body to look after 150,000 pension plans. The cost of the body will be imposed upon the industry. It would add enormously to the costs to the industry, which are already prohibitive.

Baroness Seear

I do not agree with what the Minister said about monitoring. If the Minister will not accept the amendment, will he look at what he considers to be an appropriate statement of what the authority should be doing, the point made by my noble friend Lord Ezra? He does not like the idea of putting in monitoring. There are two points to the amendment. We want monitoring included, but we also want a clear statement at the beginning of the Bill so that people reading it do not have to go through the whole thing to extract from it what the authority, which is a key part of the whole exercise, is there to do.

Lord Mackay of Ardbrecknish

I shall probably ask for the Coal Industry Nationalisation Act 1946, although it is not a good precedent because I hope that this regulatory authority will be a good deal more successful in the long term than that Act, and the company it set up, has been. This is a complicated matter. Pensions are complicated. I should have thought that we could all agree about that.

The idea that we can deal with such a complicated matter in simple terms and hope that those terms will stand up to interpretation in courts of law and the like is, I am afraid—much as I should like to go down that road—a rather simplistic view of how legislation can be framed. Whether we like it or not, legislation has to be framed in a complex way to ensure that our intentions stand the test of time and being tested in courts.

If the Committee is saying to me that there should be some kind of document that an ordinary person can look at to see what the regulator will do, the Committee might just think about pressing me to ensure that the authority will publish such a layman's guide to its role and responsibilities. I should be happy to take that suggestion away, but so far as thinking that I can have the Bill redrafted in such a way that the layman would be able to understand it at a glance is not living in the real world and protecting ourselves against real problems. For how many minutes does the Committee believe that a Bill drafted so that a layman can understand it would resist attacks from someone such as Maxwell and the team of people that he could get behind him? I believe that what Members of the Committee are asking me to do—

4.30 p.m.

Baroness Seear

The Minister is misunderstanding what we are saying. We are not suggesting that he should encapsulate at the beginning of the Bill every thing that is in it. We are saying that, since the Minister does not like the monitoring provision, he should look at our amendment to see whether in six or seven lines he can set out the duty of the authority. He must know what its duty is and be able to set that out in his own words. At least people will see on the face of the Bill what the authority is there to do. We are suggesting that he should redraft the proposal in terms of what he wants, but that the duty should be set out on the face of the Bill so that it is plain.

Lord Mackay of Ardbrecknish

We appear to be having two parallel arguments; an argument about enlarging the powers of the body to monitor all 150,000 pension schemes—which I have clearly said I do not believe is sensible—and a parallel argument that somewhere at the beginning of the Bill we should try to sum up in half-a-dozen lines the remaining clauses in order that someone can quickly understand what the authority is about. I have indicated that I hope that the Committee will reject the former proposal.

As regards the latter proposal, I understand the point being made. However, I am not sure whether the Bill is the correct place for art easy guide to the regulatory authority's duties. I am not sure whether many people will be able to pick up or to purchase what will be an Act of Parliament in order to find the guide. The proper solution may be for me to consider the points that have been raised and to assess the possibility of the authority setting out an easy guide to its responsibilities.

Baroness Turner of Camden

I am glad that at least in some degree the Minister has responded by saying that he will look at the possibility of a guide being issued. However, as he rightly said, that is not the point of this amendment. We are trying to spell out one of the duties which we believe the authority should have. The Minister does not believe that it is possible to monitor 150,000 schemes—and, of course, detailed monitoring is not possible without a great many staff and a lot of money.

We have in mind what Goode probably had in mind—that there should be in operation a programme of spot checks so that those running the 150,000 schemes would not know when an inspector would call. It is clear that Goode was thinking in terms of a system of spot checks rather than the detailed monitoring of all the occupational pension schemes.

From our point of view, it would be a good idea to take away what the Minister has said to see whether we can redraft the amendment in order to fulfil some of the functions. In the meantime, I hope that the Minister will take on board what was said by the noble Baroness, Lady Seear, and the noble Lord, Lord Ezra: it is unsatisfactory to have an authority set up under legislation without a clear statement of its new duties. It is unsatisfactory to have to plough through a Bill to discover the full package of its functions. I do not believe that that applies to most legislation, and I see no reason why a simple paragraph setting out the authority's precise functions cannot be inserted at the beginning of the Bill. They may be the limited functions which the Minister now says he perceives for the authority rather than the functions envisaged by the Goode Committee.

There is little point in pursuing the matter further at this time, and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 1, as amended, agreed to.

Baroness Hollis of Heigham moved Amendment No. 8: After Clause 1, insert the following new clause:

Codes of practice to be issued

(".— (1) The Authority may issue codes of practice containing such practical guidance as the Authority thinks fit for the purpose of promoting good practice with regard to occupational pensions.

(2) Without prejudice to the generality of subsection (1) above, the Authority shall in one or more codes of practice provide practical guidance on the following matters;

1. (a) arrangements for the appointment of member trustees;
2. (b) the time off to be permitted by an employer for the purposes of sections 36 or 37 below.

(3) When the Authority proposes to issue a code of practice, it shall prepare and publish a draft of that code, shall consider any representations made to it about the draft and may modify the draft accordingly.

(4) If the Authority determines to proceed with the draft, it shall transmit the draft to the Secretary of State who shall—

1. (a) if he approves it, lay it before both Houses of Parliament; and
2. (b) if he does not approve it, publish details of his reasons for withholding approval.

(5) In the case of a draft code of practice containing practical guidance on the matters referred to in paragraph (a) or (b) of subsection (2) above, if the draft is approved by resolution of each House of Parliament that Authority shall issue the code in the form of the draft and the code shall come into effect on such date as the Secretary of State may by order appoint.

(6) In the case of a draft code of practice not containing such practical guidance, if, within the period of 40 days beginning with the day on which a copy of the draft is laid before each House of Parliament, or if such copies are laid on different days, beginning with the later of the two days, either House so resolves, no further proceedings shall be taken thereon, but without prejudice to the laying before Parliament of a new draft.

(7) In reckoning the period of 40 days referred to in subsection (6) above, no account shall be taken of any period during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than four days.").

The noble Baroness said: The amendment relates to codes of practice. In the light of the Minister's replies to Amendments Nos. 1 and 7, I have some hope that this amendment represents the next best thing.

The Minister made much of the fact that the regulator cannot reasonably inspect each and every scheme from scratch. In fact, we were not arguing for that. We were arguing for spot checks in addition to annual reports being sent to him so that he could spot check.

We all accept that, according to the 1994 report of the Government Actuary—that is, the latest report—there are some 128,000 private sector schemes. Of those, 96,000 have fewer than 11 members and 26,000 have fewer than 100 members. We all accept that, in other words, the vast majority of schemes are small.

It is also the case that most of those schemes do not have elected or nominated members. Of the schemes with more than 11 members, 1,500 have no trustees and 21,000 have no elected or nominated trustees. In other words, two-thirds of all schemes—which represents almost one-third of all members—have never had scheme member trustees.

Most of those schemes, if not all, will have elected trustees starting from scratch. One must consider the responsibilities that they will be asked to undertake and the learning curve and liabilities that will follow. We will explore some of those issues on the next Committee day when we are debating the position of trustees.

We are arguing that the many thousands of small schemes, which will have member trustees for the first time, will need a code of guidance within which to operate in order that each scheme's trustees will not have to re-invent the wheel. Such a code from the regulator would give them a clear steer, clear guidance and, following the remarks of the noble Lord, Lord Marsh, a surer sense of when they should whistle-blow. The less interventionist the regulator, the more important it is that the trustees have confidence about what is in his mind.

For that reason, Goode believed that the codes of practice had a useful role to play, and perhaps I may give some examples. There are the procedures for electing trustees, for key information to be disclosed to scheme members, for the prior notification of any proposed changes in scheme benefits; the procedures on transfers or for the frequency and conduct of meetings of trustees. Ideally, KPMG has suggested, there should be a local scheme compliance officer to buttress them. We believe that the provisions in the amendment will be a highly desirable, useful and welcome addition to the regulator's activity. We are sure that the trustees of smaller schemes will find them helpful.

Precisely because the Government are unwilling to have a regulator who is pro-active and intervening in the schemes by spot checking, it is important that, through a code of practice, the regulator should give trustees guidance about his expectations against which they can measure their schemes and on the basis of which they can have some steer as to when they should whistle-blow. In the light of the Minister's previous comments, I hope that he will accept the amendment or come back at Report with a version of his own to that effect. I beg to move.

Lord Ezra

I support the noble Baroness in promoting the amendment. One of the prime objectives of the Bill must be that best practice should be pursued in the management of pension schemes. The Goode Report referred to codes of practice as providing a useful supplement to legislation. I think that the function of the regulator—particularly if he is not to be as pro-active as we on these Benches would like—could be enormously helped by the establishment of codes of practice which could be modified from time to time. Those who have to operate pension schemes would also be helped by these codes. The question arises whether the regulator himself should prepare codes or whether they should be prepared by one or other of the professional bodies concerned with pensions.

In that connection the noble Lord—perhaps he has this among his various briefing papers—is no doubt aware that his colleague at the Department of Social Security, Mr. James Arbuthnot, exchanged correspondence with the president of the Pensions Management Institute last October about the codes of practice prepared by that institute. They number about a dozen and the president of the institute suggested that they might be seen by the regulator and, if he agreed with them, approved by him so that they could be regarded as codes which could help both the regulator and those concerned with running the schemes to run them effectively.

I feel that if there is no guidance given on a practical basis to those running the schemes, one of the great opportunities presented by this legislation will have been missed. I hope that the Minister, when he replies, will say that this is an issue which—as his colleague said in his reply to the president of the Pensions Management Institute—the Government will consider and on which they will come forward with some proposals, or that he will leave it to us, if he likes (if he cannot accept this amendment), to come forward with further amendments at a later stage.

Lord Mackay of Ardbrecknish

I believe that there are really two parts to this amendment. I am sure the noble Baroness will accept that. One part seeks to put on the face of the Bill the words, The Authority may issue codes of practice". The other part requires the authority to prepare codes of practice in certain circumstances. I believe that the noble Baroness mentioned in particular the appointment of trustees. Those codes of practice would have to be approved by the Secretary of State and by Parliament.

I hate to keep saying no, but my reason this time ought to find favour with the Members of the Committee who have spoken. I am asking the Committee to reject this amendment not because I have any objection to the codes of practice, indeed quite the reverse. There is an important role for such codes in setting standards of excellence in the day-to-day administration of pension schemes. The noble Lord, Lord Ezra, rightly referred to correspondence by my honourable friend Mr. Arbuthnot on this matter. Of course codes of practice are valuable supplements to legislation but I do not think they can stand in place of it.

The Bill, and the regulations which will follow it, will provide a comprehensive and effective legislative framework for regulating pension schemes. I very much hope that pension professionals and administrators will see fit to complement that framework with codes of practice which they are best placed to devise and promulgate. Indeed I know—the noble Lord, Lord Ezra, has mentioned this—that the major pensions organisations are already committed to the task, and I welcome their initiative.

When the new regulatory authority is established, I am sure it will wish to consider publishing guidelines and practice notes on the way it will operate. But that is a matter for the authority itself to decide. Codes of practice undoubtedly have their place alongside the law but I do not believe they should be enshrined in the law. If they were enshrined in the law, they could not be amended and updated quickly in the light of practice and experience and I believe they would lose much of their value.

The regulatory authority will have the powers to produce codes of practice. While that is not specifically on the face of the Bill, it can be found in paragraph 2 of Schedule 1, which states: The Authority may do anything (except borrow money) which is calculated to facilitate the discharge of their functions, or is incidental or conducive to their discharge". It has to be said that the authority may not borrow money. I am happy to put it on record—if that helps the Committee and satisfies it that we are serious about codes of practice—that we would expect the authority, in pursuance of the powers in this part of Schedule 1, to issue codes of practice on many and varied issues surrounding the operation of funds and trustees and so on. Perhaps I have not gone as far as the noble Baroness, Lady Hollis, would like. She would like certain of these codes of practice to be approved by the Secretary of State and by Parliament. However, I hope with these assurances about codes of practice and the important role they will have to play, the noble Baroness will feel able to withdraw the amendment.

Baroness Hollis of Heigham

Again I am somewhat baffled by the Minister's reply. I took down his words. He said that he thinks codes of practice are a valuable supplement to legislation but should not replace it. I believe those were among his opening remarks. But his previous objections to Amendments Nos. 1 and 7 comprised a rejection of precisely that—that is, that the functions of the regulator, within which the trustees would be expected to act, should be on he face of the Bill—even though there is plenty of experience from the Irish law and from the Australian law that that is an entirely practicable operation. On the one hand, the Minister is refusing to have the functions and duties of the regulator specified so that the trustees know within which framework to act and when in that case they should whistle-blow. But, on the other hand, he is apparently rejecting, except in the vaguest terms possible, the alternative, which is that the regulator should be required to issue precise codes of guidance to make up that shortfall in the legislation.

Which is it that the Minister is going to have? He really must either give us a description arid a definition of the powers, functions and duties of the regulator or, alternatively, require on the face of the Bill that the regulator should offer that to the trustees. He has to do one or the other; otherwise what we have is a hoard, penalties and some miscellaneous clauses, and we must hope that some 150,000 schemes, with all their elected trustees, will make sense of it, monitor it, act as whistle-blowers and safeguard the pension promise. They cannot do it. Therefore I ask the Minister to think again. If he is determined to resist what we think would be the preferable first step, which is to specify what it is the regulator is expected do, so that everybody knows that—for some reason the Government do not want them to know—then he should at the very least require the regulator to make his position clear by issuing codes of guidance as required by this amendment. I invite the Minister to comment.

4.45 p.m.

Lord Mackay of Ardbrecknish

I think I have already made all the comment I wish to make. Anyone who reads the Bill, and the part of the Bill that concerns the regulator, will very quickly understand the powers and responsibilities that have been conferred on the regulator. I do not think that that is a mystery. Despite the best efforts of the noble Baroness, I do not think that there is anything mysterious about that. I do not think that there is some deep plot that she can work out. Any sensible person who understands his way round legislation will he able to see very clearly what the powers, duties and responsibilities of the regulator will be.

As I said, as regards codes of practice, the pensions professionals and the administrators are working on such codes of practice. We believe that they have an important part to play. As I explained, the authority has the power in Schedule 1 to act along the lines the Committee would like as regards code, of practice. However, as I say, I do not believe it is necessary to have statutory codes of practice and go through the parliamentary hoops which would be required to have them approved and, of course, then to have them changed. I believe the nature of codes of practice is quite different.

Baroness Hollis of Heigham

Again, I am disappointed. The Minister said that any sensible person can see very clearly—those were his words—what the regulator will do. Every Member of the Committee has the Bill and every Member here present will have been looking at the amendments and listening to the debate. I wonder how many could confidently assert, having read the Bill and listened to the debate, that they know what the regulator will do. I am talking about Members of the Committee who have had the benefit of studying the Bill and listening to the Minister's response. If the Committee cannot assert that it knows what the regulator will do—I think, speaking for our Benches, that many of us would say that we could not do that—how do the Government expect the members and trustees of 150,000 schemes to have that clarity that the Minister thinks any sensible person would have?

I have still not received from the Minister an explanation as to why he refuses to make clear what is opaque. If the information is redundant, what does it matter? If it is necessary, it is vital. We can only assume not that there is a plot but that the Government prefer to keep the regulation of the pensions industry in the shadows. If that is so, we are surely inviting a continuing array of frauds and problems—not necessarily a Maxwell case, because we would all accept that nothing can stop a Maxwell—based on a misunderstanding because the Government have refused to do what we asked them to do. We asked them to clarify the position so that sensible people, including Members of this Chamber, know what the regulator is expected to do and therefore know their obligations under the scheme and when to blow the whistle.

Lord Boyd-Carpenter

I am grateful to the noble Baroness for giving way. I should like to know what it is she is asking the Committee to do. The first subsection of the amendment states that the authority "may" issue codes of guidance, while the second subsection refers to a duty to issue codes of guidance. Is it voluntary or compulsory?

Baroness Hollis of Heigham

I am glad that the noble Lord, Lord Boyd-Carpenter, asked that question. The second subsection refers to the duties under which the regulator will be required to issue a code of guidance, while the first subsection allows the regulator to add additional codes of guidance. Therefore, the second subsection is the subset within the first. The regulator has a general power and is required to exercise it on specific items. I hope that that clarifies the matter.

We shall obviously return to the issue. It is distressing that on an issue as technical, complicated and detailed as this Pensions Bill, as the Minister himself will be the first to admit, when the Minister has constantly been invited from these Benches to clarify the Bill—whether through the first amendment, Amendment No. 7, or Amendment No. 8—he has refused to do so and rejected the amendments. I very much hope that if his noble friends behind him share our concern, and if they too remain mystified as to exactly what the regulator will do and what newly appointed trustees will be expected to do, they will make representations to their noble friend the Minister. For the moment, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 1 [Occupational Pensions Regulatory Authority]:

Baroness Turner of Camden moved Amendment No. 9:

Page 94, line 10, at end insert: (" . The assistance of the Authority may be invoked by the trustees of an occupational pension scheme coming within the scope of this Act, a trade union representing members of such a scheme, the employer, an individual member or members of the scheme or their dependants, the Occupational Pensions Advisory Service (OPAS), the Pensions Ombudsman established under this Act, or the Secretary of State, and the Authority is required to investigate such requests for assistance unless it can show good reason why it should not.").

The noble Baroness said: Amendment No. 9 deals with the issue of persons who may invoke the assistance of the regulator. The intention of the amendment is to spell out exactly who may invoke the assistance of the regulator since that is nowhere stated precisely in the Bill. Clearly, the trustees of a scheme should be able to do so if they feel that matters are not as they should be. On the other hand, an individual member may come by some knowledge which he may acquire as an employee or in some other way. If he feels that the interests of scheme members are at risk he should be entitled to go to the regulator. Should he die in the meantime it should be open to his dependants to continue with the quest.

There are already organisations which are active within the pensions field, some of whose functions have been to provide advice and assistance to individual members. There is the Occupational Pensions Advisory Service (OPAS), which provides a service without charge to individuals concerned about pensions issues affecting them personally. I am currently a member of the OPAS board. That body has now been recognised by the Government and receives funding from public funds via the Occupational Pensions Board. It does a very useful job, and it is likely that from time to time OPAS advisers may come across something that causes them to question the administration of a particular scheme. The same is true of the pensions ombudsman. Incidentally, OPAS and the ombudsman occupy different floors in the same building, so there is a connection between them. All those bodies, together with trade unions representative of members within a scheme, should be able to trigger an investigation by the regulator.

Again, the public knowledge that all those people could invoke an investigation could deter wrongdoing. I hope that the Minister will agree that this is a sensible amendment and will agree to its inclusion—or, if not this wording, then something like it—on the face of the Bill. I beg to move.

Baroness Seear

I rise in the hope that this time the Minister will agree with us. It is a faint hope, but hope springs eternal.

The Minister is anxious that the regulator should not be burdened with always taking the initiative but that whistles should blow to alert him that something needs to be done. In the amendment we spell out who may blow the whistle.

In an earlier debate I said that I did not wish the regulator to have to rely on whistle-blowing. We shall have a more detailed discussion about that on a later amendment. However, the fact that I do not want the regulator to have to rely on whistle-blowing is not the same as saying that I do not want people to blow the whistle. That is a quite different matter. It is clear that anybody who is worried that something is going wrong should be able to alert the regulator to it so that he can then exercise the monitoring function that the Minister is so afraid will be too much for the regulator. He will certainly be helped if all the people mentioned in the amendment have the authority to go to the regulator if they are worried.

I stress that those people would act if they were worried. It is not a matter of where something has obviously gone wrong. It has been said repeatedly in discussions about the Bill that the regulator needs to come in not when things have gone drastically wrong but when there is a suspicion that things may be going wrong. It is at that point that the people listed in the amendment—who are in a very good position to do so—should alert the regulator to the fact that there may be something that needs to be investigated. I hope that on this occasion the Minister will be able to accept the amendment.

Lord Mackay of Ardbrecknish

Perhaps I may deal with the amendment in two parts. The first part is all of the amendment bar the last line. That outlines the people who may complain to OPRA: a trade union representing members of a scheme, an employer, an individual member or members of a scheme, the Occupational Pensions Advisory Service, the pensions ombudsman or the Secretary of State. All of them may blow the whistle, as the expression has it.

We do not need such a provision on the face of the Bill. It is not required because the authority will have to look at all matters brought to its attention wherever they come from. The authority cannot just tear up a letter and say that because it has not come from A, B or C it will ignore it. The difference is that trustees, actuaries and auditors will be under a legal obligation to blow the whistle if they see anything wrong. Other people cannot be placed under such an obligation. That will not mean that they cannot blow the whistle and the authority must take what they say seriously. I believe that that part of the amendment is quite unnecessary. The Committee has my assurance that any complaint made to the authority, from whatever source, will be treated seriously.

The last line of the amendment states that the authority: is required to investigate … unless it can show good reason why it should not". I believe that the authority must have discretion to decide whether an investigation is justified. It would be unnecessarily bureaucratic to put tile authority under a duty to demonstrate that an investigation was not needed. It has to be left to the authority's judgment and expertise to decide whether information which it receives and examines justifies an investigation.

I hope that with the assurance that the number of people who can blow the whistle is not limited and that anyone can complain to the regulator, who will look seriously at the complaint, Members of the Committee will be satisfied on that count. I hope that they will accept the point that I made about the last line in the amendment and the duty that it would impose on the authority being a step too far. It would give the authority little or no judgment on whether further investigation was justified. I hope that with those remarks, the noble Baroness will feel able to withdraw the amendment.

5 p.m.

Lord Ezra

The noble Lord stated that the amendment was unnecessary because it was quite clear that anyone, in particular those groups referred to in the amendment, could draw the attention of the regulator to anything that they believed he or she should consider. Will the noble Lord indicate where that is made clear in the Bill or is it simply implied? Is the provision unnecessary because one ought to be able to deduce it; or is it referred to somewhere in the Bill? That clarification would assist us to decide whether to press the amendment at this stage or at a later stage.

Lord Mackay of Ardbrecknish

One of the problems regarding the complexities of such a Bill is that I cannot put my finger on the exact point which the noble Lord seeks.

Baroness Hollis of Heigham

Does that not suggest that ordinary trustees and scheme members, too, will not be able to do that?

