HL Deb 08 November 2004 vol 666 cc615-37

3.8 p.m.

The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Hollis of Heigham)

My Lords, I beg to move that the Bill be now further considered on Report.

Moved, That the Bill be further considered on Report.—(Baroness Hollis of Heigham.)

On Question, Motion agreed to.

Clause 284 [Financial assistance scheme, for members of certain pension schemes]:

Lord Higgins moved Amendment No. 260:

Page 235, line 24, after "payments" insert "entirely from public funds with no charges, levies or contributions to be made by the private sector"

The noble Lord said: My Lords, Amendment No. 260 stands in my name and that of my noble friend Lord Skelmersdale. It may be helpful to put the amendment in a more general context by way of introduction. This and the following amendment are to a very important clause, which deals with the financial assistance scheme introduced by the Government at a very late stage in the Bill's passage through the House of Commons. Consequently, there has been very limited scope indeed for the House of Commons to express any views on the Government's particular proposals. I say "particular proposals", although if one looks at the measures that were introduced in Clause 284, with which this amendment seeks to deal, one will see that it runs to fewer than two pages and is in an extremely uncertain state indeed. Virtually every possible aspect of the financial assistance scheme is to be dealt with by way of regulation. The House of Commons had virtually no opportunity to consider the matter as we were able to in considerable depth in Grand Committee.

Your Lordships may recall that this clause and the proposal were introduced as a result of enormous concern expressed in the House of Commons about the plight of those whose pension schemes had, in simple terms, gone bust. That was reflected in a number of Early Day Motions, which were supported on all sides of the Commons. It also became apparent that there was to be a very significant Labour revolt on the Government Benches if something of this kind were not introduced.

The problem, as we now see it on this side of the House, is that the clause itself, as I said a moment ago, is extremely vague. The Chancellor of the Exchequer was obviously persuaded that something must be done, so came up with a nice round figure of £400 million by way of support—although in reality, of course, it is not £400 million because it is spread over 20 or 30 years and the present value of that £400 million might be something like £250 million. That figure was introduced and I fear that the Chancellor is likely to do all he can by way of damage limitation, if not actually to double-cross those who were persuaded not to revolt against the Government, at least to short-change them. We shall come to those points on later amendments.

However, this amendment is concerned with a specific government proposal; namely, to produce the sum of £400 million. As of now, and despite the debates in Grand Committee, we have no idea what is the basis for that £400 million, but we feel very strongly that it should be made clear that government money will be produced to deal with this particular problem.

Considerable concern has been expressed outside—for example, by the Engineering Employers Federation—that the sum will, to some extent, be contributed to by industry and so on, and that is the reason for the amendment. In the Statement made on 14 May about the FAS, Mr Andrew Smith, who was then Secretary of State for Work and Pensions, said: The Government will therefore make available £400 million of public money … with the possibility of further contributions from industry".—[Official Report, Commons, 14/5/04; col. 32WS.] Again, on the second allotted date of the Bill's Report stage in the House of Commons on 19 May, Mr Malcolm Wicks, the pensions Minister, stated: It is open to industry to offer further support. We hope that that support will be forthcoming".—[Official Report, Commons, 19/5/04; col. 983.] It seems to us appropriate that this should be a government responsibility and one in which there should be no financial cost to the outside interests concerned. Essentially, that is the purpose of the amendment.

I make one final general point. In the course of Grand Committee debates, the noble Baroness, Lady Hollis, said that she was not prepared to accept the Opposition chipping away at the Government's proposals. That was a very strange expression to use. We do not seek to chip away at the Government's proposals, as they are simply a solid block of proposals on regulations and it would be difficult to produce any sculpture out of that solid block. We are exerting the right of this House, and indeed Parliament's right, to say that the legislation should be as specific as possible so that we have some idea where we are going.

At the moment the clause is a mere skeleton. It has come out of the cupboard, but we have no idea of its content. It is right that this House should, as far as possible—although it is very difficult—put some flesh on the bones of the skeleton. That is not chipping away. Unless we do that, the Bill will go through as it is and the Government will have complete control over what happens thereafter by way of introducing regulations. As far as possible, we want to pin down the Government to specific proposals and this is the first of a series of amendments that seek to do that. I beg to move.

3.15 p.m.

Lord Oakeshott of Seagrove Bay

My Lords, from these Benches let me clarify our approach to the FAS and to the matters that we are discussing this afternoon. I shall then deal with this first specific amendment. As I said in Grand Committee, and as the noble Lord, Lord Higgins, says now, this is barely a skeleton of a Bill. There really is nothing for us to see here at all. We are trying to pin down to some extent, and in very broad terms, what this provision will mean and who it will cover. We know roughly how much it will cost on average over 20 years, although we have no idea of the cost in the early stages. Specifically, what the ASW workers, and many other people who have been suffering for years while they waited for this want to know is when it will start. That is what we are discussing under this amendment.

Last May, after a long period of the Government saying that they did not want to raise false hopes and that they were unable to do anything, with defeat in the House of Commons staring the Government in the face, suddenly this scheme