Lord Mackay of Ardbrecknish

I suspect that it suggests that the Minister is not superhuman and is not able to command to his memory every particular detail of the many lines and pages of the Bill. I shall certainly look into the exact detail that the noble Lord seeks.

However, the general point I made is that anyone will be able to blow the whistle. During Second Reading I believe that there was a little confusion. I had thought that I had put it right at that stage. There was confusion because on the face of the Bill there is a duty on the trustees, actuaries and auditors to blow the whistle. That duty cannot be imposed on some of the other people referred to in the amendment. But they are still able to blow the whistle and to report something that they do not like to the regulator for consideration. That is certainly the full intention of the Government and will be within the remit of the authority. When I have the opportunity of a break in the proceedings, I shall check exactly where that is provided on the face of the Bill.

Lord Shaw of Northstead

Before my noble friend sits down, will he clarify a matter that puzzles me? If the amendment spells out that the trustees and others of an occupational pension scheme may invoke the assistance of the authority, is there any danger that were we to accept that provision it would limit the number of people who were able to invoke the assistance of the authority?

Lord Mackay of Ardbrecknish

My noble friend makes the point which I sought to make in perhaps a more confused way. As I stated, the trustees, the actuaries and the auditors are under a duty. So far as concerns everyone else, my noble friend puts his finger on the point. If we define who "anyone else" will be, undoubtedly we shall tighten the ring around who is able to blow the whistle. I should have thought that it is much better to leave the matter as I expressed to be the case: that anyone can actually blow the whistle. Obviously they will be people who have some involvement with the pension scheme. But, rather than seek to define those people, it is better left that anyone can blow the whistle. However, those in the three categories to which I referred are under a duty to do so.

Baroness Seear

The noble Lord was rescued by his noble friend on that point. Of course, he could add a clause stating that it is open to anyone else to do so, or words to that effect. It should be made clear that anyone is able to do so. The words ought to appear in the Bill.

The noble Lord referred to the words, show good reason why it should not". Surely when the authority receives a complaint, it will answer the letter. In answering the letter it could show good reason. It requires only one letter. That letter has to be written anyway.

Lord Mackay of Ardbrecknish

As I made clear to my noble friend, when I have the opportunity I shall have a closer look at the point that is made. I believe that I am right in what I said; but I shall ensure that that is so.

There is a difference between the good manners of the authority in replying to a letter and requiring the authority to show the reason why it has not investigated. That is the point I seek to make when I say that the last line of the amendment ties the authority's hands unnecessarily.

Baroness Turner of Camden

I listened with interest to the discussion on the amendment and to the response of the Minister. I am glad that he intends again to have a look at his briefing and the Bill, and will tell the House (no doubt at Report) exactly where it is stated in the Bill that anyone may invoke the assistance of the authority.

There is a great deal of difference between receiving a letter from anyone, perhaps a member of the public with no specific interest in the scheme, and the individuals, members and organisations referred to in the amendment. The amendment quite clearly refers to people with a specific interest—trustees, a trade union representing members of a scheme, OPAS, and the pensions ombudsman. The last line of the amendment requires the regulator to investigate such requests from such people for assistance unless the authority can show good reason why it should not.

If one considers the people listed in the amendment, that seems quite reasonable. On the other hand, if one is talking about anybody, as the Minister indicated, I agree that such a provision places too much of a duty on the regulator. However, I do not believe that the amendment does so.

There is a need for the Bill to state who may or who may not blow the whistle. Of course, we accept what the Minister says about such action being a duty on trustees and other people referred to in the Bill.

Lord Mackay of Ardbrecknish

I am grateful to the noble Baroness for giving way. I have had what I might describe as a quick legal consultation on the matter. It might be helpful if I shared that with the Committee—at, of course, no expense.

I am advised that it is not specified anywhere in the Bill that anyone is excluded from reporting, or that OPRA is excluded from investigation. The position that I stated—that anyone can blow the whistle, and that OPRA would be able to investigate a complaint from anyone—is clearly in the Bill so far as concerns the law, because it is not excluded.

Lord Monkswell

I am curious that the Government—

Lord Lucas

It might be best if the noble Baroness, Lady Turner, were able to conclude her remarks, if the noble Lord, Lord Monkswell, will allow that.

Baroness Turner of Camden

I thank the Minister for that explanation. We shall consider Hansard closely when we have the opportunity. I still believe that there is some merit in having written on the face of the Bill that the people and organisations which are set out in the amendment have a right to have their queries properly investigated and to receive good reason if there is no such investigation.

We accept that any member of the public, perhaps people with no interest in the scheme, may write to the regulator and that no doubt the regulator would send a letter back stating whether or not he intends to proceed. That is not the same as having a positive duty to investigate, and to show good reason why that investigation should not proceed, if that is the decision.

I believe I heard the Minister aright when he stated that the Bill also includes a duty on trustees to blow the whistle. However, I gather that Clause 41 covers only actuaries and auditors and does not cover trustees. Perhaps the noble Lord will check that.

It is an issue to which I shall wish to return at Report stage when I have had the chance tomorrow to consider the report of the debate in Hansard. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 10 and 11 not moved.]

Lord Lucas moved Amendment No. 12:

Page 95, line 11, at end insert: In the Parliamentary Commissioner Act 1967, in Schedule 2 (departments and authorities subject to investigation), there is inserted at the appropriate place— The Occupational Pensions Regulatory Authority".").

The noble Lord said: This amendment brings the Occupational Pensions Regulatory Authority within the jurisdiction of the Parliamentary Commissioner for Administration. I am confident that the Committee will agree that that is desirable. I beg to move.

Baroness Hollis of Heigham

We agree with the noble Lord that the amendment is a good one and we support it. We hope that on a knock-for-knock basis we can expect the Minister's support on the next amendment.

On Question, amendment agreed to.

Baroness Hollis of Heigham moved Amendment No. 13:

Page 95, line 13, leave out from ("and") to ("other") in line 14.

The noble Baroness said In moving this amendment, I wish to speak also to Amendments Nos. 14, 17 and 194 standing in the names of myself and the noble Lord, Lord Ezra. The amendments concern the funding of the regulatory authority. Amendment No. 17, the substantive amendment., asks that the regulator be financed by the state, by us the public, and not by industry.

On this side we do not argue that the industry cannot afford to fund the regulator but instead that it should not be asked to fund the regulator. Why do we argue that? It is for four main reasons. First, it is basically reasonable that the state should fund the regulator. After all, OPRA will take over some of the responsibilities of the Occupational Pensions Board, which is currently funded by the DSS. The cost is not high. According to the cost compliance document we are talking of about £10 million a year to fund the regulatory authority, together with the £3 million start-up costs. Occupational pensions, are, after all, contracted out of SERPS which the Government expect to regulate. So it is entirely reasonable that the Government's regulatory activity should cover the full field of pensions, whether SERPS or occupational pensions.

Unless the Government accept Amendments Nos. 13 and 14, they propose to determine the budget and staff of the regulatory authority. It therefore seems only reasonable that they should fund the budget and staff that they determine. So our first argument is that it is reasonable that the state should fund it.

Secondly, we believe that it is desirable from the point of view of the industry itself. The activity of the regulator, the funding and the issues of compensation are all linked. The more energetic the regulator is in preventing calamities, the less likely the industry is to face a compensation levy. It is the usual idea about fire prevention rather than fire fighting.

I believe, and have been led to believe, that the industry would be far more willing to co-operate with such an active regulatory authority if it were financed by the state. We want and need that co-operation if marginal schemes are to be brought up to best practice. We do not wish to repeat the experience of the PIA, where some companies are apparently refusing to co-operate. We want full partnership with industry in ensuring the security and solvency of pension schemes.

Thirdly, it is also desirable that the regulator should be independently funded from the point of view of scheme members and pensioners. It is important not only that the regulator be' independent—and we have heard nothing today to suggest that it will not be—but also that it is seen to be independent. That cannot be possible if it is funded by the industry itself, with the smack of self-regulation that that seems to imply.

To take a totally unrelated sphere, I was a member of the former Press Council, chaired at that time by Sir Louis Blom-Cooper, which was funded by the industry. If we as a press council were energetic, the industry complained. If we were not energetic, the public distrusted us. Because we were funded by the industry, we were never seen as truly independent, So we believe it is reasonable that the state should fund the regulator. We think it is desirable in order 1:0 ensure full co-operation with the industry. That will ensure that the regulator is perceived to be independent.

Fourthly and finally, there is a point about rights. We believe that the protection of individual rights—including pension rights, which will for many people in the end be more valuable than the rights in their property and home—is a proper function of government. The fact that the rights may be enjoyed by only a proportion of the population—the 11 million to 15 million holding occupational pensions, according to how it is assessed—is neither here nor there. Most of our country's regulatory and policing apparatus, funded by the state or the local authority, is sectional in that sense.

It is not very different from the Health and Safety Executive at work, which benefits only employees at work, but we expect it to be funded by the state. It is not very different from environmental health officers inspecting houses in multiple occupation. However, we do not expect to levy the landlord or the tenant. We have fire officers inspecting theatres and cinemas, but we do not expect to recharge the theatre or the cinema. In other words, we accept that regulation or policing is paid for by the public where there is a public policy interest in such policing. The state wants to regulate occupational pensions. The state, the Government, we, want to protect our own investment in them, reflected by rebates and, above all, by the special privileges that pensions attract from the Inland Revenue. It is nonsense, therefore, to say that it is merely a private matter and. something for the industry to finance.

The amendment is, therefore, drawn from Goode. It has the support of the House of Commons Select Committee on Social Security; it has the full support of the CBI, as well as the TUC. It has the full support of the National Association of Pension Funds and of Age Concern, consumer associations and every pensions body that I am aware of. I cannot find a single organisation that disagrees. Virtually every organisation has lobbied us actively to support this. It is not because of the cost but for the reasons that I have tried to suggest. It is right and proper in order to protect the perceived independence of the regulator that the state should fund it. If the Government were today to undertake to come forward at Report stage with an amendment to that effect, it would be welcomed across the whole swathe of the industry. But if they do not, they are making a serious statement today about their lack of commitment to the principles that informed Goode. I beg to move.

5.15 p.m.

Lord Ezra

I support what the noble Baroness has said on the amendment. It was a great surprise to me that the Government did not accept the firm recommendation of the Goode Report. If the regulatory authority is to be a statutory, independent body, the Bill only goes half-way to establishing it in that respect. It makes it a statutory body, but for some unknown reason which did not come out in the Second Reading debate, the Government decided not to accept the financial consequence and have the scheme funded out of public funds.

I find that difficult to understand, unless the Treasury got at it and decided: "Here is a way of saving £10 million. These people can easily afford it. Why should the state cough up?" However, as the noble Baroness pointed out, that is not the issue at all. We want it to be a statutory body which is absolutely independent in every respect. The noble Baroness pointed out the anomaly of the situation in which the appointment is made by the state, the budget is fixed by the state but the industry is saddled with the cost. I know of no organisation in business where that could conceivably happen and I cannot see why it should be allowed to happen in government.

We have had much difficulty with self-regulation in this country. It has now been decided, rightly, in connection with the Bill that there should not be self-regulation but statutory regulation. What the Government have now introduced, however, is some kind of half-way house; namely, that it is a statutory body but is paid for by the people who are to be regulated. I do not think that that is right. I very much support what the noble Baroness said in asking the Minister to think about this matter again, bearing in mind the long list which she read out—which I had intended to read out but will not repeat—of all those who have written in from all sides of the spectrum criticising this decision of government.

Lord Marsh

When the Minister replies to this debate, he may want to answer the noble Lord, Lord Ezra, in full. The noble Lord said that he cannot think of any reason other than the fact that the Treasury wants to save £10 million, and surely all that the Minister need do is to say yes. This is not a large amount of money. The matter cannot be argued on that basis. All clichés are absolute truths which are too frequently repeated. "He who pays the piper" is a very powerful fact.

The noble Baroness referred to the Press Council. I was chairman of the Newspaper Publishers Association for 13 years. Throughout that period the threat of non-payment to the Press Council was made over and over again. Sometimes it was made overtly; sometimes it was just implicit. Whichever way it was made, it was a fact that officers of the Press Council had to bear in mind. The provision is unhealthy and unnecessary. Even if, as is argued, it is a question of cost—and the Treasury can be quite silly about these matters from time to time—very real benefits accrue to the Government as a result of the whole of this Bill from private pension provision of this type, the cost of which is borne to a large extent by the employers. I ask the Minister to look carefully at this matter. What he is perpetrating is totally unnecessary. It is almost unique in my experience. On the occasions where the bodies being governed by authorities are financed by those authorities, it matters not how the rules are written: the pressures will be there.

Lord Mackay of Ardbrecknish

I am sorry that, having come to this amendment, we cannot give the knock for knock that the noble Baroness, Lady Hollis, requested on the last one. This is a serious matter of principle. I listened to the points that were made by the three noble Lords who have spoken, and I think there will be quite a gulf between us on this issue.

The effect of Amendments Nos. 194 and 17 would be to prevent the costs of the new regulatory authority being met by the levy on pension schemes and instead require the Secretary of State to make appropriate funds available from taxation. That is usually expressed as being from the Treasury. But of course it is not actually from the Treasury; it is from taxpayers. We do not accept that it is right to burden all taxpayers, many of whom are not members of occupational pension schemes, with the cost of regulating such schemes.

We consider that it is right that the cost of the authority should fall to those who establish and run pension schemes, because they are responsible for ensuring that their schemes are properly run and it is in their interests to promote members' confidence in schemes. We have therefore decided that the authority will be funded by a levy on occupational pension schemes.

Reference was made to the Occupational Pensions Board and the money that currently goes to fund it. The bulk of its work is involved with granting and withdrawing contracted-out status. That work will go to the contributions agency of the DSS, which will continue to pay the costs of administering the contracted-out arrangements. The registry, which is funded by the existing levy, will pass to OPRA and will continue to be funded by levy. A small number of residual OPB functions, mostly concerned with very limited powers to modify schemes, will also pass to OPRA. Therefore I do not think that there is a proper comparison to be made between the Occupational Pensions Board and OPRA.

We are committed to ensuring that the costs of the authority are kept to the minimum that is compatible with effective regulation. It is important that we should be able to apply checks and balances on the authority's expenditure. We therefore cannot accept Amendment No. 14. I also have to resist Amendment No. 13, which would remove the power from my right honourable friend to approve the number of staff which the authority employs.

As to the reference to the Treasury, I am sure that the Committee will be aware of the recent fundamental review which resulted in much greater delegation of authority to other departments of state in matters such as pay and conditions of service. In the light of that review, we shall consider whether references to Treasury approval are appropriate and bring forward any necessary amendments during the Bill's passage. That is the first small concession that I have made, and I appreciate that against the background of the main issue in this group of amendments it is a minor point. But we do not believe that it is right to impose additional costs on taxpayers or employers.

The argument which has been pressed on us, and which is understandable, is the one that was put by the noble Lord, Lord Marsh; namely, that he who pays the piper calls the tune. Both the noble Lord, Lord Marsh, and the noble Baroness, Lady Hollis, looked to their experience with the press for examples in which the Press Council, in the case of the noble Baroness, found itself dictated to by the press itself threatening to refuse to pay up if it did not like the way in which the council behaved.

There is a major difference here. For a start, the OPRA board, with its full-time chairman and six part-time members, wholly independent and appointed by and accountable to the Secretary of State, will ensure that the authority itself cannot be dominated by one interest group. Fears about its independence in that regard are unjustified.

But, equally, this is not self-regulation; it is statutory regulation, and the levy is a statutory levy, paid not to the body itself but imposed and payable to the Secretary of State. It is to the Secretary of State that the money would be owed. He, in his turn, passes the money over to the authority to run its budget and fulfil its obligations. We believe that these two parts—the composition of the board and the way in which the levy will be imposed via the statutes which one hopes we shall pass in the next few months—will prevent the "He who pays the piper calls the tune" syndrome applying in this respect. We believe that it is fundamentally correct that the cost of regulating occupational pensions should fall on those who set them up and who run them. We do not believe that it is right that the generality of taxpayers—many of whom will not be fortunate enough to benefit from an occupational pension scheme—should be asked to pay a share of the cost of the regulatory authority. We do not believe that in any way—either the way in which it is funded or the way in which we propose that it is funded—will detract from its efficiency and effectiveness.

Lord Monkswell

We need to be a little more concerned about this issue than the Minister seems to indicate. Effectively the Minister suggests that we have a predicated tax; that we are to pay for something out of the public purse but we are to levy a special tax on a special group of people to pay for that disbursement. If one thinks of just about every other sphere of activity in our lives, that principle can be taken right across the board. That is not done, and for very good historical reasons. The Committee needs to be very, very concerned about what I would describe as the thin end of the very dangerous fiscal wedge that the Government effectively describe. Can the Minister advise the Committee as to whether there is any precedent for the sort of action with which we are faced?

Lord Tugendhat

Perhaps I may intervene briefly to take up the point that was made by the noble Lord, Lord Marsh, and also perhaps the point that was made by the noble Lord, Lord Monkswell. I should say, as we have to be so careful about these matters now, that I am chairman of Abbey National but I am speaking in an entirely personal capacity.

In a previous incarnation I was chairman of the Civil Aviation Authority. That body has been in existence for a very long time. I believe that it was set up by the Heath government. Certainly, the noble Lord, Lord Boyd-Carpenter, was the first chairman. It operated throughout the period of Labour government, as well as more recently under Conservative government. Although the Civil Aviation Authority's capital expenditure is derived from public funds and it has all the difficulties of dealing with the Treasury that that causes, its regulatory function was financed by those whom it was or is—I should use the present tense—regulating. The Civil Aviation Authority is a statutory regulator; but at the same time it levies charges on those whom it regulates.

I listened with great interest to the point made by the noble Lord, Lord Marsh, about the Newspaper Publishers Association and the Press Council, but I must say that I did not have a similar experience at the Civil Aviation Authority. I do not remember any airlines threatening not to pay. It would have been very ill advised of them to do so. No doubt the noble Lord, Lord Boyd-Carpenter, will bear me out on that point.

I make that point because I feel that the presumption that he who pays the piper is a major influence on the regulator need not be the case. No doubt it was the case in some areas of national life. It was not the case in the one of which I speak with personal experience. I agree that that is a very different field from pensions; but the point made by the Minister about personal pension schemes being for their members rather than for the generality of taxpayers should be borne in mind.

I have no idea how the industry or the company with which I am connected will view this matter when it comes up for discussion. But the point about statutory regulation and charging those who are regulated is one that is more complicated than the earlier intervention suggested. There is a successful precedent for it in a quite different field.

5.30 p.m.

Lord Marsh

I do not want to press this point. The argument is not based wholly on "He who pays the piper". This is a very different situation from that which exists with the airlines industry.

First of all, employers do not have to provide occupational pension schemes at all. They do so voluntarily and on a non-profit basis. They are expensive to administer. The Government are increasingly aware that occupational pension schemes will have to be supplemented. Roughly 50 per cent. of the population are covered by occupational pension schemes and therefore the Government are interested not only in maintaining them but also in encouraging them to expand further.

In addition, with regard to solvency and solvency margins, the Bill can impose considerably increased burdens on the providers of pensions. That is against a background in which those providing the pensions administer them voluntarily. They make no profit out of them but find a continuing cost. The Government find reasons more and more sensibly to encourage the provision of pensions outside the state system.

It seems to me that from every point of view this amendment is pushing what the Minister declares to be a principle—I understand that—to a ludicrous point, where it can cause harm to the policies which lie behind the Bill; namely, to make the pension schemes outside the government area wider and more acceptable. It might be understandable if there were a vast amount of money involved, but in this kind of situation it does not begin to make any kind of logic.

Baroness Seear

As we have heard this evening, many organisations from both sides of the political scene are in favour of the regulator being state financed. The noble Lord said that only a proportion of people would benefit. The idea is that more and more people shall do so. If families are taken into account, a very high and increasing proportion of the population will benefit. As the noble Baroness, Lady Hollis, said, we pay out of public funds for health and safety and a variety of things which protect only a relatively small proportion of the population—in fact, a smaller proportion than will increasingly benefit from pensions.

I thought that the Government wanted to take burdens off business. We have heard that phrase often enough. Yet here they are putting on burdens. They are not consistent in their line of argument. Surely the Government should think again.

The example mentioned by the noble Lord, Lord Tugendhat, is exceptional and quite different from the pension scheme. One can see reasons why the airlines should contribute. They are not like other employers.

Finally, we want the employers to provide these schemes. We do not want to discourage employers from providing them. The Government also want that. Why can they not use the logic of their own arguments and take this burden from them?

Lord Boyd-Carpenter

I am quite sure that the Government are right in the decision that they made in respect of the financing of this regulator. It would be quite wrong to put on the ordinary taxpayer the costs of regulating a very important economic activity which is of direct benefit to those taking part in it and not necessarily of direct benefit to the rest of the community. I hope that my noble friend the Minister will stand quite firm on this issue.

Baroness Hollis of Heigham

I should like to thank all those who took part in this brief debate. Before responding to some of the points raised by the Minister, I should like just to reply to the point made by the noble Lord, Lord Tugendhat, who mentioned the airline regulatory body. Would I be right to believe that airlines which refused to pay would lose their licence? Therefore, there is no comparison between the Bill that we have today and the regulatory authority funded by airlines, because they have to do so in order to continue to operate.

Lord Tugendhat

Perhaps I may reply to the noble Baroness and say that, first of all, the situation did not arise. I was addressing in part the point made by the noble Lord, Lord Marsh.

Secondly, the Civil Aviation Authority's regulatory activities cover a very wide area. They do not simply give airlines a licence to operate. They do that but they also give pilots licences to operate and regulate the safety of aeroplanes on a continuing basis. They regulate the air traffic control. It is a form of regulation at a grand level but also entering into the interstices of aviation.

I do not want to carry the comparison too far. I wanted to draw attention to the fact that it is possible to have statutory regulation funded by the people who are regulated without the baleful effects to which the noble Baroness and the noble Lord drew attention earlier.

Baroness Hollis of Heigham

I thank the noble Lord for that intervention. However, it remains the case that if airlines fail to do that, they will go out of business. There is a strong commercial incentive for them to do it. That is not the case with the measure that we are discussing today.

The Minister's reply basically made the point that, because funding of the regulator by public funds would not benefit the generality of taxpayers, it was appropriate that funding should be carried out by the industry itself. That was the core of the argument.

Following up the point made by the noble Lord, Lord Marsh, I do not believe that any of us disagree that in relation to a £500 billion industry, the sum of £10 million is a particularly large sum to ensure proper regulation and delivery of the pension promise. The question is whether something which benefits not all taxpayers but a substantial proportion of them—about half—should be properly funded out of public funds.

There are two answers. First, in all walks of life where we deem it appropriate, we already fund, through general taxation, the regulation of the behaviour of a minority—often a smaller minority than half the population—whether we are talking about car drivers, restaurant users, noise pollution or even lost dogs. All those activities associated with regulation and policing are funded by all of us, even though the benefit of that activity is only privately enjoyed by a minority. That is the basis of policing. All policing is made up of a bundle of sectional minority interests. However, as a community we decided that it is in the public interest that that activity be regulated. That is the basis of our law and order contract.

Secondly, the Minister seemed to assume that the rest of us who were not members of occupational pension schemes had no interest in the well-being of occupational pensions and therefore should not contribute through our taxes to its regulation. That is also not true. The point about occupational pensions is that, according to their security, so people opt out of SERPS, which is a direct financial benefit to all of us as taxpayers. Above all, the status of occupational pensions is made attractive by Inland Revenue tax privileges and the forgoing of that income is made up by increased taxes from the rest of us. Not only is it the case therefore that all of us contribute to the financing of the policing and regulation of minority groups because it is in public policy interests to do so, but here, more than in many areas of policing, the rest of us who are not members of occupational pension schemes continue to have a direct financial interest in the taxes we pay to ensure the security of those schemes. That is a fact.

Does the Minister want the scheme to work? Does he want to protect the Inland Revenue's investment in occupational pensions? Does he want the co-operation of the industry? Does he want the public to have confidence in the independence of the regulator? Does the Minister seriously wish to encourage employers to remain committed to the occupational pensions industry? Or is he seeking to tip everybody over into personal pension schemes because the employers have withdrawn, faced with the threat of another burden on them? Is £10 million too much to pay for those advantages? I hope that I can invite the Minister to reconsider his position.

5.45 p.m.

Lord Mackay of Ardbrecknish

We have had an interesting debate on this issue. As usual some Members think that the state—that is, the taxpayer; it is nice to call it "the state" or "the Treasury"—should fund it. Quite rightly there are things that the generality of taxpayers are happy to fund. But there are other instances—and my noble friend Lord Tugendhat made a point about the Civil Aviation Authority, which is a major and important regulator—which are extremely valid.

Coming closer to the occupational pensions industry, the costs of looking after the insurance companies by the DTI are paid for by the insurance companies themselves. The regulatory authority of the DTI and any compensation is paid for by a levy on the insurance companies. There is therefore that precedent, as there is the precedent of the Civil Aviation Authority. There are other precedents, perhaps not exactly the same. In answering the noble Lord, Lord Monkswell, if the noble Lord applies for planning permission, he will be expected to pay for it in order to cover some of the costs of the planning authority in coming to conclusions and running its planning system. There is plenty of evidence and there are plenty of situations in which people are asked to pay for what are more general services of a public nature but which are specifically to their benefit, and this is one of them.

Lord Monkswell

I thank the Minister for giving way. In the case of an application for planning approval, there is a direct benefit to me—if I am the applicant—as an individual. Therefore it may be perfectly right that I should pay a fee. But in this situation we are asking individual pension funds to pay a levy from which they may not receive any direct benefit whatever. I just throw into the pot yet another argument for not employing this mechanism for funding the new regulatory body.

Lord Mackay of Ardbrecknish

There is of course a direct benefit for everybody involved in a pension scheme in the introduction of this regulatory authority.

If there were no direct benefit and no protection given by it, it would not be worth our while spending this afternoon and a few more afternoons discussing it.

It is a direct benefit, every bit as much as, if not more than, a simple planning permission. It involves the security of people's pensions, which we are all agreed are in many cases of even greater value than planning permissions for extensions to people's homes or whatever else it may be. If we are discussing the benefit the regulatory authority may bring and who should pay for it, the case is firmly with me that the costs of the authority should be borne by the people who will ultimately be the beneficiaries of good regulation ensuring that pension schemes are all kept up to the mark.

We have been round this point. We are committed to keeping down the cost of the authority to the minimum compatible with effective regulation. That must be in the interests of the schemes themselves. The schemes know that if they all run their schemes well and the regulator does not need to spend much money doing his work, then the levy will not be as high as it would otherwise be. All the schemes have a direct incentive not only to look after their own scheme well, but also to apply peer pressure to other schemes to ensure that they do likewise.

I believe that if we are setting up this regulatory body, which is statutory, the people who are most directly involved and most likely to benefit should be asked to pay a modest amount—it is a modest amount against the background of the amount of money the pension schemes have. It is right that they should do that. Members of the Committee may ask why, if it is a modest amount, cannot the taxpayer pay it? The trouble is that every day, day after day, pleas are made that the taxpayers' money should be spent in modest sums. The problem for the Government and the taxpayer is that the modest sums quickly accumulate to become large sums. In this case we should relieve the tax payer of that burden and ask the occupational pension schemes, the employers who benefit from having well regulated schemes, to shoulder this small burden.

Baroness Hollis of Heigham

Obviously we shall come back to this matter. But on the point of planning consents, I was delighted that the Minister went into that example; it makes our point beautifully. In that situation people who stand to gain by enlarging their homes pay for the planning permission. They pay the fees that would lead to that planning permission being granted, in exactly the same way as we pay into our pension funds. But when it comes—as I am sure the Minister knows, which is why I am surprised he mentioned it —to the enforcement of planning controls, that is the policing and regulating activity, that is precisely what is paid for by all the taxpayers of a local authority. It makes our point precisely. Where it is a matter of private enrichment, the individual pays; where it is a matter of public policy interest that planning controls be observed, all of us pay. That is precisely what happens in local government and precisely what we should like to see happen here.

On the Minister's substantive point, that those who benefit should pay, our argument is simple. All of us benefit—directly as members of schemes or indirectly to ensure that the tax privileged status of occupational pension schemes and the confidence that they enjoy is protected. We all benefit either directly or indirectly and therefore, on the Minister's own argument, we should all pay.

We shall return to this amendment. At this time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 14 not moved.]

Lord Lucas moved Amendment No. 15:

Page 97, line 10, leave out ("or a personal pension scheme").

The noble Lord said: I beg to move Amendment No. 15 and to speak at the same time to Amendment No. 16. These are technical amendments. As we are proposing to repeal Section 136 of the Pension Schemes Act 1993 by means of Amendment No. 193 to this Bill and Clause 62 of the Bill relates only to occupational pension schemes, these amendments remove an unnecessary reference to personal pension schemes in paragraph 17 of the schedule. I commend the amendment to the House.

On Question, amendment agreed to.

Lord Lucas moved Amendment No. 16:

Page 97, line 11, leave out ("under section 136 of the Pension Schemes Act 1993").

On Question, amendment agreed to.

Schedule 1, as amended, agreed to.

Clause 2 agreed to.

[Amendment No. 17 not moved.]

Baroness Hollis of Heighammoved Amendment No. 18: After Clause 2, insert the following new clause:

Assistance for research and education

(".—(1) The Authority may undertake or assist (financially or otherwise) the undertaking by other persons of any research, and any educational activities, which appear to the Authority necessary or expedient for the purposes of this Part.

(2) The Authority may make charges for educational or other facilities made available by it.").

The noble Baroness said: These two amendments are grouped together and are designed to grant the regulatory authority powers additional to those which we believe are granted in the Bill, if only we could know what those powers are. The first amendment seeks to permit the authority to assist research and education. The second amendment is designed to permit the authority to support legal activity.

I deal with the first amendment. The powers and obligations of the authority in the Bill as drafted are supervisory only. This amendment, together with others, is intended to widen the functions of the authority to give it greater powers to -determine and enforce best practice. Clearly, the authority needs to know what that best practice should be, and to do so it will need these powers. The amendment has modest financial implications, but we believe that that can be covered by charging. A very similar power is possessed by the EOC under the Sex Discrimination Act 1975. Part of the job of any regulatory authority is to be able to pursue research and education in appropriate activities. Therefore, we should like to see that power in this Bill.

The second amendment is very similar. It is designed to permit assistance with legal proceedings. There are well-established precedents under the EOC. Without such a clause it could be financially prohibitive for members to seek redress in the courts. The reference to industrial tribunal proceedings relates to the enforcement provisions contained in the Bill so far as equal treatment is concerned: Clauses 55 to 59. The enforcement mechanism for an equal treatment rule is identical to that in the Equal Pay Act 1970. The wording comes from the Sex Discrimination Act 1975.

Both amendments seek to widen the powers of activity of the authority. Given the obscurity of those powers, the position needs to be clarified. There are well-established precedents to which the Government have already acceded. We hope that they will be able to support these amendments.

Baroness Seear

I rise briefly to support the amendment which the noble Baroness has just explained. The one thing on which we can all be completely agreed is that the issue of pensions is complex. Nobody knows quite how they will work out in future. Therefore, it is highly desirable that research and investigation should be undertaken to clarify issues as they arise and to enable the information obtained to be widely spread. That is the purpose of this amendment. It is also quite plain that legal issues will arise. As we know, legal costs can be prohibitive for many people in modest circumstances. It is a cliché to say that nowadays you have to be either very rich or very poor in order to get legal assistance.

The second amendment is to enable people to take cases which will undoubtedly arise, and which ought to arise, and clarify points of law. This has been extremely useful in connection with the Sex Discrimination Act. The Equal Opportunities Commission has been able to back cases where an issue of principle has required clarification. This has been very useful in advancing the purposes of that legislation and it can be equally useful in advancing the purposes of this legislation.

Lord Mackay of Ardbrecknish

This amendment, coming so soon after our discussion on whether or not pension funds themselves or the taxpayer should pay, perhaps provides an interesting message to us. If it was the taxpayer who was paying, within five minutes of making that decision, had the noble Baroness won the Division, the price would now he slightly higher. I have no doubt that that would continue. We have to examine rigorously any amendment that will create any unnecessary additional cost to be met from the levy. Amendments Nos. 18 and 19 both create additional functions for the authority and will impose new costs. All affect the financial arrangements for the Occupational Pensions Regulatory Authority.

Lord McIntosh of Haringey

I am grateful to the Minister for giving way. Only a short time ago I heard the Minister say to the Committee with great pleasure that the authority had powers to do anything it liked except borrow money. Is there not rather a contrast between that and what he is now saying?

Lord Mackay of Ardbrecknish

I am not sure that I understand the noble Lord's intervention. I should point out that during the course of the past two hours I have said that the authority's budget and its staffing will be a matter for discussion and agreement with my right honourable friend the Secretary of State. Therefore, it does not have absolutely unlimited powers to spend money. It has to agree the expenditure. That has to be recouped in the levy by my right honourable friend the Secretary of State. I believe that I was referring to something quite different when I spoke about the powers of the authority.

The purpose of Amendment No. 18 is to create a new educational research role for the authority. I believe that such a role would not sit well with the authority's primary function as an enforcement agency and would create unnecessary additional costs. It would be wasteful to duplicate the already excellent advice and information service provided by the Occupational Pensions Advisory Service. Although the amendment allows the authority to charge for the facilities that it makes available, such charges will not cover the full costs incurred in granting Financial assistance to others. Therefore, I cannot advise your Lordships to accept the amendment.

Amendment No. 19 would create a subsidised legal service for scheme members to bring matters before the courts. The main function of the authority is to enforce compliance with statutory obligations placed on those who run pension schemes. It will have power to take necessary court action.

I believe that the powers and responsibilities of the authority are perfectly clear and well laid out in the Bill, but I repeat them in order to deal with some suggestions that they are not clear. I believe that it is not appropriate for the authority to become involved in providing legal assistance to individual scheme members whose complaints may go beyond the specific statutory provisions within the authority's remit under this and previous pensions legislation. The pensions ombudsman already provides an effective avenue of redress for many individual members' pension complaints.

The costs created by this amendment are not laid out either in the amendment or in the speech by the noble Baroness, but I believe that they could be unacceptably high. For those reasons, I urge the Committee not to accept the amendment. I do not believe that we can accept amendments which are peripheral to the main purpose of this regulatory authority and which will impose additional costs on employers or even, if noble Lords opposite have their way, the taxpayer. It is fundamentally correct that the cost of regulation should fall on those who set up and run pension schemes. Equally, we must ensure that the Costs which fall upon them are those specifically designed to carry out the regulation which we all believe to he so important. We cannot accept amendments which will give the authority new responsibilities that we do not believe are in keeping with its regulatory role. I believe that they can only detract from its effectiveness and create unnecessary costs.

Baroness Hollis of Heigham

I was slightly taken aback by the Minister's reply. I deal with the first amendment. I hoped I had made it clear that there was no reason why most, if not all, of the costs of that activity could not be recovered by charging for educational facilities. That is part of the wording of the proposed amendment. I am sorry that the noble Lord overlooked that in his wish to denounce the new clause. In other words, there need be no additional cost whatever. Therefore, if this should prove to be self-financing, will he withdraw his objection? Or is his objection wider than that merely of cost? Is it the extension of the activity of the authority itself?

6 p.m.

Lord Mackay of Ardbrecknish

The first part of the amendment states: The Authority may undertake or assist (financially or otherwise) the undertaking by other persons of any research, and any educational activities". That suggests to me that it will pay out some money. Admittedly, subsection (2) says that the authority may make charges. I am not sure whether it would charge the same person it had previously assisted. It would be a little cyclical if that is what it was going to do.

Baroness Hollis of Heigham

That is sophistry. The Minister says that we on this side should be aware of how the burdens on the taxpayer will be mounting, as the clock ticks away like a parking meter, if we add this extra function. I then said to the Minister that the requirement could be self-financing and asked whether he would therefore withdraw his objections. He then said that he did not know whether the charges would meet the cost. Oh, really, that is a pretty sorry reply! That is one issue. We could cover and address the financial point if the Minister were minded to take that on board. He is not. He is scratching around for any points he can make.

The second issue is much more worrying. I think I heard the noble Lord's words correctly. He said that he regards education and research as peripheral. In other words, he wants the regulatory authority to act without the benefit of that education and research. He wants it to act without the knowledge that could be gained by research rather than with it. No one is suggesting that the experienced body which the Minister is setting up under the Bill will be spendthrift or unwise in the activities it finances. Presumably, if it chooses or seeks to finance education and research it will be because to do so will allow the regulatory authority to perform its duties more effectively. What are the Government doing? They are denying the regulatory authority the power to make itself more effective by being better informed.

That is a disgraceful attitude. Every piece of legislation is meant to be informed by research. One thinks of the cost of the Goode Report. One thinks of the cost of the education and research behind the Government's own papers. One thinks of the cost of the very valuable research document put out by the Government Actuary a month or so ago which the Minister was kind enough to recommend to me. I refer to the document on the occupational pension schemes. I doubt whether that research was done without the expenditure of several thousands of pounds. In other words, the Government recognised the need to have their judgments based as far as possible on education and research. However, when it comes to the regulatory authority, we are told that we should not have such a benefit. Instead, presumably, decisions should be based either on the experience of the members or on hunch and instinct. If the Minister wants to ensure that the regulatory authority gets the backs up of the members of the industry which is funding it by appearing to be ill informed, the Government's rejection of the amendment is a sure way to do so.

Baroness Seear

I find it odd that the Minister did not in any way answer the point about the backing of cases where an issue of principle is involved. The Minister surely knows that with the Equal Opportunities Commission—it may not be his favourite organisation—and the developments that have spread as a result of the Sex Discrimination Act, the taking to the courts of cases which are complex and difficult and to which the answer is not apparent to get the issues clarified has been of the greatest assistance. The Minister must at least agree that this is not the most straightforward and simple Bill that has ever come before your Lordships' House and that not everyone will realise at once what this subject means. The authority may well need to take cases in order to have the position clarified. That is all we are asking for in the amendment. Surely the Minister can concede that.

Baroness Hollis of Heigham

I support the noble Baroness, Lady Seear, on the second of the amendments. That is precisely the point. Because the Minister refuses, by rejecting the first amendment to clarify on the face of the Bill what the duties, functions, purposes and powers of the regulator are, individuals may seek or need to have that clarification through the courts. But the regulator cannot help finance what may need to be tested in the courts—the very definition and function of its powers. That is an absurd and perverse position for the Minister to be in: to deny the right of the authority to be conjoined in legal action where the authority judges that it is in its own interests to be so conjoined. It is not a duty on the authority; it is a permission, where it thinks it appropriate and in the public interest, that that point of law should be tested. We know that the private individual cannot afford to do it.

Why is the Minister failing to specify what the regulatory authority may do and then failing to allow us some very specific powers—education and research on the one hand and the power to clarify its functions, duties and responsibilities 1n court on the other? Why are the Government seeking to tie the hands of the regulatory authority, which the Government are resting on to deliver the pension promise? We are trying not to be suspicious of some deep laid plot. However, every amendment for clarity, strengthening or for independence of the regulator, even when it has virtually nil cost, the Government are resisting. The only message that emerges is that the Government are not seeking to strengthen the regulator. On the contrary, the Government would not be unhappy if many of its powers and functions in practice were subverted. We shall come back to this matter. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 19 not moved.]

Clause 3 [Removal or suspension of trustees]

[Amendment No. 20 not moved.]

Lord Lucas moved Amendment No. 21:

Page 2, line 20, leave out ("this Part or") and insert: ("(a) this Part, other than the following provisions: sections 44 to 47, 55 to 58 and 100 to 102, or (b)") .

The noble Lord said: This amendment excludes from OPRA' s jurisdiction obligations introduced under Clauses 44 to 48, 55 to 59 and 100 to 102 covering, respectively, indexation, equal treatment and the provision of information to the Pensions Compensation Board. As currently drafted, Clause 3 brings them within the authority's jurisdiction. That was never the intention. Problems over indexation and equal treatment are best left to the ombudsman, industrial tribunals and the courts. The compensation board will he best placed to enforce the requirements to provide it with information. I beg to move.

Lord McIntosh of Haringey

I listened with care to what the noble Lord said in support of the amendment but I remain very puzzled by it. If it had been argued that the powers which would exist to control pensions by the removal of trustees of pension schemes existed somewhere else, then one would be more sympathetic to it. But these are very wide areas of possible infringement of the pension provisions. They cover price indexation, which many people in pension schemes agree with. I, as the beneficiary of a price indexed pension scheme, believe it is enormously important. They cover the rules about equal treatment, which are widely believed to be of great importance. They also cover the issue of the supply of information to the PCB.

All of these matters are central to the effective supervision by the authority of individual pension schemes. Yet the noble Lord says that they should be taken out of the powers of supervision and dealt with by the ombudsman or by industrial tribunals. Surely that is a misuse of the ombudsman and industrial tribunals. The ombudsman is the person to go to as a matter of last resort. The ombudsman should not be deluged by day-to-day matters of the supervision of individual pensions schemes. We welcome the earlier amendment which brought the ombudsman into it, but if there are 150,000 schemes there could be thousands of references to the ombudsman; in other words, the whole of the duties of the parliamentary commissioners could he subverted by this new responsibility.

Is it really the most efficient way of dealing with a regulation of this kind for it to be dealt with within an industrial tribunal? We all know what the delays are in those bodies and what the costs are to the public purse. I suggest that the Government consider that an ombudsman or industrial tribunal is not the right locus for the day-to-day supervision of individual pensions schemes. The authority is the right place for supervision because it is more direct and immediate. It is also a good deal cheaper than the alternative which the noble Lord has suggested. The Bill as it stands is better without this amendment.

Lord Lucas

Perhaps I may clarify a little the intention behind this amendment and, I hope, lay to rest some of the fears of the noble Lord, Lord McIntosh. As regards indexation of pensions, that concerns their indexation in payment. Scheme members are only likely to be aware that there is a problem in relation to the indexation of their pensions once it is in payment. The pensions ombudsman and not the parliamentary ombudsman, has all the necessary power to deal with complaints from scheme members that their pension has not been indexed in accordance with the requirements under this Bill. So it is unnecessary to involve OPRA in this matter.

This sort of minor problem—because those running the schemes will be perfectly well aware what their obligations are under this Bill—is just the kind of individual matter which is best dealt with by the ombudsman. If widespread misbehaviour by one particular scheme occurs, undoubtedly there will be maladministration of that fund which might come to OPRA's attention in other spheres. As regards the non-observance of a technical regulation like this, surely the ombudsman is the usual and best way for dealing with these kinds of complaints. It is also a well established one.

As regards equal treatment, this Bill will make clear that occupational pensions schemes should provide equal benefits to men and women, but it does not specify how the schemes should achieve that. There is therefore no specific obligation which the authority can enforce. Equal treatment currently falls within the remit of the pensions ombudsman. Again, if there is an Individual problem surely he is the best person to deal with it. It can also be dealt with by industrial tribunals.

As regards the compensation board, this Bill provides powers for it to require information from those involved with running schemes. The enforcement of these requirements is surely best left to the board itself. It is directly involved with the problems and is surely in the best position to look after matters which fall within its own competence. From what I have said, I hope that the noble Lord, Lord McIntosh, realises that to involve OPRA in these areas would be to duplicate functions which are already well carried out by other organisations.

6.15 p.m.

Lord McIntosh of Haringey

On the contrary, it seems to me that the Minister has made no case whatsoever for this amendment. It is true that in the last resort cases will have to go to the pensions ombudsman and then to industrial tribunals. That must be the case. The point about this amendment is that it is taking away the power of the authority to remove trustees if they are in breach of these provisions. Whatever the noble Lord may say they are not minor provisions, but ones which are critical to the just administration of pensions schemes. Price indexation, equal treatment and the supply of information to the Pensions Compensation Board are not minor matters but are inherent in the adequacy of an individual pension scheme.

The point I ask the Government to answer is this: if these derelictions are "serious or persistent", as called for in Clause 3(1), does the ombudsman or the industrial tribunal have the power to remove those trustees who are in "serious or persistent breach" of those duties? If not, I insist that the amendment is damaging.

Lord Lucas

I listened to what the noble Lord said, but we still believe that the pension ombudsman has all the powers necessary to deal with these problems.

Lord McIntosh of Haringey

Does he have the power to remove trustees who are An "serious or persistent breach" of their duties?

Lord Lucas

No, but we believe that he has the powers necessary to deal with the kinds of problems which are dealt with in the sections of the Bill which are excluded by this amendment.

Lord Monkswell

I find this debate absolutely amazing. What are we talking about? The paying of people's pensions correctly and preventing discrimination are not minor technical matters, but run to the heart of what we are talking about. Are we in the business of setting up an Occupational Pensions Regulatory Authority to ensure that people who are members of occupational pensions schemes get them paid fully when they are supposed to be paid? If the Government believe that infringement of those responsibilities by the trustees are minor technical matters, I wonder what this business is about.

It is not a minor technical matter if a member of an occupational pensions scheme is not paid the pension he is entitled to. It is the responsibility of the trustees to ensure that that is done. If they do not do that, then we all thought that it was the duty of the Occupational Pensions Regulatory Authority to do something about the trustees. Are we seriously to accept the Government's view, or not?

Lord Lucas

On this side of the Committee we are clearly of the opinion that any widespread breach of indexation or misadministration as regards equal treatment would involve a scheme being in breach of obligations which would bring OPRA into play. This is a somewhat complicated area and I understand the principles which the noble Lord, Lord McIntosh, has raised. I shall write to him and set out in detail why we believe that this amendment is right or whether, on further consideration, we believe that it needs improvement.

Lord McIntosh of Haringey

I cannot resist that offer. It is valuable to know that the second thoughts which the Government have had about this Bill are subject to the possibility of third thoughts. I welcome the offer which has been made. I shall withdraw any opposition to the amendment.

Baroness Hollis of Heigham

For the time being.

On Question, amendment agreed to.

Lord Haskel moved Amendment No. 22:

Page 2, line 22, at end insert ("or of trust law as it applies to occupational pension schemes, and, in particular, of the duty of trustees to exercise each and all of their powers in the sole long term interests of the beneficiaries to whom they owe a duty of care and prudence.").

The noble Lord said: In moving this amendment I shall speak to Amendments Nos. 52, 62, 69 and 103. The noble Viscount the Leader of the House said, when winding up the debate last Wednesday on the Civil Service, that we live, in an age which puts a premium on openness and accountability".—[Official Report, 1/2/95; cols. 1565–66.]

I agree with him entirely. This amendment will bring openness and accountability to the Pensions Bill. The noble Lord, Lord Marsh, spoke about the need for people to take more interest in their pension affairs. This clause will enable them to do that. There is a special need for openness and accountability in this Bill because not only are we dealing with the pensions of our citizens, but with the management of one-third of all the shares on the London Stock Exchange. That affects the well being of all of us and that is why it is doubly important that there should be openness and accountability. Not only has the regulator a responsibility to supervise occupational pension schemes and enforce the legal responsibility of governing them: surely, as my noble friend Lady Hollis has pointed out, he also has a fiduciary duty under trust law to promote proper management of pension funds. The Goode Committee clearly stated that such duties must be put on a statutory basis.

The Secretary of State for Social Security said that the regulator: will have all the powers in full which were in essence recommended by the Goode Committee."—[Official Report, Commons, 23/6/94; col. 365.]

The way the Bill is drafted at present has the hollow sound of stable doors being closed after horses have bolted. The Bill as drafted ignores one of the most important lessons we should have learned from the Maxwell experience. Those involved in the running of the pension management company knew what was going on but, because of our libel laws, they could not speak out and blow the whistle. A statutory right for beneficiaries to know would have overcome this. This amendment provides that statutory right.

However, yet more security is needed because the inventiveness of the criminal mind is limitless and we cannot legislate for everything. Information can protect against future negligence or criminality and will help to sound early warning bells. Most importantly, the regulator must have powers to enforce and encourage the openness about which the Leader of the House spoke.

The Goode Report spoke of such codes of practice and at paragraph 4.19.20 said that they should: have a useful role to play in encouraging good business practice in matters not conducive to legislation or as a voluntary improvement on legal requirements.

This is so that members can understand how their scheme works, how their benefits accrue, how their scheme performs relative to other schemes, and what their stake is in the pension scheme.

Mr. Jim Stratton, the deputy managing director of Standard Life, said last week: Regulation should be directed at creating a fair market in which the customers could protect themselves. This focuses on providing information to consumers, rather than keeping records for regulators".

With this greater understanding and openness, members have a statutory right to know and are in a much stronger position to take an active interest in their scheme, and thereby exercise the best kind of regulation—informed regulation. Nowadays we call this "empowering people", so that they can eliminate incompetence, negligence or criminality in the management of their own pension schemes. I beg to move.

Lord Mackay of Ardbrecknish

The Bill introduces a number of new obligations and schemes so as to clarify and underpin the most important duties placed on trustees. It would not make any sense to recreate in this Bill the whole vast and complex body of trust law. That would take a little more time than we hope to spend on this important Bill.

As to trust law, some matters are best left for the courts to decide. The new authority will be highly effective in enforcing the various powers given to it, and it will have expertise and clout, but it cannot replicate or replace the courts. Consequently, I cannot accept amendments which place a general duty on the authority to enforce trust law, and Amendments Nos. 22, 52 and 103 would require it to do just that. As I say, that is something best left to the courts.

Amendments Nos. 62 and 69 would inappropriately further widen the scope of the authority. For example, it would become responsible for procedural matters with regard to contracting out. That has no place in an enforcement agency, and will in future be dealt with by my department's Contributions Agency. I can assure the Committee that the security of rights in contracted-out schemes will be regulated by OPRA in the same way as schemes which have not been contracted out.

The amendments also encompass matters relating to the state pension scheme, which clearly do not fit with the authority's role as regulator of occupational pension schemes. They would give the authority jurisdiction over the requirements relating to equal treatment and indexation, which, by virtue of the previous amendments and the discussions we have had, we intend to leave to the ombudsman, tribunals and courts. As my noble friend indicated, we will certainly check that the provision does what we intend it to do. With the amendments that my noble friend moved, we think it will do so.

While I am open to considering refinements in relation to OPRA's regulatory powers where there is a good case for doing so, we should not widen its powers in such a way that it becomes involved in trust law and other matters which are best left to the courts, my department, the pensions ombudsman or other bodies.

I appreciate that the Opposition always want to widen the power, scope and responsibility of every body that is set up, but we ought to keep our eye on the ball—and our ball is to set up a very tight regulatory authority which will make sure that pension schemes are properly run and that incidents similar to the ones we have had will not occur—not just the Maxwell incident, although that was the most highly publicised—because there will be a body that can act on a blowing of the whistle. I imagine that even Robert Maxwell would not have been able to slap a writ on a whistle being blown.

Lord Haskel

Obviously I do not wish to open up all the complications of trust law, neither do I wish to widen the role of the regulator. What I wish to do is to bring into focus that we are dealing here with a new generation. This generation will regulate their pension schemes themselves far more effectively than by leaving it to a regulator. This clause sets out to make sure that people have the information so that they can be informed regulators of their own schemes.

I do not know if the Minister listened to Radio 4 on Sunday, when there was a long programme about pensions. The conclusion of the programme, in which many people involved in the pension business were interviewed, was that openness and more information would, in the end, be the most effective form of regulation.

We shall return to this matter because there has been a lot of support for this clause, but meanwhile I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Haskel moved Amendment No. 23:

Page 2, line 35, at end insert: ("( ) In satisfying itself of a serious or persistent breach of duties, the Authority is entitled to make use of information provided by the Securities and Investments Board and the regulatory bodies under the Financial Services Act, and by the Pensions Ombudsman under this Act, without a need to make further investigations of its own.").

The noble Lord said: I speak also to Amendments Nos. 85, 87 to 101 and 104. These amendments deal with the exchange of information between the pensions regulator and other regulators.

The Goode Report in paragraph 4.19.39 recommended this exchange: so far as such information is or appears to be relevant to the exercise of the recipient regulator's powers and functions.

The Government stated in the White Paper that they had accepted this recommendation. These amendments seek to put it into effect.

The amendment to Clause 95 is that information freely available in other countries should also be disclosed here. We live in a global economy and it seems incorrect that information available in other countries should not be made available here. These amendments allow one regulatory authority to tip off another. They should all he working in unison, The Department of Trade and Industry is included as the regulator of the insurance companies. Amendment No. 104 ensures that the Inland Revenue and VAT authorities can disclose information to OPRA.

The Goode Report spoke of a lack of regulator gateways as being a problem under the Financial Services Act. These amendments are designed to overcome this difficulty. I beg to move.

6.30 p.m.

Lord Ezra

I support this series of amendments, and I should have thought that they would be close to the Minister's heart because, particularly with Amendment No. 23, there would be a considerable cost saving. We are saying here that if the relevant information is available to other regulatory bodies, the regulator in this case should not need to conduct his own investigation. This is a straightforward proposition, recommended by Goode, and very much in the spirit of what I understood the Minister to be saying about minimising cost.

Lord Mackay of Ardbrecknish

We have a number of amendments to consider here and as some of them are in my name I shall need to be careful that I do not suggest that the Committee reject them all. I must be a little cautious when it comes to this group of amendments. I may even be a little more helpful than just suggesting that my amendments are excellent and should be accepted.

The amendments are all concerned with the authority's powers to exchange information. Clauses 94 to 98 place strict limits on the disclosure of information by the authority, and on any other person who may receive information from the authority, where the information is restricted information. Provisions elsewhere in the Bill provide for other bodies to provide information to the authority.

I am sure the Committee will agree that it is important that the authority and its staff observe the restrictions placed on information passed to it by other bodies. The provisions in Clauses 94 to 98 are similar to those found in other enactments that provide for the protection of information gathered by regulatory bodies; for example, the Financial Services Act and the Banking Act.

Most of the amendments add nothing to the provisions in the Bill, and I hope that the noble Lord will be persuaded and be prepared to withdraw them. However, Amendments Nos. 85, 87 and 104 raise issues which I am happy to consider further. It might be of benefit if I take each amendment in turn, even if that means that I shall talk for a few minutes.

The Bill, at paragraph 9 in Schedule 3, inserts a provision in the Financial Services Act so that the Securities and Investments Board and other bodies under the Financial Services Act can provide information to the authority. The Bill also makes similar provisions in respect of the pension ombudsman. The authority uses information provided by those bodies to enable it to carry out its functions. So I hope that the Committee will agree that the intentions of Amendment No. 23 are met.

Clause 93 provides the authority with the power to publish, in such form or manner as it thinks fit, a report of any investigation and of the results of such an investigation. We shall consider further the amendment which details that and whether a specific provision enabling the authority to make a simple statement to the effect that an investigation is being made is necessary.

We consider that the provisions in Clauses 94 and 95 provide sufficient flexibility for the authority to use the information supplied to it by corresponding overseas authorities. It is right that such information is afforded high protection, otherwise such sources of information could quickly dry up. Indeed, Amendment No. 88 seeks to make that clear. If an overseas regulator has information to pass on which is relevant to another UK regulator (other than OPRA) that information should be passed direct—not using the authority as post box. However, we shall consider Amendment No. 87 further to see whether it is necessary to impose the tight restrictions on disclosure of information where that information is not provided with such protection in its originating country.

The needs of Amendment No. 100 are met by the first entry in the table in Clause 97. That provides for the authority to provide my right honourable friend the Secretary of State for Trade and Industry with information that would enable or assist him to carry out his functions under the Insurance Companies Act 1982. The Bill provides, where necessary, for other relevant bodies to provide information to the authority. It achieves that by making appropriate amendments to other enactments. Examples are in Schedule 3, paragraphs 5, 6 and 7. This achieves what is intended by Amendment No. 101, making it unnecessary.

Amendment No. 104 seeks to extend the scope for the Inland Revenue and Customs and excise to provide information to the authority. We believe that Clause 99 already provides for an adequate flow of information to the authority from the Inland Revenue and Customs and Excise. It is unlikely that they will hold anything of relevance other than material gathered in the course of exercising their tax functions. That is because they only investigate direct and indirect tax matters. However, we shall take this amendment away and consider it further.

Amendments Nos. 89, 90, 92, 94, 95, 98 and 99 make minor technical amendments to the functions column of the table in Clause 97 so that powers of the authority are not inappropriately restricted and cover all the relevant functions of the persons listed in column one. Amendment No. 91 adds a new entry to the table so that the authority may provide information to the Treasury to enable or assist it to carry out its functions under the Financial Services Act 1986. That is necessary because not all the functions under the Financial Services Act are picked up by the other regulatory bodies already included in the table.

Amendments Nos. 93 and 96 add new entries to the table. Amendment No. 93 allows the authority to provide information to the Deposit Protection Board and the Investor Protection Board. Amendment No. 96 enables the authority to provide information to a person authorised to exercise powers under specific provisions in the Insurance Companies Act 1982, the Companies Act 1985, the Financial Services Act 1986 and the Companies Act 1989. Amendment No. 97 is consequential on Amendments Nos. 95 and 96. Without the provisions in Clause 97 the overall regulatory structure would be incomplete. The authority will not have sole responsibility for overseeing all aspects of occupational pension schemes. The amendments here ensure that the authority is able to provide information to other bodies that have responsibilities for other aspects of pension schemes, enabling it to liaise and co-ordinate with them effectively.

I commend my amendments to the Committee. I have promised that I will look at points made in three of the amendments tabled by the noble Lord. I hope that he can be persuaded, either now or after he reads Hansard—I appreciate the matter is complex—that the amendments he tabled are not necessary because they are covered by other provisions in the Bill.

Lord Haskel

I thank the Minister for that comprehensive reply. However, I could not absorb all the data that he gave. There is one point I should like to clarify. Schedule 3 is much narrower than the table. Can we have an assurance that there will be a two-way flow of information with all these bodies? In order to have more effective regulation we need to have a two-way flow of information between the bodies. Perhaps the Minister will give some thought to that. Meanwhile, we shall have to read what is in Hansard. Does the Minister wish to intervene?

Lord Mackay of Ardbrecknish

I am certain that the two-way flow is allowed for and that the problem with which the noble Lord is concerned does not arise. Of course I shall check that as well as the other points. But I think that he can be assured that the two-way flow is allowed for.

Lord Haskel

I thank the Minister for that, and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Monkswell moved Amendment No. 24:

Page 2, line 35, at end insert: ("( ) Before making such provision as is mentioned in subsection (5) above the Authority shall consult the other trustees of the trust scheme and the employer and shall consider any representations made by them.").

The noble Lord said: I hope that we can have a two-way flow in respect of Amendment No. 24. It relates to Clause 3(5), which confers on the authority the powers to suspend a trustee of a trust scheme. The amendment seeks to ensure that before suspending a trustee the authority shall consult the other trustees and the employer.

The operation of pension funds through boards of trustees is a collective activity. It is in the trustees' interests to know what is going on so that they can take decisions affecting the members of the scheme. Furthermore, if the authority informs the trustees that one of their number is likely to be suspended, an explanation might be given for the collective action of the trustees that is in question.

Another factor is the effect of any attendant publicity on the operation of this scheme. We must bear in mind that some of the pension funds are major players on the stockmarket. The calling into question of the performance of a particular scheme, which would be implicit in the suspension of one of the trustees, could have ramifications that need to be considered.

There may also be an effect on the employer. If something hits the employer out of the blue—for example, in terms of publicity—the confidence of the market in the operations of that company may be tested. It is right that the employer should have some forewarning and he may be able to give an explanation of the circumstances which suggest that the trustee should be suspended. The employer should have some warning of the storm that is likely to hit him and he should be able to take precautions in defending the continuing operations of the company. I beg to move.

Baroness Hollis of Heigham

I support the amendment moved so clearly by my noble friend. I do so on the simple ground that it relates to natural justice. OPRA makes a mistake about the reputation of a trustee—and we hope that it will not happen often—it is right that OPRA should use its best endeavours to restore that reputation. Basically, that is what the amendment would do and I hope that the Government will accept it.

The Earl of Buckinghamshire

I support the amendment moved by the noble Lord, Lord Monkswell. The balance of power on the board of trustees is most important, as is the relationship between the trustees and the employer. It is sensible that where OPRA makes a change of trustee consultation should take place.

The noble Lord, Lord Monkswell, made most of the points that I wished to make. OPRA does not need to take into account the views of the other interested parties but a dialogue must take place, and that is an extremely important point. I look forward to hearing the Minister's reply.

6.45 p.m.

Lord Mackay of Ardbrecknish

This is a difficult issue but a balance must be struck—that is the first time today that I have used the phrase. As the noble Baroness said in her intervention, one must expect some natural justice for the trustee who is being removed. However, all Members of the Committee will agree that the authority, if it believes that something has gone wrong, must be able to act quickly in order to protect the interests of scheme members.

The Bill provides a number of safeguards for trustees and for schemes under investigation. For example, OPRA will need to give at least one month's notice of its intention to remove a trustee. A trustee can make representations and ask OPRA to review its decision. The remaining trustees and other persons may also make representations to OPRA, and OPRA will be free to consider all the circumstances. That is right and proper but we must not strain OPRA's ability to act quickly. If it does not do so a great deal of damage may be done. It is important to balance the interests of the scheme members, whom the regulatory authority is there to protect, with the natural justice and the rights of a trustee.

I like to think that the Bill strikes that balance. I hope that the noble Baroness, Lady Hollis, who rightly drew the matter to my attention, will accept that it does strike the right balance between the ability of the regulator to act quickly and the need for natural justice as regards the trustee.

Lord Monkswell

I thank the Minister for his response and I totally accept the argument for precipitate action to be taken in appropriate circumstances. One of the difficulties with which we are faced is the effect of precipitate action on the rest of the trustees and the operation of the scheme, and a possible knock-on effect on the employer. I suspect that we do not yet have the balance right but I accept that we must recognise the need for precipitate action. However, I am not sure how we can deal with that because a problem exists. On the basis of the Minister's reply, and the possible need to return to the matter at a later stage, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Monkswell moved Amendment No. 25:

Page 2, line 35, at end insert:

("( ) Where—

1. (a) an order suspending any person under this section is revoked or his suspension is not extended after it has expired, and
2. (b) no order has been made under this section removing him as trustee,

then he may require the Authority to issue, within the prescribed period and in the prescribed Form, a statement regarding their decision or revoke or, as the case may be, not to extend his suspension.").

The noble Lord said: We must recognise the effect of suspension on the individual trustee. One of the difficulties with which we are faced is the implication that OPRA's only activity is to take action when there has been some wrongdoing.

It is unfortunate that the Minister was not more sympathetic to Amendment No. 7, which gave OPRA the responsibility to monitor. That would have made it easier for suspended trustees to believe that they were unlikely to be pilloried. In the process of monitoring a scheme, OPRA may believe that a certain aspect needs further clarification and decide to suspend a trustee. Having made those further investigations the suspension may be lifted. Unfortunately, in view of the way in which the Government propose that OPRA will work, we are faced with the situation in which it will intervene only when there has been some wrongdoing.

Implicit in that is that any action that it takes is dealing with wrongdoing, not just with monitoring or inspecting or seeking to investigate. That is the problem we are faced with. The amendment seeks to ensure that in the case of a trustee who has been suspended and who has effectively been exonerated in that no further action is being taken against him—the suspension having finished—some public statement should be made by OPRA to that effect so that the individual trustee has a clean bill of health and there is no stain on his or her character. It is in the interests of that natural justice that I beg to move.

Baroness Hollis of Heigham

Again I wish to support my noble friend on this amendment. I think it is fairly straightforward. We would expect the regulatory authority to consult but we want to make what at the moment could remain merely a matter of courtesy into an obligation. We believe that that is sensible and support it.

The Earl of Buckinghamshire

I support this amendment moved by the noble Lord, Lord Monkswell. I hope I am supporting the correct amendment this time. The whole objective of the amendment is to seek some mechanism to ensure that those people who are wrongly accused are properly vindicated to an extent over and above what is laid down in the Bill. OPRA is given wide powers to suspend trustees. I am afraid that in the normal course of events it may well make mistakes. I hope that that will not be the case, but it is a possibility. We should remember the cause and effect of all these matters. The cause is serious but the impact on the professional trustee, or the individual trustee, who is suspended can be very damaging to his professional life and also on a personal level. It is extremely important that a person is damaged as little as possible by an unfounded suspension. There are significant penalties in the Bill for trustees. It would be wrong for them not to have some recourse when they are incorrectly or improperly—whatever the correct word is—suspended. I look forward to hearing what my noble friend the Minister has to say.

Lord Mackay of Ardbrecknish

This amendment, as has been explained, relates to the authority's powers to suspend trustees. The security of pension rights depends crucially upon the integrity and diligence of the trustees. If they put that security at risk by failing to comply with their statutory duties there must be a power to suspend them from office. I listened to the arguments of the noble Lord, Lord Monkswell, of my noble friend Lord Buckinghamshire and of the noble Baroness, Lady Hollis. However, I do not believe that Amendment No. 25 is needed. I believe that as soon as the authority has concluded its investigations it will seek to ensure that any problems discovered are put right so that the scheme can run without further attention from the authority. We do not want to involve the authority in unnecessary bureaucracy. However, I recognise the argument that trustees who have been suspended should be kept informed of any developments on their case. Rather than ask the Committee to reject the amendment I would say to the noble Lord that if he wishes to withdraw it I shall certainly take away the proposal and consider further the points that have been made.

Lord Monkswell

I thank the Minister for the fairly encouraging response that he will take the amendment away and have another look at it. I re-emphasise that we are not seeking to interfere with the powers of OPRA to suspend anyone. We recognise that that may be necessary in certain cases. But if, following the investigation and the suspension, no wrongdoing is found, we think it only reasonable that a trustee who may have been suspended pending the results of the investigation should have his good name cleared. It seems of little import to us that OPRA, having concluded the suspension of a trustee, should issue a statement saying effectively that the matter has been investigated, that no wrongdoing has been found and that the individual is completely exonerated of any stain on his character. Our amendment would seem to be perfectly reasonable. The risk is that if the amendment, or something like it, is not written on the face of the Bill, there will be great concern as to the effect of the way that OPRA will operate on the character and future well-being of individuals in the occupational pensions industry, particularly trustees. It is unfortunate and a possible bar on some able people coming forward and being prepared to be good trustees if they feel that something could happen which would ruin their professional future. However, I note what the Minister said. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 3, as amended, agreed to.

Clause 4 [Removal of trustees: notices]:

Lord Lucas moved Amendment No. 26:

Page 3, line 3, after first ("the") insert ("other").

The noble Lord said: This is a technical amendment which clarifies who should be given notice under Clause 4(3) of the authority's intention to remove a trustee. The authority is already obliged by subsection (1) to give notice to the trustee it proposes to remove. The amendment ensures that OPRA has to give notice under Clause 4(3) to each of the other trustees of the scheme. I beg to move.

On Question, amendment agreed to.

Clause 4, as amended, agreed to.

Clause 5 [Removal or suspension of trustees: consequences]:

Baroness Dean of Thornton-le-Fylde moved Amendment No. 27:

Page 3, line 9, after ("3") insert ("or by an order made (whether before or after the coming into force of this subsection) by the High Court or the Court of Session on the grounds of misconduct or mismanagement in the administration of the scheme for which he was responsible or to which he was privy, or which he by his conduct contributed to or facilitated").

The noble Baroness said: The Minister in another place said in introducing the White Paper on 23rd June last year that the role of trustees in pension funds was crucial. I agree with that statement. The Goode Report also stated: Trustees play a pivotal role in the administration of pension schemes".

However, surprisingly, it then took the view that it would not suggest an amendment to trust law. I assure the Committee that I do not intend to start to debate trust law this evening. But it is central to certain aspects of the Bill relating to trustees. It is important, if trust law is to stand as it is, that we have the correct checks and balances in the Bill and that the trustees are clearly aware not only of their duties and rights but also of the consequences of breaches of trust law and their responsibilities to the pension fund.

This is not a new idea. Indeed the Wilson Committee in 1980—under Sir Harold Wilson as he then was—reviewing the functioning of financial institutions, said: The framework within which occupational pension schemes in the United Kingdom operate has grown piecemeal and now needs to be systemised and strengthened. It is unsatisfactory in our view that so much of it should depend on a body of trust law developed for quite other purposes".

"The Occupational Pensions Board has also drawn attention to that factor in several reports. It said in its 1982 report: We are agreed that the present Trust Law does not provide satisfactory safeguards for members' rights, and expectations in occupational pension schemes. That underlines the necessity within the Bill to be absolutely clear on the responsibilities of trustees and the consequences if they are i n breach of pension fund rules and trust law. What does the amendment suggest? Clause 3 provides for disqualification of a trustee by the authority. Clause 5, which is now before the Committee, provides that legal action can be taken where a trustee continues to act after having been suspended. The amendment would have the effect of including in Clause 5 instances where a trustee is subject to a court order—and one has to bear in mind that suspension of trustees will not only derive from the authority but there will still be the right for individual members of schemes to go to law—on the grounds of misconduct or mismanagement in the administration of a scheme.

I suggest that the amendment helps to make it plain to trustees what can happen. it also supports the authority in carrying out its responsibility. I beg to move.

7 p.m.

Lord Mackay of Ardbrecknish

First, I should like to welcome the noble Baroness, Lady Dean, to the Front Bench. Although we have heard her speak on the Bill from the Back Benches, this is the first time she has moved an amendment. I am happy to tell her that I think it is unnecessary.

Baroness Hollis of Heigham

Accept it!

Lord Mackay of Ardbrecknish

There is no point in unnecessary legislation. That is not a good thing.

While the noble Baroness was speaking I read Clause 5. Even bearing in mind the lectures I received at the beginning of the Sitting about making matters clear on the face of the Bill, it would be a very stupid person who read Clause 5 without seeing that he (or she) was in for some very real trouble if he continued to act as a trustee. The offence and the penalties are clear.

If someone is removed from a trust board by a court order but continues to act in contravention of that order, the law already provides suitable measures by which the court can enforce compliance. I do not believe that there is any need to provide an alternative or duplicate provision for the authority to take similar court action. The power already exists.

I hope that, with that assurance that her amendment is unnecessary and the power is already available, the noble Baroness will be able to withdraw her amendment.

Baroness Dean of Thornton-le-Fylde

I am obliged to the Minister for trying to be so helpful. We also were trying to be helpful with our amendment in making the proposals quite clear. Clause 5 as it stands provides that if a trustee continues to act and the matter has been to court the individuals concerned would need to return to the court. We propose that the authority should be able to bypass that procedure and step in.

Nevertheless, I hear what the Minister says. I shall read the record with interest. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Turner of Camden moved Amendment No. 28:

Page 3, line 22, at end insert: ("( ) Proceedings under this section may only be commenced if, having been given every opportunity to correct the matter, the person concerned has failed to do so.").

The noble Baroness said: In moving Amendment No. 28, I shall speak also to Amendments Nos. 35, 36, 38 to 41 and 43, which have been grouped together.

The amendments are all concerned with penalties. I say at the outset that we have no objection to penalties being imposed where there has been wrongdoing or malpractice. However, there has been criticism from some quarters concerned with pension provision that the penalties envisaged in the Bill are so draconian that there may well be difficulty in getting individuals to put themselves forward to stand as trustees at all. Furthermore, unless the Bill is amended in ways which we suggest, a potential trustee might see himself (or herself) as moving into the employer's sights—as he obviously would if he became a trustee—without any protection against victimisation on the one hand (although I say in passing that we shall move amendments later to try to deal with that problem) and on the other hand exposed to severe penalties in the event of failure to undertake or perform the prescribed duties and to take care of members' interests as expressed in the Bill.

I said earlier that we have no objection to penalties being imposed for wrongdoing, but we believe that it has to be conscious wrongdoing and that the individual should be given the opportunity to put things right before the penalties are enacted. The amendment therefore directs itself to the requirement that the person concerned must be given every opportunity to put matters right before proceedings are commenced. Amendment No. 43 to Clause 9 stipulates that the individual concerned must have been involved in deliberate wrongdoing or given a reasonable opportunity to correct a matter in which he or she has been negligent.

Surely these proposals are entirely reasonable. It is very necessary that suitable people come forward to act as member trustees in particular, although these strictures would also apply to other trustees. However, we are particularly concerned about member trustees.

I am sure that every effort will be made to ensure that trustees are properly trained. Again, we shall deal with those requirements at a later stage in the Bill. But at this stage let us at least demonstrate to those interested that the requirements in the Bill will not be such that trustees can stumble into trouble without knowing and then find themselves facing penalties or fines which they may well not be able to afford.

The other amendments in the group are concerned with trying to spell out with some degree of clarity what happens if a person does not pay the penalty which has been levied upon him or her. We believe that there is a need to set that out with some degree of clarity and we hope that the amendments do so.

I hope that the Minister will find the amendments entirely reasonable. They are meant to be helpful. They are intended to produce legislation which will result in people coming forward to do the jobs which are necessary under the Bill as trustees without being put off by worries about whether they will be able to meet the conditions involved. I beg to move.

Lord Ezra

I should like to support what the noble Baroness, Lady Turner, has just said. While it is perfectly right that the penalties which can be incurred by trustees in breach of their duties should be clearly spelt out, at the same time it is important that people should not be frightened off. We would be expecting a great deal of trustees of these funds if they were to feel that such dire penalties could be imposed upon them for breaches which they might not be aware they were committing. In particular, in relation to Amendment No. 28, there should be a possibility for the person concerned to be warned and given the time and opportunity to put matters right before the penalties were imposed.

Lord Mackay of Ardbrecknish

The authority can only be effective if it can apply sanctions to ensure that the obligations that we will impose on it under Part I of the Bill will be met. This group of amendments seeks to make changes to the provisions in Clause 9 which give the authority the power to impose civil penalties for breaches of the requirements placed on those running the schemes.

The noble Baroness, Lady Turner, thought that the penalties were too draconian. Perhaps if they were less severe we might be discussing increasing them. I believe that we all agree that the punishment has to fit the crime. OPRA will have a range of fines at its disposal. It will not always fine at the highest rate any more than the courts do. It will not necessarily impose fines at all. A warning or a reprimand may be all that is needed. That would be at the authority's discretion.

I shall now turn to the amendments in detail. Amendments Nos. 35 and 38 remove the power to set the maximum civil penalty in regulations and substitute requirements for it to be a reasonable amount. While we agree that the civil penalties imposed should be reasonable, I do not believe that the amendments are the best way to achieve that.

I note that the Delegated Powers Scrutiny Committee suggested in its report that either the maximum civil penalty should be set out in the Bill, as Amendment No. 40 seeks to do, or that regulations under this clause should be subject to the affirmative resolution procedure. I am a little surprised that no one pointed out that part of the report of the Delegated Powers Scrutiny Committee. Having read what the committee said, and mindful of the fact that I was a founding member of the committee, I am prepared to consider those options further with a view to bringing forward a suitable amendment, if appropriate, at a later stage. That is on the maximum civil penalty point.

Amendments Nos. 36 and 39 would require the maximum civil penalty to be determined by a formula related to the losses caused by the breach for which the penalty is imposed. It is an ingenious proposal. If we had time I am sure that I could make comparisons across the whole field of law enforcement where a similar provision could be used. However, I believe that it is not a provision that we should accept. There are important obligations on which it may be difficult to make a direct attribution of the loss—for example, those concerning the provision of information to scheme members. So I do not believe that an ingenious formula, even as ingenious as this, would be workable in practice.

Amendment No. 41 removes the authority's power to recover an unpaid civil penalty and instead makes it a criminal offence to fail to pay a civil penalty. Under the clause as drafted, the authority would pursue an unpaid civil penalty as a debt through the civil courts. We do not believe that there is anything to be gained from criminalising failure to pay the civil penalties imposed by the authority and would not wish to add further to the burdens on the courts.

Amendments Nos. 28 and 43 prevent the authority from prosecuting a trustee who acts when removed or imposing a civil penalty for breach of duty unless the individual has failed to take steps to correct the wrongdoing despite being given reasonable opportunity or, in the case of civil penalties, the infringement was the result of deliberate wrongdoing. We have sympathy with the thrust of the amendments, but believe that it would unnecessarily hamper the ability of the authority to remove trustees or impose civil penalties on those who have breached obligations.

The authority will have the discretion to decide in every case whether a civil penalty would be the most effective way of securing the proper running of the scheme. There are cases for which the authority may decide that a civil penalty is not needed. There may, however, be circumstances where a civil penalty should be imposed even though the individual has subsequently taken action to put matters right—for example, where the breach committed was particularly severe or has taken place after a warning from the authority.

With the provisos that I have made, I shall certainly look at the point made by the Delegated Powers Scrutiny Committee. I hope that with that explanation of the powers in Clause 9, the noble Baroness will be prepared to withdraw the amendment.

Baroness Turner of Camden

I thank the Minister for his comprehensive reply and I am inclined to agree with some of it. I am grateful for his assurance that he will consider what the scrutiny committee said.

On this side of the Chamber it is a question of getting the balance right. We accept that there have to be penalties for wrongdoing or malpractice, as I said at the outset, but we do not wish to have penalties which appear to be so heavy that individuals are reluctant to come forward to take on what they see as rather onerous and frightening duties. Because of that, we put down this series of probing amendments to see whether or not they were likely to attract any support or sympathy from the Minister. From what he says, I believe that he sympathises to some extent with what we seek to do. Perhaps our wording is not apposite. On the other hand, I believe it is important that we have people who are scheme members, and members who are likely to be member trustees, who are not put off from taking on such work. It may not be enough simply to say, "You will be trained and given lots of instruction, and so on". If people believe that they may have heavy fines imposed on them which they may not be able to meet, and they do not have the opportunity to put right what has gone wrong, they may be reluctant to put themselves forward for those jobs.

I believe that those are important considerations. We shall have to consider the situation again. However, in the meantime I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 5 agreed to.

Clause 6 [Appointment of trustees]:

Baroness Dean of Thornton-le-Fylde moved Amendment No. 29:

Page 3, line 37, at end insert: ("( ) Where the existing trustees have not met their obligations under sections 14 and 15 below, the Authority shall by order appoint an additional trustee who shall ensure that these obligations are properly met.").

The noble Baroness said: In moving the amendment, I speak also to Amendments Nos. 33 and 34.

Amendment No. 29 refers to the obligations under Clauses 14 and 15 of the Bill. Clause 14 deals with the requirement of trustees of the scheme to include persons nominated and selected under the scheme rules, removal of trustees, action in the event of an unfilled vacancy, and a period of office of between three and six years. Clause 15 provides for the exceptions.

The amendment provides that the authority shall have the right to appoint an additional trustee. That additional trustee is already provided for under Clause 7(4) (b) of the Bill which makes provision, for powers or duties to be exercisable by a trustee so appointed to the exclusion of other trustees".

That additional trustee appointed by the authority would ensure that the trustees in post who had not carried out the provisions under Clauses 14 and 15 of the Bill can have another trustee imposed on their work who will have the power of the regulatory authority behind him. We believe that that makes sense.

Amendment No. 33 is a probing amendment. It calls for appointments not to be restricted to those with particular qualifications or experience. Clause 6(6) states that, Regulations may make provision about the descriptions of persons who may or may not be appointed trustees".

One has to bear in mind that at present only 35 per cent. of the 150,000 schemes have member trustees. I am sure we all hope that that will change significantly with the introduction of the Act. Those trustees will be aware of their responsibilities. One hopes that they will have had training, which will be compulsory if we are able to change other parts of the Bill. One also hopes that there will be only an insignificant need for the appointment of an additional trustee, and, under Clause 6(6), trustees.

What we do not wish to see is the professionalisation of the pensions field, if I may so call it. The member trustees have an important role to play. I suggest that it would not be helpful if we suddenly found that the regulator was appointing only accountants, actuaries or people with professional qualifications.

In his response, perhaps the Minister will indicate whether the regulations will be issued. At present the Bill states "may". Will regulations be issued? If so, what restrictions does the Minister anticipate will be in those regulations as regards the qualifications of individuals? As drafted, the Bill refers to "experience" with regard to descriptions of individuals. What is that "experience"? I seek clarification from the Minister as to whether the regulations will provide for charges that such trustees can make.

Amendment No. 34 is straightforward. It introduces into the Bill a set period of time for trustees who are appointed to serve. That makes sense as an addition to the Bill because the present wording leaves it open-ended. I beg to move.

The Earl of Clanwilliam

Will my noble friend clarify a point for me? I do not wish in any way to criticise the amendment moved by the noble Baroness but she mentioned that there were 150,000 occupational pension schemes, of which 90 per cent. have only 11 members. Has my noble friend any information as to how many of those schemes in the 90 per cent. are director occupational pension schemes which do not include any worker element at all?

Lord Mackay of Ardbrecknish

I am not sure whether the information for which my noble friend asks is available and I certainly do not have it at the moment. However, I shall look into the matter as I saw the direction in which he was heading. With this amendment we are talking about schemes of a reasonable size; I shall not quantify the number of people covered. It may not be many; and it involves people who are not directors but employees of a firm.

The amendments proposed by the noble Baroness all relate to the authority's power to appoint trustees. The security of pension rights depends crucially upon the integrity and diligence of the trustee. If trustees put that security at risk by failing to comply with their statutory duties, there must be a power to appoint a trustee where it is necessary to ensure that the scheme is properly run. I do not believe that there will be any dispute between us about that.

First, Amendment No. 29 is unnecessary. If the authority is satisfied that trustees have seriously or persistently breached any of their responsibilities under Part I of the Bill, including those to implement the requirements relating to member nominated trustees, it is able to remove those trustees. Clause 6 allows the authority to appoint a trustee to a scheme where it has taken action to remove a trustee. So I hope that when the noble Baroness reads what I have said on her amendment, she will realise that Amendment No. 29 is, in our view, unnecessary.

Where the authority takes the serious step of appointing a trustee to a scheme, there may be significant problems with the scheme's administration. That will often be the case. It is important that we are able to set down minimum standards of experience, competence and integrity for those whom the authority is able to appoint. While Amendment No. 33 seeks to ensure that the field of candidates is not unduly limited, it may inadvertently prevent adequate minimum standards being set. I do not wish to accept that amendment to the Bill as it may weaken the powers of the regulatory authority when it comes to appoint a trustee for a pension scheme which may be in difficulty.

Amendment No. 34 proposes to set the period within which the appointment of a trustee has to be reviewed. I believe that it is an unnecessarily bureaucratic addition to the responsibilities of the authority and is not necessary.

On the general question of issuing regulations, we intend to issue them and will wish to consult on what will be in them before they are issued. I hope that with those explanations of what the Bill does and of the amendments, the noble Baroness will feel able to withdraw them.

Baroness Dean of Thornton-le-Fylde

I thank the Minister for that reply. On Amendment No. 29, I took a little comfort—I hope I was right in doing so—from the Minister's assurances that the Bill more or less provides what we were seeking. I shall read the Minister's words with care when I receive Hansard.

As regards Amendment No. 33, I was pleased, to hear that the Minister has given an undertaking that there will be consultation. Can he give me an assurance that the consultation will be wide-ranging and include people who are at present member trustees of the funds of their organisations and that the consultation will not be restricted?

However, I was not as happy with the response on Amendment No. 34. The Bill provides specific periods of office for trustees and I see no difference between a member who is elected or appointed as a trustee and someone appointed by the authority. It needs to be made clear how long the appointment is for, and the amendment which we put forward provided for a review. I am not happy with the answer which I received from the Minister on that amendment and before reaching a decision to withdraw it I invite his response on whether he can give me an assurance about consultation on the regulations.

Lord Mackay of Ardbrecknish

One thing I have learnt about my department is that we consult pretty widely. I suppose the words I should use are "where appropriate", which prevents me from feeling obliged to consult many people who may not have much to contribute. However, we shall consult all the people we consider to have an appropriate and proper interest in the matter. We shall listen to what they have to say.

Baroness Dean of Thornton-le-Fylde

I thank the Minister, although not 100 per cent. That is as far as we can go this evening, but we shall watch this space closely. With that, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Hollis of Heigham moved Amendment No. 30:

Page 3, line 38, leave out subsection (4).

The noble Baroness said: I freely confess that this amendment is a hook on which to hang a matter trailed by the Minister in a previous amendment. The role of regulation in the Bill is of major concern to many people in the field. I approach the topic with trepidation because many Members of the Committee present are infinitely more senior and experienced in such matters. I hope that they will feel able to contribute.

Clause 6 allows the regulatory authority to appoint a trustee in prescribed circumstances. That is harmless enough, except that it is the first of 200 regulatory powers in the Bill. I wish to use the first power in order to raise a more general issue. Clearly it is silly to litter the Bill with items more appropriately confined to regulations. We all accept that. But virtually every reputable body in the pension field—and doubtless less reputable ones—has expressed anxiety about the scale and significance of many of the regulatory powers which the Secretary of State has taken to himself. As the National Association of Pension Funds has said, the breadth of the regulatory powers leaves too much room to the Executive to make major shifts of policy. For example, it cites minimum solvency and speed of paying back. In other words, not only do we not know what the implications of certain clauses will turn out to be in practice, but the Bill gives further draconian powers to the Secretary of State, without even the assurance in some cases that they will be handled by the affirmative procedure. The House of Lords Delegated Powers Scrutiny Committee has given serious warning of some of its concerns in the field. It behoves us to take those concerns extremely seriously.

Perhaps I may give examples of matters which might worry the Committee on territories which the Secretary of State has taken to himself under regulation. The first—admittedly it is a slender example, but it is the first to occur in that form—is the provision in Clause 6 that regulations will determine under what circumstances a person may be appointed by the authority to a trust board. Clearly, one would expect minimum standards of competence. But given the major issues which we hope to raise on the next Committee day on the balance and composition of trustee boards, there is clearly a concern that the power could be used to undermine the agreed proportion of scheme members to others.

Let me take another instance. Clause 9 allows the authority to impose a penalty of a sum whose limit will be determined by regulation—in other words, a penalty whose limit is not specified in primary legislation. That applies not only to this Act but is inserted retrospectively into the consolidating Pension Schemes Act 1993. We shall put forward amendments later to limit that either to a fixed ceiling, such as £5,000, or to a more general concept of what is reasonable.

I move on to Clause 65. I am just picking out the examples that are of particular concern. Many others also concern us. Clause 65 allows a government Minister to modify a public service pension scheme. What is worse, if it is done by the Secretary of State for the Department of Social Security, it can be done by the negative procedure; but if it is done by any other department, it is done by the affirmative procedure. As the Scrutiny Committee reminds us, it is surely not right that whether an important regulation is handled by negative or affirmative procedure should depend on which particular departmental Minister brings it forward.

Most worrying of all—and let me flag it now because we shall resist it quite strongly—Clauses 106 and 134 allow regulations to create a criminal offence. A criminal offence will be created by regulation—and not only in this Bill but retrospectively in the 1993 pensions Act—and, I assume, by negative procedure. I have singled out only some of the instances; this particular amendment deals with the first. It is very clear that, not only in relation to Amendments Nos. 1 and 7 and codes of practice is the Minister refusing to clarify the functions, duties and powers of the regulator, but in addition there is a hidden Bill, namely, one of regulation. It is the one that we are not debating today—especially if it is handled by the negative procedure. We may not even subsequently debate it if it is not brought forward. And if it is subsequently debated in this Chamber under either the negative or affirmative procedure, we will be able neither to amend it nor, by convention, to reject it.

Let us suppose that the Government's will prevails and under Clauses 106 and 134 a criminal penalty can subsequently be introduced by regulation. Let us assume that it is done by negative procedure and that, nonetheless, the industry of your Lordships ensures that it is debated. What then happens? We cannot amend it; we cannot reject it. Only one House will have reviewed something that is vital; namely, a criminal penalty. It will be reviewed properly only by the House of Commons.

Given that the very distinction between primary and subordinate legislation is our inability to amend and our unwillingness to reject, is it wise to allow quite so much of this Bill to be cast in the form of regulation, which this Chamber cannot effectively review? That is what it means. It is within that context that I beg to move the amendment.

7.30 p.m.

Baroness Seear

I very much support this amendment for the reasons that were put forward by the noble Baroness, Lady Hollis. At this point we are putting down a marker concerning our resistance —which will be very strong—to the use of regulations to the extent that it is laid down in the Bill that regulations will be used. Of course we recognise that in a Bill of this kind a number of matters have to be dealt with by regulation. That is not in dispute. But what is very much in dispute is the occasions in the 13:111 on which regulations are being used when in our view it is quite clear that primary legislation is required—we shall debate this matter at greater length when the clause arises—particularly where by regulation a criminal penalty can be created. The fact that the: Government can think it appropriate to use regulations to produce a criminal penalty is, I must say, a cause for very considerable alarm. It indicates how little they understand the resistance that this Chamber has put up.

I am very glad to see that the noble and learned Lord, Lord Simon of Glaisdale, is in his place. I fully expect that he will make a far more powerful contribution to this part of the debate than any of the rest of us could. The Government have chosen to ignore the consistent resistance of this Chamber to the use of regulations for matters for which primary legislation is plainly needed, including the use of regulations to this extent in this Bill.

Lord Elton

Before the noble and learned Lord, Lord Simon of Glaisdale, is tempted to take up that challenge, I hope that the Committee will take note that we are speaking to Amendment No. 30, which is not grouped with any other. We seem to be trembling, on the brink of a debate on major issues of criminality. There is no criminality involved in relation to this subsection. I am sure it is useful to have this smoke signal telling us what is coming over the horizon on the Bill. But I hope that the Committee will not start to get too excited about this amendment because the issue seems to be quite different.

Baroness Hollis of Heigham

I am sorry that the noble Lord felt obliged to make those remarks. I made it very clear that this amendment was being used as, in the phrase of the noble Baroness, Lady Seear, a marker, and in my own phrase, a hook, concerning the degree to which this Bill will be developed by the regulatory procedure. All the organisations, without any exception, said that they are extremely concerned at the degree to which this Bill will be understood in terms of its regulatory procedure. This is the first of many such instances. It seemed appropriate under the circumstances to make the general points before going on in subsequent amendments to deal with the specific.

The Earl of Buckinghamshire

My name is attached to this amendment. I am quite sure that my noble friend the Minister will deal with regulatory powers as a separate issue. Perhaps I may concentrate on Amendment No. 30. In what prescribed circumstances do the Government intend using the powers under this amendment? I have heard that possibly the regulation-making power may be used to limit the circumstances under which trustees can be appointed by OPRA to ensure that this power is used only in the last resort. I shall be very interested to hear what the Minister has to say on this point.

Lord Mackay of Ardbrecknish

I, too, wondered whether we were about to stumble into a general debate on this matter just before the dinner hour. It is not the first time that it has been raised. I raised it a short time ago in replying to Amendments Nos. 28, 35 etc. and in particular Amendment No. 40, when I drew the attention of the Committee to what the Delegated Powers Scrutiny Committee had suggested. I indicated that I was prepared to look at what the Committee had said and see what other options were available with a view to bringing forward a suitable amendment, if appropriate, in order to accommodate the points that were made by the Scrutiny Committee.

The noble Baroness, Lady Hollis, rightly said that there are a considerable number of instances in this Bill where regulations are referred to. As we said in our memorandum to the Scrutiny Committee and freely admitted, the Bill imposes a number of substantial new requirements on pension schemes and makes a number of changes to existing requirements. Given the complexity and variety of schemes, the requirements will necessarily require detailed provisions. It would be inappropriate to attempt to deal with every aspect of such requirements for every circumstance by means of primary legislation. To do so, with all the variants that would be needed, would produce primary legislation of great complexity, length and detail; and it would still be impossible to be sure that all possible variants, now and for the future, had been covered. In addition, the Government have no wish to restrict unnecessarily the flexibility which the schemes have built into them or to impose unreasonable restraints on how they are run or developed to meet individual needs.

I accept that there are a fair number of regulations forecast or prophesied. The complexity of the issues and the complexity of the Bill are such that to try to deal with everything under primary legislation would make for a very large and pretty unwieldy piece of legislation. It would also build in to the pensions industry an inflexibility for which people might not thank us in future years. We shall no doubt discuss those and other points. When we come to points to which the Scrutiny Committee has drawn our attention, I shall be looking at them very seriously indeed.

This amendment relates to the authority's power to appoint trustees. Given the expense that an additional trustee may impose on a scheme, rather than give the authority an unfettered power to appoint trustees in any circumstances, we have sought to specify on the face of the Bill the situations in which we believe that the power to appoint could be exercised. The flexibility to add to that list of circumstances through regulation is needed, we believe, in case in the light of experience there are other situations in which it would be desirable for the authority to be able to appoint a trustee to a scheme.

For that reason I certainly would not be able to accept Amendment No. 30. I hope that the noble Baroness and other noble Lords will not see anything sinister in that but will appreciate the important need—not just today but in the future—for us to be able to act quickly if we find that steps need to be taken to help protect pension schemes.

Baroness Hollis of Heigham

I do not believe that anybody denies that a fair proportion of detailed regulation needs to be carried through by those powers. This may or may not be an appropriate one. I do not feel strongly about this amendment. However, many of us, and certainly people outside this Chamber, are extremely worried, on the one hand, about the degree to which the Government are hugging to themselves powers through the regulatory procedure—there are 200 such powers in this Bill—and, on the other hand, about their refusal to share, by putting on the face of the Bill the responsibilities of the regulator and empowering it to perform activities, give out codes of guidance and so on, to steer those trustees who have to bring up their schemes to best practice. The discrepancy is noteworthy between what the Government are hugging to themselves and their reluctance to clarify the main principles of the Bill and the powers and functions going to the major regulatory bodies. Certainly, it is a source of major concern to organisations outside.

As I said, this is not a major measure but it is the first of the substantial ones to which the Minister drew attention and which I mentioned when I moved the amendment. We shall come back to it and seek agreement, in the circumstances that I have outlined, that such powers should be on the face of the Bill and not handled by regulation. With the leave of the Committee, I should like to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Lucas

This may be a convenient moment for the Committee to adjourn. I beg to move that the Committee be adjourned and begin again at 8.30 p.m.

Moved accordingly, and, on Question, Motion agreed to.

[The Sitting was suspended from 7.42 to 8.30 p.m.]

The Earl of Buckinghamshire moved Amendment No. 31:

Page 3, line 44, after ("paid") insert ("reasonable").

The noble Earl said: Clause 6(5) ensures that where the authority appoints a trustee to a scheme, the scheme must pay his fees and expenses. The purpose of Amendment No. 31 is to insert the word "reasonable" into the clause to ensure that there is recourse to law if the fees charged by the new trustee are too high, or the expense is considered to be excessive.

The reason for the amendment is quite clear. It is fair and reasonable that a trustee should be properly reimbursed for any work that is carried out by him. But the way the clause is presently worded would leave the scheme vulnerable to excessive fees being charged by that new trustee. By inserting the word "reasonable" into the Bill, we give the scheme recourse to law if it were to find itself in a situation where it was expected to pay excessive amounts to a trustee appointed by the regulatory authority.

I believe Amendment No. 31 to be a "reasonable" amendment. It is not sensible to include in the Bill a clause which allows any trustee or professional person to levy fees, charges or expenses without any controls being in place. I suppose the Government will say that the controls exist because if a trustee or professional person levied excessive charges he would never be re-employed. That is scant comfort. As the Committee is aware, I am in the profession and feel that it is important that some control should be inserted into the wording of the Bill in order to control fees. I beg to move.

Lord Haskel

I rise to support the amendment. This is a situation which may easily be exploited by an unscrupulous person. It is only right that the word "reasonable" should be inserted to prevent it.

Lord Mackay of Ardbrecknish

I suppose this amendment could be looked on as "reasonable". But what is "reasonable"? We may find ourselves debating that issue for quite a long time.

I fully understand and appreciate the point being made by my noble friend Lord Buckinghamshire and the support he received from the noble Lord, Lord Haskel. My noble friend said that he supposed—giving half my answer before I stood up—that I would say that the trustee would never again be put into a trust by the authority. Indeed, that was my second line of defence.

My first line of defence is that the authority will be free to remove a trustee it appointed if it believes that the fees the trustee charges are not reasonable. It is therefore a little more than belt; it is belt and braces. Not only would the trustee not be employed again if he tried to charge unreasonable fees, but also he could he removed by the authority in those circumstances.

While I appreciate the argument of my noble friend, I hope that with those words on the record he will feel reassured that no one will be able to be appointed as a trustee by the authority and then charge exorbitant fees to the pension fund for his trusteeship. In those circumstances, the authority would certainly act to protect that pension fund and not reappoint the trustee again. I hope that with those words of reassurance my noble friend will be able to withdraw the amendment.

Lord Monkswell

I listened with interest to the Minister's response and I wonder whether it is entirely adequate. He suggested that if a trustee appointed by the authority was to levy or charge unreasonable fees, then the authority would remove that person as a trustee and not employ him on any other occasion. However, that would be shutting the stable door after the horse had bolted. That seems to be a thread running through the whole pensions debate.

The problem would already have occurred in that the trustee would have levied the unreasonable fees. Perhaps the Minister would consider that point and offer a hope that the unreasonable fees levied would not have to be paid.

Lord Mackay of Ardbrecknish

I imagine that the fees would be paid on some kind of time basis—either per day or even per hour. Quite clearly, if somebody charged unreasonable fees I fully accept that that person may obtain a few pounds or guineas, or whatever they charge, when they submitted their Bill for the first few hours worked; but the pension fund and the authority would then be alerted and could stop that happening again. I believe, therefore, that there is a protection in the Bill.

I take the point that somebody may get away with a few hours of unreasonable fees. But we are trying to prevent a trustee getting away with many hours, days, or weeks of unreasonable fees. As I explained, I believe that the powers in the Bill already do that.

Lord Monkswell

I am sorry, but I must come hack to that point. I can envisage a situation where a lawyer or someone with legal expertise may be used as a trustee and after several years of work submit a bill that may be astronomical. One needs only to look at the problems faced by the Legal Aid Board to consider the horrors that may beset a pension fund. Perhaps the Minister will think again.

Lord Mackay of Ardbrecknish

The problem with issues like this is that one can create amazing scenarios. I shall not comment on whether lawyers may or may not charge excessive fees. I see the point being made by the noble Lord that a trustee may work for two or three years before putting in a fee note for the work already done and that fee being enormous. All I cm say is that I doubt that that will be the way pension funds will remunerate their trustees. I believe it is more likely to be the way I suggested at the beginning of my response. However, I shall check that the situation envisaged by the noble Lord cannot arise because that would slightly undermine my argument.

The Earl of Buckinghamshire

I thank my noble friend for his words and for agreeing to check the position. Contrary to what was said by the noble Lord, Lord Monkswell, I believe that cashflow is also extremely important to lawyers. However, on the basis of what my noble friend said, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Haskel moved Amendment No. 32:

Page 3, line 45, at end insert ("provided that the trustee appointed by the Authority under this section has been approved by a unanimous vote of the remaining trustees").

The noble Lord said: Amendment No. 32 is closely aligned with Amendment No. 31. The independent trustee can be both an individual and a company. Although I am sure that what the Minister has already said will apply, companies may have a conflict of interest. It is important that if a company is to be appointed an independent trustee it should win the support of all the trustees. I was told by my advisers that a case arose involving a company called Belling where a small group of people appointed a company as a trustee and the situation was exploited in the manner we discussed. I believe that to be a loophole in the making, to which I would like the Minister to give consideration. I beg to move.

Lord Mackay of Ardbrecknish

The amendment is based on the same ground as the previous one. The authority will be able to set the terms of appointment of any trustee it puts into a pension fund, if so desires. I suspect that that will be another protection against the problem that has just been mentioned. The amendment we are now considering is slightly different. I hate to say to the noble Lord that I believe it is unacceptable. It will prevent the authority ordering an appointed trustee's fees to be paid from the scheme unless it is unanimously accepted by the rest of the trust board. That will give the remaining trustees on the board an unacceptable means of obstructing the appointment of an additional trustee by the authority. While, obviously, in the circumstances we are looking at, the authority will consider that the other trustees are fit to stay on, they may feel a little bruised and unhappy about another trustee being parachuted in on them. I believe that that will give them an unacceptable grip over the trustee that the regulatory authority may wish to put into the pension fund in order to sort it out.

I hope that on reflection the noble Lord will see that his amendment is too restrictive. We certainly do not wish to see that in respect of the regulatory authority's powers.

Lord Haskel

I thank the Minister for pointing that out. It is important to remember that a number of independent trustees are now companies which go around touting for business. It is incumbent on them to win the support of all the trustees. However, in view of the other point the Minister raised, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment Nos. 33 and 34 not moved.]

Clause 6 agreed to.

Clauses 7 and 8 agreed to.

Clause 9 [Civil penalties]

[Amendments Nos. 35 and 36 not moved.]

Lord Lucas moved Amendment No. 37:

Page 4, line 27, leave out ("or failed to comply with").

The noble Lord said: I beg to move Amendment No. 37 and speak at the same time to Amendment No. 170. Both amendments are minor and technical. Their purpose is to remove from Clause 9(2) and Clause 106(1) wording which duplicates the definition of "contravention" given in the list of definitions in Part I of the Bill, namely Clause 112(1). That definition specifically includes the words "failure to comply with".

On Question, amendment agreed to.

[Amendments Nos. 38 to 41 not moved.]

8.45 p.m.

Baroness Turner of Camden moved Amendment No. 42:

Page 4, line 31, leave out subsection (4).

The noble Baroness said: Amendment No. 42 is a probing amendment to find out what the Government intend by writing this clause into the Bill. Clause 9 is said to deal with civil penalties. The subsection that we seek to remove by our amendment reads: The Authority must pay to the Secretary of state any penalty recovered under this section.

We wish to know why the authority cannot keep the money. Presumably, it will have been put to some expenditure in pursuing the case. Why is there a provision in the Bill that if a penalty is recovered it does not accrue to the funds of the authority, which has done all the work and spent money on the case, but to the Secretary of State? That does not seem very sensible. I should like to know from the Minister why that provision is in the Bill.

The Earl of Buckinghamshire

I support the amendment, to which I have lent my name. It is quite quixotic to find a provision which says that the money is to be returned to the Secretary of State and the Treasury and then presumably back to the regulatory authority, perhaps minus one penny. I shall be very interested to hear what the Minister has to say in response to the amendment.

Lord Ezra

I too find the proposition somewhat difficult to understand. If, in spite of what we have proposed, the state is not to pay the costs of the authority, 1 fail to see why any money that accrues to it for whatever reason should flow to the Secretary of State. At the very least, the money should be used to reduce the levy. I believe this to be a quite unreasonable proposition.

Lord Mackay of Ardbrecknish

We believe that although the authority should have power to impose civil penalties it should not have an interest in the number of penalties or the size of the penalties it imposes. Amendment No. 42 would remove the requirement for the authority to pay moneys collected from civil penalties to the Secretary of State.

It would be unacceptable for the authority to have direct, unfettered access to these funds. It would provide a perverse incentive to the authority to increase the number and size of the civil penalties that it imposed. I assure the Committee—this will perhaps comfort the noble Lord, Lord Ezra—that the moneys will be paid into the Consolidated Fund. However, they will go to defray the costs of the authority, including the costs of the case from which the fine has arisen, and therefore reduce the rate of the levy. Given the trouble I had in persuading your Lordships that the levy should be levied on the companies and pension funds themselves, I am sure that the Committee will be happy to know that any moneys which came into the Consolidated Fund by way of fines would be used to defray the costs of the authority and reduce the levy.

Lord Ezra

I am delighted to learn that, but I do not see how anyone studying the provision can read that meaning into it. Surely, we must have more than what the Minister has just said, unless we expect everyone to read Hansard along with the Bill. If what he has said is correct—I am sure it is —I hope that perhaps at the next stage he will bring forward a suitable amendment. There is no way at all that what he said to us can be read into Clause 9(4).

Baroness Turner of Camden

I fully agree with the noble Lord, Lord Ezra. If one simply reads the Bill as it stands one has no idea that anything received by way of penalty will be used to defray the costs of the authority or reduce the levy. As the noble Earl, Lord Buckinghamshire, and the noble Lord, Lord Ezra, said, it is not as though the authority is being funded by government. Generally speaking, the industry has to pay for the authority. If the intention is, as the Minister says—and I have no doubt that it is so—I believe that we must have an amendment to that effect, produced either by the Minister or perhaps by our side at Report stage. As matters stand, this is not what the Bill says. It gives the impression that the Secretary of State will collar any penalty money received. That seems very inequitable.

In the circumstances, I shall not press the amendment to a Division at this hour of the night. However, we flag up that we shall return to the matter at Report. I hope that the Minister will also feel inclined to do so. Having said that, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 43 not moved.]

Clause 9, as amended, agreed to.

Clause 10 [Powers to wind up schemes]:

Lord Lucas moved Amendment No. 44:

Page 4, line 38, after first ("on insert ("the generality of").

The noble Lord said: In moving this amendment, perhaps I may speak also to Amendments Nos. 46, 47 and 50. These amendments concern the authority's powers to wind up schemes contained in Clause 10. Amendment No. 44 concerns the authority's powers to wind up a scheme to protect the accrued rights of the scheme members. The amendment ensures that it is clear that the authority is able to wind up a scheme only when that is in the best interests of the generality of members. Amendments Nos. 46 and 47 are amendments which I expect will appeal greatly to Members of the Committee opposite. They remove one of the regulation-making powers in the Bill. These were drafted along the lines of powers contained in the Social Security Act 1973 but on inspection it appears that those powers have never been used and therefore that this Bill can do without them.

Amendment No. 50 clarifies the effect of an order to wind up to ensure that no other rule of law or any provision or procedural device in scheme rules is able to prevent the authority from winding up the scheme when that is in the best interests of scheme members. This mirrors the provision in the Pension Schemes Act 1993, which Clause 10 replaces. I beg to move.

Lord McIntosh of Haringey

I am grateful to the noble Lord for explaining these four amendments. I shall deal with the easy ones first. As he suggested, we have no difficulty with Amendments Nos. 46 and 47, which remove regulation-making powers. There is no difficulty about that. We positively welcome Amendment No. 50. It means that there cannot he rules in one's pension scheme which enable the provisions of Clause 10 concerning the winding up of a scheme to be frustrated.

I have much more difficulty about Amendment No. 44. Perhaps I may explain from personal experience why that is the case. I have no financial interest in the matter because I am a pensioner member of a small pension fund which I established myself 30 years ago. However, I am a pensioner member. After I retired and started to take my pension, the trustees, who did not include a pensioner member but included directors of the company, of which I had been a director for 30 years, decided for their own reasons to wind up the scheme. They decided that it was sensible for them—I am not saying that they were wrong—to have personal pensions assisted by the company rather than a final salary scheme. What they did not take into account was the fact that at the time they did so there was a surplus in the scheme. They did not take into account the possibility even that I and the other pensioner members ought to have some rights in terms of improved pension arrangements from the surplus of the scheme.

They were able to do so because the rules of the scheme provided that the trustees had the complete freedom to wind up the scheme when they wanted to—that, I hope, will be dealt with by Amendment No. 50—but also they would be able to do it—in my view wrongly—if the words "the generality of" were inserted in Clause 10(1) (c) but not if the Bill remained as originally drafted with the words "the best interests of the members". I am a member but I am not a part of a generality of members. In other words, I am a minority of members. I do not think it is right that a minority of members should be overridden in that way.

Even though the remaining amendments in the group will be accepted by the Committee, I hope the Government will feel that they ought to look again at Amendment No. 44. If the noble Lord will give me the slightest indication that he thinks that here is a case here and is prepared to write to me about it, I may be persuaded not to divide the Committee on the subject.

Lord Monkswell

I rise to support my noble friend. He raises a problem with regard to the Government's thinking on the matter. They really must have another look at this point. As my noble friend so ably described, there is a clear division between employee members of the scheme and the pensioner members of the scheme. Nowhere in the Bill have the Government recognised that division. We tried earlier on to get them to accept that point in terms of the make-up of OPRA but they would not. When it comes to protecting the interests of everyone in a pension scheme, we must recognise that there is this divide. I hope that the Government will take the point very seriously. If they do not, there will be great concern among many pensioners who are currently receiving pensions from occupational pension schemes. I am sure that that is not the Government's intention.

Lord Lucas

I have great sympathy with what the noble Lord, Lord McIntosh, said. Later on in the proceedings on the Bill we shall come to clauses which deal with the priorities on wind up. At that stage I hope that we shall be able to look again at the points which the noble Lord raised. With regard to this amendment, I shall certainly look at what is in Hansard and what is in the Bill and see whether there is anything which I can usefully write to the noble Lord.

Lord McIntosh of Haringey

I am grateful to the noble Lord. While he is doing that perhaps he will be good enough to consider the issue raised by my noble friend Lord Monkswell. Is it possible to interpret "the generality of members as being confined to the active members of the scheme—those still employed—while excluding the pensioner members? Clearly, in many pension schemes there could be a conflict of interests on winding up between pensioner members and existing members, whether or not there is a surplus in the scheme, as was the position in the case I described. However, the noble Lord has been most generous in offering to write to me. I do not propose to oppose the amendment at this stage.

Lord Lucas

Perhaps I may confirm that we shall certainly take those points and the matters raised by the noble Lord, Lord Monkswell, into account.

On Question, amendment agreed to.

Baroness Dean of Thornton-le-Fylde moved Amendment No. 45:

Page 4, line 39, at end insert: ("(d) the trustees are unable to act properly in a fiduciary manner, owing to serious or persistent interference by the employer.").

The noble Baroness said: Before the Minister says that the amendment is not necessary and that the point is covered in the Bill, perhaps I may pre-empt what he may say by pointing out that there are those who carry out the rules and those who frustrate them. I have represented people who have been at the receiving end of such treatment. Not only are there employers who disregard rules but some may remove themselves as trustees and appoint someone else as an employer trustee who is just a puppet on the end of that first employer's string. We set great store in the Bill by the authority but some employers are adept at delaying tactics. It is said in regard to Mr. Maxwell that much of what he did was quite legal. However, the Maxwell case is only one among many. I have a file half an inch thick of a whole list of companies in respect of which there has been employer interference, frustration and procrastination while all the time the pension fund has been deteriorating.

I do not accept that subsection (1) (c) of this clause is the answer to the problem that I am pointing out here. It is necessary to provide the means whereby the authority can step in to wind up a fund if the trustees have not carried out their duties. It may not always be in the best interests of the members of the fund for different trustees to be introduced and for changes to he made. Sometimes one has to pull up the drawbridge and say "Stop, we cannot carry on with this fund". That is why this amendment is tabled. I beg to move.

9 p.m.

Lord Mackay of Ardbrecknish

Clearly we have been here too long today because the noble Baroness has pre-empted what I am going to say to the Committee about the amendment. The point which she has made about the circumstances which can arise is perfectly valid. A scheme can be so poorly administered that its funding position can only be expected to deteriorate. The case which the noble Baroness is putting is that it is the employer's interference which can bring that about. There can be other reasons. Whether it is the employer's interference or not, we believe that the clause as drafted gives the authority the power to wind up the scheme. There is nothing in the Bill to prevent anyone, including scheme members, bringing anxieties about the administration of the scheme to the authority's attention. In most cases it may be better for the scheme members if the authority uses its powers to remove and appoint trustees to restore the scheme to a proper footing rather than to wind it up. Obviously, the noble Baroness had one or two circumstances in mind where, as she put it, the only way to deal with the matter was to pull the plug and wind up the scheme.

Clause 10 certainly gives the authority the power to wind up a scheme as a regulatory action to protect the interests of scheme members. The authority would be obliged to consider all the relevant issues before deciding whether to make an order to wind up. I do not believe that we can envisage here the circumstances which may occur to bring that about. Obviously, decisions of that kind would have to be arrived at very much on a case by case basis and only as a last resort.

As the noble Baroness thought I would, I should like to reassure her that the powers are certainly there to wind up and do not require to be added specifically against an employer's interference. There are other provisions in the Bill to protect the scheme from undue interference by employers; for example, the duty of the trustees to employ the auditors and the actuaries. I have no doubt that we shall come to these issues later.

I believe I said earlier to the noble Baroness, Lady Hollis, that we review all that happens during the day to see what points have been raised and whether our answers were proper, and properly addressed the issue. My answers are always proper, but whether they properly address the issue is another matter. I appreciate the considerable experience which the noble Baroness has had. We shall think about this matter and make sure that what I have said is the case.

Baroness Dean of Thornton-le-Fylde

I thank the Minister for that helpful reply. I appreciate very much the fact that he is prepared to look at this matter again. We await the outcome. On that basis I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Lucas moved Amendment Nos. 46 and 47:

Page 5, line 2, at end insert ("or").

Page 5, line 3, leave out from ("employer") to end of line 7.

The noble Lord said: I have spoken to these amendments already. I beg to move.

On Question, amendments agreed to.

The Earl of Buckinghamshire moved Amendment No. 48:

Page 5, line 7, at end insert: (" ; and an order may only be made under this section after consultation with each of the persons mentioned in paragraphs (a) to (c) (other than any on whose application the order is made).").

The noble Earl said: Clause 10 is quite interesting in dealing with wind up powers, particularly for someone who is in the business, as one might say. An order to wind up a scheme because it has been replaced by a different scheme or if it is no longer required, can only be made on application of the trustees or the managers or by a person who has power to alter the scheme rules or the employer. That is the purpose of Clause 10.

The amendment which I am moving ensures that, in an application for wind up by any of those people whom I have mentioned previously, other parties with an interest in the scheme are also consulted. The reasons are that there are circumstances where the employer, for instance, could apply for a wind up to take place where the trustees do not agree, and vice versa. The new wording will ensure that the regulatory authority talks to the interested parties before authorising the wind up.

There are two other reasons which I would like to mention quickly to the Committee. Many of the schemes have their own wind up powers included in the trust deed and rules. An application may be made where a person who can wind up under the scheme rules is unwilling to exercise that power. That is an important point and I should like my noble friend the Minister to reply to it.

As the clause is worded at present, the wind up can take place on the simple ground that there is a surplus in the fund. Curiously enough, in the 1970s I came across a scheme where there was a surplus and the scheme was wound up and the proceeds distributed directly to the active members of the scheme without reference to some of the other beneficiaries of that arrangement. There has to be some protection in such situations in the wind up, because the interests of all the members must be considered. We heard from the noble Lord, Lord McIntosh, about the active members, and in my view they were not properly dealt with on wind up. That could occur without the protection of this amendment to the Bill. I look forward to hearing what other Members of the Committee have to say. I beg to move.

Baroness Hollis of Heigham

I am not sure that I shall be able to add very much to what the noble Earl has said except to say that we strongly support the amendment. It seems entirely reasonable that under those circumstances those affected should be consulted. That is a basic principle of justice which came earlier in today's debates. We warmly support this amendment.

Lord Mackay of Ardbrecknish

The decision to issue a wind up order will only be taken by the authority after it has carried out an investigation. I suggest to the Committee that, for the reasons I gave in the previous debate, that should take place only after other possible solutions have been considered, because winding up may not be in the best interests of the scheme. Putting in new trustees and trying to get the scheme back on an even keel may be the best thing to do. If it comes to wind up, clearly that will be done only after the authority has satisfied itself that that is the only possible outcome, and therefore this amendment is unnecessary in that regard.

During the investigations the authority will have possibly talked to all the people mentioned in the subsection, but placing a statutory obligation on it to consult them is perhaps going a step too far. It could lead to delays in decisions being made—I have little doubt that somebody who is totally unscrupulous could find ways to stall and delay—and during this period the position of the scheme could further deteriorate, putting members' interests at even greater risk. While I understand the point and think it is perfectly reasonable—and this will be done, I am sure, in the position where the scheme will not deteriorate during the discussions—to make it mandatory for the authority to have these discussions could perhaps put at risk schemes where speed is of the essence.

The other point made by my noble friend Lord Buckinghamshire is that it may sometimes not he in the best interests of the scheme members to wind up a scheme with large surpluses, where members might benefit from a large cash windfall. That is not the intention we have in mind when we give the power of wind up; it is to prevent losses.

We are aware of the concerns but we do not think it is a problem. The power to wind up is designed to protect members in the rare cases where schemes are seriously under-funded. It would not be in the long-term interests of members to have their schemes wound up for what might be a relatively small, short-term gain. The level of the surplus would have to be significant for members to benefit in the way suggested. However, on that point, I shall look at the concerns my noble friend has expressed and consider them before the next stage.

Baroness Hollis of Heigham

Before the noble Earl, Lord Buckinghamshire, decides what he wants to do with this amendment, may I ask the Minister, so that we have it on the record, whether this clause as it stands give the authority power to act where there have been breaches of trust rather than simply breaches of the statute? If so, what powers does the authority have to investigate or initiate a wind-up?

Lord Mackay of Ardbrecknish

The noble Baroness has asked me a question that I cannot answer immediately. If she will forgive me, I shall either answer it later or write to her.

The Earl of Buckinghamshire

I am grateful to those Members of the Committee who have taken part in the debate on the amendment. I think it is a curious clause in the way it is being applied. I have listened carefully to what my noble friend has said and I am very pleased that he will come back to us on one of the issues I raised. On that basis, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Dean of Thornton-le-Fylde moved Amendment No. 49:

Page 5, line 7, at end insert: ("(e) scheme members").

The noble Baroness said: The subsection states that an order made by the authority under this clause: may be made only on the application of—

1. (a) the trustees or managers of the scheme"—

we know who they are— (b) "any person other than the trustees or managers who has the power to alter any of the rules of the scheme"—

and the individual members of a scheme do not normally have that power— (c) "the employer, or (d) such other persons as the regulations may specify".

This subsection does not contain within it the right of individual members of the scheme to seek a wind-up of the scheme. It gives that authority to a wide group of other people, some of whom have no individual vested interest or money in the scheme. We feel that it is wrong to have a provision in the Bill that provides for those various groups to seek a wind-up but excludes quite specifically the individual members of the scheme. That is what this amendment would effect. I beg to move.

Lord Mackay of Ardbrecknish

Before I speak to Amendment No. 49, perhaps I may answer the question asked by the noble Baroness at the end of the debate on the previous amendment. Having studied the matter in the past few minutes, I can state that the answer is yes.

I turn now to Amendment No. 49, which enables scheme members to ask the authority to wind up the scheme if it is not needed or is to be replaced. The right to make an application currently rests, and we believe must continue to rest, with the employer or trustees. It is not a matter for scheme members. Indeed, since a similar regulation-making power introduced by the Social Security Act 1973 has never been used we have brought forward an amendment to remove that unnecessary power.

However, if scheme members are concerned about the administration of their scheme they can, of course, inform the authority, and in extreme circumstances—I mentioned this in a previous debate—the authority has the power to wind up the scheme if that is in the best interests of the generality of the members.

It would be wrong to put scheme members into one of the classes in this part of the Bill, but that does not mean to say that scheme members do not have a route, via the regulatory authority, if they feel that there is something so wrong with the scheme that it should be wound up. I hope that that assurance will allay any fears that scheme members will have no way of suggesting to the authority that the scheme be wound up.

9.15 p.m.

Lord Monkswell

I am a little concerned that the Minister should have taken that line in his response. We must recognise the practical world of work. In negotiations over the remuneration package between employers and employees pension arrangements will form part of the scenario. Effectively, what the Minister is saying is that the advantage in those negotiations should be conferred on the employer, and the employee should not have a balancing facility. A reasonable employer probably would not use the argument in negotiation with his employees, "If you do not play ball, I will get the scheme wound up", but we must recognise that we may be dealing with unscrupulous people, particularly employers. Will the Minister reconsider the fact that scheme members should not make an application to wind up the scheme?

Lord Mackay of Ardbrecknish

I am not entirely sure that the noble Lord is not coming to this from the opposite direction. He was talking about an employer wanting to wind up the scheme under the feet of the scheme members, with them having no say in the matter. I think that is what he was saying. We are actually discussing who can make an application to the authority to wind up the scheme. The noble Baroness is asking me to consider adding scheme members to the list. That is a different argument from the one suggested by the noble Lord.

My response to the noble Baroness stands. If the noble Lord was suggesting that an application from, say, an employer would be automatic, and that the scheme members would have no say in the matter, I can assure him that an application is not automatic. The authority can accept the request and proceed with wind-up, or it can refuse any application for wind-up. I hope that answers the noble Lord and helps him with the problem that he raised.

Baroness Dean of Thornton-le-Fylde

The Minister is correct in his interpretation of what we intend with the amendment: it is to include the scheme members. My concern with the Bill is that we talk about trustees, professional advisers and employers, but we sometimes tend to forget the persons whom it is really all about; that is, individual members of the scheme who invest in it a considerable amount of their hard-earned income.

In going through the Bill, we must ensure that individual scheme members have control and authority, and are rightly able to seek accountability from the people who run and organise the scheme. Therefore any measures in regard to pension funds should de facto include the rights of individuals within the scheme—the scheme members. I hear what the Minister said and I shall read in Hansard and consider whether we should come back at a later stage. At this point, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Lucas moved Amendment No. 50:

Page 5, line 11, at end insert: ("( ) The winding up of a scheme in pursuance of an order of the Authority under this section is as effective in law as if it had been made under powers conferred by or under the scheme. ( ) An order under this section may be made and complied with in relation to a scheme—

1. (a) in spite of any enactment or rule of law, or any rule of the scheme, which would otherwise operate to prevent the winding up, or
2. (b) without regard to any such enactment, rule of law or rule of the scheme as would otherwise require, or might otherwise be taken to require, the implementation of any procedure or the obtaining of any consent, with a view to the winding up.").

The noble Lord said: I spoke to this amendment with Amendment No. 44. I beg to move.

On Question, amendment agreed to.

Clause 10, as amended, agreed to.

Clause 11 [Injunctions and interdicts]:

Baroness Turner of Camden moved Amendment No. 51:

Page 5, line 21, at end insert ("and the costs of such court action, and any costs incurred in preparing cases under this section, shall fall on the Secretary of State.").

The noble Baroness said: I shall speak also to Amendment No. 57. Amendment No. 51 addresses the problem that it would be for the regulatory authority to prove reasonable likelihood of misappropriation to a court. That could be an expensive exercise. The authority needs resources to investigate possible cases. The budget allocated to the regulator may be insufficient to sustain many cases. The idea of the amendment is to ensure that the DSS or the Government will provide sufficient resources.

It is worth mentioning that Clause 87 provides very wide-ranging powers both for the authority to make application to the courts and for aggrieved individuals to make application for judicial review. In these circumstances, it becomes necessary to ensure that the authority has the resources available to it. If the authority wishes to make application to the court under Clause 11, which deals with the important question of a possible misappropriation, the Government should stand behind it to ensure that the necessary costs are met. That would be in the public interest.

Amendment No. 57 also deals with references to a court and Clause 87 relates to references to a court by the authority. Where it is deemed appropriate to refer any question of law to the court the authority must tell the applicant where this arises from an application being made to the authority and, in any case, to such persons as appear to it to be concerned with the question. Again, it says little about scheme members and the beneficiaries.

The intention of the amendment is to make it obligatory for the authority also to notify any independent trade union, recognised to any extent for the representation of members of the scheme, and any organisation appearing to be representative of pensioners or beneficiaries of the pension scheme concerned. It is surely appropriate for the scheme members, through whatever organisation they choose to represent them, to be involved if there are references to a court about their scheme. After all, they are the people who are most concerned—a point made most strongly by my noble friend Lady. Dean. I hope that the Minister will regard these two relatively minor amendments as entirely reasonable. I beg to move.

Lord Mackay of Ardbrecknish

My Lords, these two amendments concern the arrangements for taking court action. I am not happy about them because they would impose additional costs on the taxpayer. We believe that it is fundamentally correct that the costs of regulation should fall on those who set up and run pension schemes. We had a major debate about that earlier today. For this reason, I cannot accept Amendment No. 51, which provides for the costs of court injunctions granted on application by the authority to be met by the Secretary of State.

I believe that Amendment No. 57 is unnecessary. The effect of this amendment is to require the authority to give written notice to specified parties of its intention to refer a case to the court on a point of law. However, Clause 87(2)(b) already gives the authority a wide permissive power which would enable it to do this. The authority will be well equipped to decide which groups may have an interest in a given case. Clause 87(2) states: If the Authority determine in accordance with subsection (1) to refer any question of law to the court, they must give notice in writing of their intention to do so—

1. (a) in a case where the question arises on an application made to the Authority, to the applicant, and
2. (b) in any case to such persons as appear to them to be concerned with the question".

I believe that the authority will be well able to judge who is concerned with the question. It seems to me unnecessarily prescriptive and bureaucratic to require the authority to notify such organisations in all cases, even where not all of the groups might have a specific interest.

This amendment would also insert a power to allow the authority to meet the court costs of scheme members or those organisations representing them, with or without a court order requiring them to do so. Clause 87(7) already provides for the court to order the authority to pay the costs of any other person if it considers it appropriate. Whether or not the decision is in that other person's favour and whether or not the authority appears on the reference or the appeal the court may order the authority to pay the costs, or in Scotland the expenses, of any other person. It is surely the court which will be best placed to decide in what circumstances it would be right for the authority to meet such costs.

Extending the circumstances under which the authority would pay costs would increase the costs of the authority and would be asking all pension schemes to meet the legal costs of persons involved in a case which might concern only one specific scheme and where the groups specified in the amendment might have only a marginal interest in the question referred. I believe that this amendment is unnecessary and the costs and the way they are imposed are wrong and contradict the points that I made earlier. I hope, with that explanation, the noble Baroness will feel able to withdraw her amendments.

Baroness Turner of Camden

I thank the Minister for his response to the amendments. I am not entirely surprised at his response to Amendment No. 51, but I think it would be unsatisfactory if the regulatory authority found that it did not have sufficient funds available to take appropriate cases to the courts where a case of misappropriation was involved. It surely would not be in the public interest for that to happen. That was why we felt that the Government ought to be prepared to stand behind the regulator if that were the case. However, I am not surprised, in view of the Minister's general attitude to funding as regards the authority, that he has not felt it appropriate to accept Amendment No. 51. We shall look carefully at what he said in Hansard and see whether there is any way in which we can return to the matter on Report.

With regard to Amendment No. 57, I note what the Minister had to say about it being unnecessary and about the provisions of Clause 87. However, I still feel that independent trade unions recognised to any extent for the representation of members in a scheme, or an organisation representative of pensioners or beneficiaries, ought to have some status and ought to have some rights in regard to consultation. It may well be that our wording here is not appropriate—I am quite willing to accept that—but I think that organisations of that kind have a role and have a right of consultation. It would be a good idea for that right to be written into the Bill. I shall not press either of these amendments at this point in time, but certainly I shall look very closely at the response, particularly to Amendment No. 57, to see whether we can return with a different sort of wording on Report. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 11 agreed to.

Clause 12 [Restitution]:

[Amendment No. 52 not moved.]

Clause 12 agreed to.

Clause 13 [Directions]:

Lord Haskel moved Amendment No. 53:

Page 6, line 3, at end insert: ("(c) in the case of any trust scheme, direct that an advertisement prepared by the Authority shall be inserted in national or local newspapers or magazines.").

The noble Lord said: In moving this amendment I wish to speak also to Amendments Nos. 81 and 82. The Minister should be quite pleased with this amendment because it may save the taxpayer some money. It concerns publicising the regulator's decisions. Public knowledge about someone breaking the rules is often a far greater deterrent than the penalties or the fines imposed on a company. This is because that information could reflect on a company's image, its share price and its credit rating and even signal a financial crisis in the business. The Committee may have noticed that the publicity given to fines imposed by FIMBRA has had more deterrent value on firms in the financial services industry than the fines themselves. The purpose of this amendment is to add the threat of publicity to the penalties which can be imposed on an employer. That would be quite normal in the commercial world. I beg to move.

9.30 p.m.

Lord Mackay of Ardbrecknish

I cannot agree with the noble Lord that the amendments would save me, or more importantly the levy payers, money.

Turning to Amendment No. 53, Clause 93 of the Bill already provides the authority with the power to publish reports of its investigations in any manner it thinks fit. That would include the placing of advertisements in local or national newspapers or magazines if it believes that that is appropriate. Therefore, I believe that Amendment No. 53 is not necessary.

As regards requiring the authority to publish reports of all investigations as Amendments Nos. 81 and 82 suggest, many investigations may conclude that there are no substantial problems with the scheme. It would be pretty bureaucratic and costly to require the authority to publish reports in those circumstances. Other investigations will reveal problems which are of concern only to the members of that scheme and which can be put right relatively easily. The authority has power under Clause 13 to direct the trustees of that scheme to advise scheme members of the conclusions of the authority's investigations.

Therefore, I believe that the amendments are unnecessary. In cases where the authority feels that publicity for its reports and decisions is necessary, powers already exist for the authority to do just that.

Lord Haskel

I feel that the matter should be pressed harder rather than merely being left to the discretion of the regulatory authority. However, at this time of the evening I do not intend to press it. Therefore, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 13 agreed to.

Clause 86 [Review of decisions]:

Baroness Hollis of Heigham moved Amendment No. 54:

Page 49, line 29, at end insert: ("( ) to make any other action or to make any other determination under this Act.").

The noble Baroness said: In moving Amendment No. 54 I shall speak also to Amendments Nos. 55 and 58. The amendments seek to establish a right of appeal against the decisions of the authority.

Amendment No. 54 widens the scope of reviews by the authority of its own decisions in order to make any decision reviewable on the application of any person. Amendment No. 55 would require that the authority must, on the application of any person appearing to the authority to be interested in the decision, review a determination if it appears that there has been a material change of circumstances, material facts were missing or it was wrong on a question of law. At present that review is merely optional. Amendment No. 58 allows any person aggrieved by a determination given on a review by the authority, or its refusal to review a determination, to appeal to the court rather than merely on questions of law. Together the three amendments provide that the authority will make a decision on a matter, and it must review that decision if requested to do so or if it did not get the facts or the law right. If a person is still not satisfied, that person can appeal to the courts on questions of fact or law.

We do not suggest necessarily that the drafting of the amendments is perfect, but we ask the Government to look again at whether the authority should be the final arbiter in cases of fact. We ask either that questions of fact should also be appealable to the court, as proposed in the amendments, or, alternatively, that the Government consider establishing an appeal tribunal rather like the Financial Services Tribunal which can hear appeals for the Securities and Investments Board on issues such as withdrawal or suspension of authorisations to conduct investment business.

While the suspension of a trustee is not a question of a loss of livelihood, it can still have serious consequences. We do not believe that it is sufficient to say that a mistake of fact can be rectified by the authority under Clause 86(3) (a) when a review is optional and it is up to the authority itself to decide whether there has been a mistake as to material fact. We hope that the situation will not arise often. However, we believe that natural justice requires that there should be an appeal from the authority on matters of fact as well as of law analogous to that established in the Financial Services Act. I beg to move.

Lord Mackay of Ardbrecknish

We are moving to another part of the Bill relating to the functions of OPRA. I believe that we are all agreed on one matter: that we want OPRA to be an effective regulator. I rather fear that, taken together, the amendments could easily have the reverse effect. They require the authority to review any of its actions. That involves every request for information, every attempt to carry out an investigation, and every application for an injunction. Indeed, those provisions would frustrate and delay the very regulatory process that we seek to put in place. Adding a right of appeal to the courts on questions of fact as well as of law could only add significantly to the delays.

There may be times when OPRA has to take very difficult decisions—for example, when the only way to prevent further deterioration in the funding and running of a scheme is to wind it up. That would at least prevent a bad situation from getting worse, and ensure that members received at least some of their accrued rights. I can assure the Committee that those are not the type of decisions that OPRA will take hastily or lightly. They will come only at the end of a period of considerable involvement with the scheme. But, once having been taken, such decisions will need to be implemented as quickly as possible. To require OPRA to suspend such enforcement action pending the carrying out of a formal review would not be in the interests of scheme members.

That would also be the case if every decision taken by OPRA could be taken to the courts, not just on a point of law, but on a point of fact. Perhaps I may suggest to the Committee that this is not a recipe for effective regulation of scheme security.

I understand the desire to have a mechanism for looking again at OPRA's decisions, in particular where penalties are involved. That is why we have put in place a rigorous internal review procedure. Decisions on penalties and on other significant enforcement decisions will not be taken by faceless officials blindly following procedures. They will be taken by the OPRA board. That board will be selected to bring to the authority as wide a range of expertise and knowledge of pensions matters as possible. Decisions will have to be explained, in writing, to those who are the subject of those decisions. The Bill already contains a requirement for OPRA to review its decisions: a mandatory requirement, on application by any person, where penalties are to be imposed and a permissive one where other decisions have been taken.

We accept that there will be a need to ensure that OPRA's decisions have been taken in accordance with the law. That is why we have provided for a right of appeal to the courts—but only on a point of law, where it is obviously the case that the courts are best placed to make judgments.

I believe that the amendments would seriously compromise the authority's ability to do its job speedily and effectively. Having listened to what I have said, I hope that the noble Baroness will feel able to withdraw her amendment.

Baroness Hollis of Heigham

I thank the noble Lord for that reply. Obviously on this side of the Committee we are anxious to do nothing which adds to frustrations and delays regarding the regulatory authority. We accept the Minister's worries about that; we certainly do not wish to contribute to them. However, the Minister might perhaps have accepted more freely than he did that, as drafted, the authority's powers are extremely draconian. The authority is the final arbiter on matters of fact, and almost the final arbiter on matters of law. There is an area here of legitimate public concern. Unless we do something about that, only the right of judicial review will be open to aggrieved applicants, and for that they will not be able to obtain legal aid.

Obviously at this stage it is a probing amendment. Will the Minister review the situation? In the case of most other agencies, such as under the Financial Services Act 1986 and with the child support appeals tribunal and the Industrial Injuries Compensation Board, I understand that there is a route of appeal. It seems to me that between us we ought to be able to find a last safety net for aggrieved individuals who have been harshly treated with draconian measures by the authority. Perhaps the Minister will consider that. It is rare not to have the right of appeal with such a significant authority. I accept that we do not want delays, but we need something on grounds of natural justice. I invite the Minister to make a final comment.

Lord Mackay of Ardbrecknish

I fully appreciate that the matter is serious. The noble Baroness started to make a point, but she did not really advance the argument. Perhaps she did not wish to stray into other fields with which we shall deal later. The question of an appeal has been one of the difficult issues with the Child Support Agency.

Here we are dealing with a regulatory authority with a statutory duty to carry out all the work we have laid down. I was accused earlier in the day of proposing a regulator who was weak and might be ineffectual. I am now saying: "Let's keep it firm by not allowing people to appeal against decisions which would prevent the regulator from acting quickly and efficiently", and I am now being—I shall not say attacked, but asked rather gently whether I will do something to put in an appeals procedure. There is already provision in the Bill to go to the courts on a point of law.

I shall carefully consider what the noble Baroness said because I appreciate that sometimes it is important to have the safety valve of an appeals system. I hope that she will agree with me that the provision would have to be extremely narrowly drawn and not in any way prevent the regulatory authority from being able to act quickly and efficiently to prevent any further damage to an already damaged scheme. I shall go so far as to say that I shall consider what has been said, but I should have to be more convinced than I am before I could go down the road of introducing an appeals procedure. It might weaken the immediate impact which the regulator might need in certain cases.

Baroness Hollis of Heigham

I thank the Minister for that reply. The reason I did not pursue the example of the Child Support Agency is that I did not wish to embarrass him. Members on this side of the Committee called for an appeals system there and the Minister refused it. Two years later, the Minister has had to accept a system, acquiesce in it and introduce it in the light of public protest. I thought that perhaps the Minister would have learnt from that and was ascertaining whether we could establish common ground between us.

Perhaps the Minister could take on board the anxiety here. We are not sure that the proposal is the right way to handle it, but there ought to be a final reviewing agency above and beyond the regulatory authority. However, in the light of the Minister's assurances that he will consider the matter —I shall not say reconsider it—I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 55 not moved.]

Clause 86 agreed to.

Clause 87 [References and appeals from the Authority]:

Baroness Seear moved Amendment No. 56:

Page 50, line 19, leave out ("if the Authority think fit").

The noble Baroness said: This amendment is very much a continuation of the discussions we have just had. In the light of what he has just said, the Minister will probably tell me that the question has been answered. However, the point of the amendment is to ensure that the legal advantages are not all in favour of the authority as against the members requiring legal protection. The phrase: if the Authority think fit", seems to imply that the authority has a right to go to law or not to do so as it sees fit. The Minister will probably say that the members are equally protected under subsection (3) (b) because they can appeal to the law. However, I should like that to be confirmed. It is the same point as the one made by the noble Baroness. We wish to be certain that the authority does not have arbitrary power and that at the end of the day appeal to the law is available for all interested parties, not only the authority. I beg to move.

9.45 p.m.

Lord Mackay of Ardbrecknish

As the noble Baroness, Lady Seear, explained, this amendment removes the specific reference to the authority from Clause 87(1), which sets out the powers to refer questions to the court on a point of law. The effect of the amendment would be to make it unclear who is to refer questions that arise under Clause 87(1).

The power to refer cases is intended to allow the authority, in its regulatory and enforcement role, to seek clarification from the courts where it believes that the law is not sufficiently clear for it to reach a decision on a matter arising under Part I of this Bill or on a matter arising on review.

Adequate provision is made elsewhere in this clause for others to take questions to the court. Where any person is aggrieved by a decision of the authority on review, including any refusal of the authority to review a decision, provision is made under Clause 87(3) for that person to appeal to the court on a point of law. I will not read out the subsection, but it states quite clearly that any person who is aggrieved, where the determination involves a question of law, may on that question appeal from the determination to the court.

On a general point, it is of course open to any group or organisation wishing to seek clarification on a specific area of the law to take up a suitable test case. Sitting in the Department of Social Security, I can say that that path seems to be pretty well-worn by many bodies. I therefore do not believe that it would be wise, as this amendment seeks, to make Clause 87(1) less clear. The fear that the noble Baroness has about other people's rights to go to court on a point of law is dealt with by Clause 87(3).

Baroness Seear

I am grateful to the noble Lord for that reply. I am very anxious to have confirmation from the Minister on the record so that we can be absolutely clear that there is the same right of appeal to the law for all the interested parties and that there is no preferential position, as it were, for the authority. In the light of what the Minister said, I am very glad to beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 57 and 58 not moved.]

Clause 87 agreed to.

Clause 88 [Provision of information]:

Lord Haskel moved Amendment No. 59:

Page 51, line 9, after ("writing") insert ("and, in the case of information under subsection (4) below, in any event without being so required").

The noble Lord said: In speaking to this amendment, I also speak to Amendments Nos. 60, 71, 80 and 84.

The purpose of this amendment is to implement the sound business practices recommended in the Goode Report; namely, that there should be the discipline of an annual return to the regulator. These amendments draw on my experience of business in the United States, where annual returns are obligatory. The Department of Labor there has developed standard computer programs which highlight key ratios and other data, and that is how the majority of tip-offs occur. In addition, in the United States, under the Freedom of Information Act, scheme members are able to inspect the returns of their own employers, and that is an important contribution to informed regulation.

In the US, where the annual returns are disclosed to all scheme members, the Department of Labor receives more useful information in feedback from scheme members and learns a lot more about which schemes need investigating than it does from its own investigations. Once again, this proves the value of openness. This amendment is designed to ensure a full disclosure of information.

Mr. Andrew Large, the director of the Securities and Investments Board, recently sent me a copy of a speech that he had made in which he made clear that the regulatory burden could be lifted, only if the personal financial services sector was more open with its customers". This amendment will encourage that. I beg to move.

Lord Mackay of Ardbrecknish

The noble Lord has clearly explained the purpose of his amendments. I am sorry to tell him that I believe they would make some unacceptable changes to the way in which the authority would operate, and in particular to its powers to investigate schemes. In fact, we partly discussed the issue earlier when a noble Lord opposite—it is so long ago I cannot remember who it was—proposed an amendment to Clause 1 on similar lines with regard to the 150,000 pension schemes. I do not share the noble Lord's experiences of the United States of America, but it may help the case that I am about to make to tell the Committee that the Department of Labor's returns run to some 50 pages of detailed questions. There are 150,000 pension schemes and it is late at night. It is an awful lot of pages.

In addition, in the United States interestingly enough, there is a substantial level of failure to return information. The Department of Labor has a substantial backlog of work. I do not believe that it is the best model for an effective regulator. As I said earlier, the last thing we want is for the regulatory authority to become bogged down in administering the returns, making sure that it receives them in the form that it wants and storing them. That would take its eye off the main task we are giving it in the Bill; namely, to investigate schemes about which there is some suspicion—schemes which have been drawn to its attention. We do not want it to spend a great deal of time, energy and money looking at schemes which are running perfectly well. We believe that the authority should focus on schemes that have problems rather than schemes which are running smoothly. That is why it will act in response to reports of suspected breaches of statutory obligation under both this Bill and the Pension Schemes Act 1993.

Amendments Nos. 59 and 60 would impose a requirement for schemes to submit annual returns to the authority, as the noble Lord said. I have explained that that would be an unnecessary burden on schemes. There would be the inconvenience of having to file the returns and an additional cost to the authority, which would fall vita the levy, on the schemes themselves.

Amendment No. 84, which appears to be consequential to Amendments Nos. 59 and 60, would enable the authority to disclose to members or representatives of members any information contained in annual returns submitted to the authority. There is no specific need for that as OPRA is able to disclose information already in the public domain through Clause 94(2) (a).

Amendments Nos. 71 and 80 introduce a requirement for the authority to draw up a programme of inspection visits and allow a JP to issue a warrant for an inspector to enter and search premises if the scheme fails to operate such a visit. The authority will be able to carry out on-site checks independently of any complaint or report being received. To require it to make such visits would be an unacceptable constraint on the authority's freedom to decide how it should undertake its responsibilities.

I suspect that the noble Lord will not be very satisfied with my reply. However, I hope that with that reply and the replies I gave earlier today I have underlined the fact that OPRA's role is not to monitor all 150,000 pension schemes, most of which are running perfectly effectively, but to intervene in those schemes where question marks have been thrown up by the trustees, the auditors or, as I explained earlier, any other persons who may have knowledge which they think should be drawn to the attention of the regulator for his consideration along with the decision as to whether or not it is a sufficiently serious matter for him to start investigating a particular scheme.

Lord Haskel

I do not wish at this time to enter into a discussion about the United States. At a later stage I shall return to the experience there because I believe that there are some very valuable lessons to be drawn from it. Meanwhile, with regard to the Minister's point about the 150,000 schemes, the Goode Report foresaw that and suggested an accelerated means of checking up on schemes, particularly those administered by insurance companies or perhaps firms of consultants, which number well over 100,000.

I do not wish to enter into a discussion at this stage. I shall return later to the experience of the United States, particularly on matters of voting. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 60 not moved.]

Clause 88 agreed to.

The Deputy Chairman of Committees (Lord Lyell)

Before I call Amendment No. 61 I must inform the Committee that if Amendment No. 61 is agreed to, I shall be unable to call Amendment No. 62.

Clause 89 [Inspection of premises]:

Lord Lucas moved Amendment No. 61:

Page 51, line 18, leave out from ("of") to ("at") in line 19 and insert ("investigating whether, in the case of any occupational pension scheme, the regulatory provisions are being, or have been, complied with,").

The noble Lord said: In moving Amendment No. 61, I shall speak also to Amendments Nos. 63 to 68, 70, 72, 75 and 77. These amendments are broadly technical in nature, some more and some less. Amendments Nos. 61, 63 and 64 are related. They clarify the power of OPRA to investigate whether or not a scheme is complying with the regulatory provisions. That includes the power to make spot checks and respond to whistle blowing.

Amendment No. 61 clarifies the purposes for which an inspector may enter premises and carry out investigation. It introduces the term "regulatory provisions". Amendment No. 63 is consequential upon Amendment No. 61. Amendment No. 64 provides a definition of the term "regulatory provisions".

We have seen some of the exemptions listed in Amendment No. 64. They are the ones that featured in my earlier discussions with the noble Lord, Lord McIntosh. I can confirm that the amendment will be covered in the letter that I sent him relating to our earlier discussions.

Amendments Nos. 65 to 68 are technical and clarifying amendments. They make it clear that the investigatory powers given to an inspector appointed by the authority under the clause will only allow the inspector to enter premises connected with the scheme under investigation. The premises the inspector is permitted to enter are where members of the scheme under investigation are employed; where documents relevant to that scheme are stored, or where the administration of that scheme is carried out.

Amendment No. 70 is a technical amendment. It replaces a reference to this "Part" to make it clear that the only purpose for which an inspector appointed by the authority can apply to enter premises are those set out in Clause 89. That is because all the purposes for which an inspector should be permitted to enter premises are set out in that clause.

Amendment No. 72 is again a technical amendment. It removes a confusing reference to information given to a justice of the peace by an inspector. As drafted, the clause appears to imply that the inspector may not be giving information on behalf of the authority, which is not our intention. The position is made clear by the amendment.

Amendments Nos. 75 and 77 extend the circumstances in which the authority may apply to a justice of the peace for a warrant to enter and search premises and remove documents. They are intended to ensure that the authority is able to apply for such a warrant in all appropriate circumstances. Amendment No. 75 allows the authority to apply for a warrant where there are reasonable grounds for believing that a person will do any act which constitutes a misuse or misappropriation of the assets of an occupational pension scheme. Amendment No. 77 is a consequential amendment. It allows the authority to apply for a warrant where there are reasonable grounds for believing that a person will do any act which constitutes a misuse or misappropriation of the assets of an occupational pension scheme. I beg to move.

Baroness Hollis of Heigham

We are obviously happy with the bulk of the amendments, especially those, as the Minister put it, which are "more technical". Amendment No. 61 may be less technical and I am not sure that I understand its import. Perhaps I may press him a little on that.

In reply to an earlier question of mine in relation to the amendment of the noble Earl, Lord Buckinghamshire, the Minister's noble friend said, with his usual fluency, panache and expansiveness, "Yes". I should like to find out precisely what the "yes" covered in the context of Amendment No. 61. What is in this sense the regulatory provision? For example, does it include considering whether or not there is a likelihood of misappropriation, as in Clause 11, or whether it is in the best interests of scheme members to wind it up, as in Clause 9? In other words, will the regulator send in inspectors where there is general wrongdoing rather than an infringement of a specific statutory provision? Can the Minister tell us more, or alternatively write a note?

10 p.m.

Lord Lucas

The Minister may have the usual limitations in giving an exact answer to the question. As far as the wording of Clause 61 is concerned, I believe that what it is intended to cover is quite clear: that is, whether the regulatory provisions as defined in Amendment No. 64 are being contravened. Apparently, that means "yes". If the breach of trust leads to a deterioration in the scheme funds, OPRA can wind it up in the interests of members, including pensioners. I believe that that will cover the matter which is of concern to the noble Baroness. However, I will look again at what she, and indeed I, have said and see whether there is anything that I need add by way of letter.

Lord Monkswell

The Minister listed a series of premises that could be inspected by the authority, but I do not believe that he mentioned premises where the assets of the scheme were held. Perhaps he can clarify whether or not the authority will have power to enter those premises.

Lord Lucas

It is clear that premises where documents relative to the scheme are stored are included, but I cannot answer the noble Lord as to whether a place where gold bars are stored is also included. I will write to him.

On Question, amendment agreed to.

[Amendment No. 62 not moved.]

Lord Lucas moved Amendments Nos. 63 to 68:

Page 51, leave out lines 22 and 23 and insert ("such purposes,").

Page 51, line 31, at end insert: ("( ) In subsection (1), "the regulatory provisions" means—

1. (a) the provisions of this Part, other than the following provisions: sections 44 to 47, 55 to 58 and 100 to 102,
2. (b) the following provisions of the Pension Schemes Act 1993: section 6 (registration), Chapter IV of Part IV (transfer values), section 113 (information) or section 175 (levy), or
3. (c) any corresponding provisions in force in Northern Ireland.").

Page 51, line 34, leave out ("an occupational pension") and insert ("the").

Page 51, line 35, leave out ("such a") and insert ("the").

Page 51, line 37, leave out ("such a") and insert ("the").

Page 51, line 38, leave out ("such a") and insert ("the").

The noble Lord said: I spoke to Amendment No. 63 together with Amendment No. 61. In moving the amendment, I also wish to move Amendments Nos. 64 to 68 en bloc. I beg to move.

On Question, amendments agreed to.

[Amendment No. 69 not moved.]

Lord Lucas moved Amendment No. 70:

Page 51, line 42, leave out ("Part") and insert ("section").

The noble Lord said: I have already spoken to this amendment with Amendment No. 61. I beg to move.

On Question, amendment agreed to.

[Amendment No. 71 not moved.]

Clause 89, as amended, agreed to.

Clause 90 [Warrants]:

Lord Lucas moved Amendment No. 72:

Page 52, line 2, leave out ("or by an inspector").

The noble Lord said: I have already spoken to this amendment with Amendment No. 61. I beg to move.

On Question, amendment agreed to.

Lord Lucas moved Amendment No. 73:

Page 52, line 6, leave out ("or enactment").

The noble Lord said: I beg to move Amendment No. 73 and at the same time to speak to Amendments Nos. 78 and 102. These amendments are technical. Amendments Nos. 73 and 78 correct references in respect of legislation in Northern Ireland. Amendment No. 102 gives the Department of Health and Social Services for Northern Ireland its correct title.

On Question, amendment agreed to.

Lord Lucas moved Amendment No. 74:

Page 52, line 13, leave out from ("Act") to ("or") in line 15 and insert ("or the Pension Schemes Act 1993, or any enactment in force in Northern Ireland corresponding to either of them").

The noble Lord said: In moving this amendment I shall speak at the same time to Amendments Nos. 76 and 79. The amendments are all technical in nature. In setting out the circumstances under which a warrant can be applied for, Clause 90 makes reference to a number of provisions contained elsewhere in the Pensions Bill and in the Pension Schemes Act 1993. So that legislation in Northern Ireland is also covered it is necessary for the clause to refer to the corresponding enactments which are in force in Northern Ireland. The amendments seek to remove unnecessary references to provisions already implied by the definition of enactments in force in Northern Ireland. I beg to move.

On Question, amendment agreed to.

Lord Lucas moved Amendments Nos. 75 to 79:

Page 52, line 15, at end insert: ("( ) a person will do any act which constitutes a misuse or misappropriation of the assets of an occupational pension scheme,").

Page 52, line 16, leave out from ("Act") to end of line 18 and insert ("or the Pension Schemes Act 1993, or any enactment in force in Northern Ireland corresponding to either of them").

Page 52, line 20, leave out ("or (as the case may be)") and insert ("whether the act will be done, or").

Page 52, line 23, leave out ("provision or enactment") and insert ("provisions").

Page 52, line 42, leave out from first ("Act") to ("until") in line 43 and insert ("or the Pension Schemes Act 1993, or any enactment in force in Northern Ireland corresponding to either of them").

The noble Lord said: I have already spoken to these amendments. I beg to move.

On Question, amendments agreed to.

[Amendment No. 80 not moved.]

Clause 90, as amended, agreed to.

Clauses 91 and 92 agreed to.

Clause 93 [Publishing reports]:

[Amendments Nos. 81 and 82 not moved.]

Clause 93 agreed to.

Clause 94 [Restricted information]:

Lord Lucas moved Amendment No. 83:

Page 54, line 13, leave out ("under or for the purposes of") and insert ("for the purposes of their functions under").

The noble Lord said: In moving this amendment I shall speak also to Amendment No. 86. These amendments are technical and are intended to add clarity by using words which appear elsewhere in the Bill. The clause places strict limits on the disclosure of information by the authority, and on any other person who may receive information from the authority, where the information is restricted information.

Subsection (2) defines "restricted information" for the purposes of these provisions as information that relates to the business or other affairs of any person. It does not include information already being made public from other sources, or information that is presented in summary form so that information relating to an individual cannot be ascertained from it.

Amendment No. 83 changes the wording of the definition of "restricted information" in subsection (2). The amendment will add clarity by using a form of wording that is found elsewhere in the Bill. It refers to, information … for the purposes of their functions under this Act", rather than, information obtained by the Authority under or for the purposes of this Act".

Subsection (3) provides that it is an offence for any person to disclose information in breach of the clause and that the offence attracts a maximum penalty, on summary conviction, of imprisonment for a term not exceeding six months or a fine not exceeding the statutory maximum, or both. On indictment the maximum penalty is two years' imprisonment, or an unlimited fine, or both. The effect of Amendment No. 86 is to present the penalty for a breach of duty imposed by Clause 94 in the standard way. I beg 10 move.

On Question, amendment agreed to.

[Amendments Nos. 84 and 85 not moved.]

Lord Lucas moved Amendment No. 86:

Page 54, leave out lines 24 to 26 and insert: ("(a) on summary conviction, to a fine not exceeding the statutory maximum, and (b) on conviction on indictment, to a fine or imprisonment or both.").

On Question, amendment agreed to.

Clause 94, as amended, agreed to.

Clause 95 [Information supplied to the Authority by corresponding overseas authorities]:

[Amendment No. 87 not moved.]

Lord Lucas moved Amendment No. 88:

Page 54, line 33, leave out ("and 97") and insert ("to 98").

On Question, amendment agreed to.

Clause 95, as amended, agreed to.

Clause 96 agreed to.

Clause 97 [Disclosure for facilitating discharge of functions by other supervisory authorities]:

Lord Lucas moved Amendments Nos. 89 to 99:

Page 55, column 2, line 19, leave out ("Part XIII of").

Page 55, column 2, line 21, after ("1986") insert ("Part III of the Companies Act 1989").

Page 55, line 23, at end insert: (" The Treasury. Functions under the Financial Services Act 1986.")

Page 55, column 2, line 25, at end insert ("or any other functions").

Page 55, line 35, at end insert: ("The Deposit Protection Board. Functions under the Banking Act 1987. The Investor Protection Board. Functions under the Building Societies Act 1986.").

Page 55, column 2, line 39, leave out from ("1986") to end of line 41.

Page 55, column 2, line 52, after ("1985") insert ("or section 94 or 177 of the Financial Services Act 1986").

Page 55, leave out lines 53 to 55 and insert:

("A person authorised to exercise powers under section 43A or 44 of the Insurance Companies Act 1982, section 447 of the Companies Act 1985, section 106 of the Financial Services Act 1986, Article 440 of the Companies (Northern Ireland) Order 1986, or section 84 of the Companies Act 1989.

Functions under those sections or that Article.")

Page 56, leave out lines 9 and 10.

Page 56, column 2, line 16, leave out ("or Part XII of").

Page 56, column 2, line 18, at end insert ("or Part II of the Companies (No. 2) (Northern Ireland) Order 1990").

On Question, amendments agreed to.

[Amendments Nos. 100 and 101 not moved.]

Clause 97, as amended, agreed to.

Clause 98 [Other permitted disclosures]:

Lord Lucas moved Amendment No. 102:

Page 56, line 43, after ("of") insert ("Health and").

On Question, amendment agreed to.

[Amendment No. 103 not moved.]

Clause 98, as amended, agreed to.

Clause 99 [Disclosure of information by the Inland Revenue]:

[Amendment No. 104 not moved.]

Clause 99 agreed to.

Lord Mackay of Ardbrecknish

I beg to move that the House do now resume.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.

House adjourned at twelve minutes past ten o'clock.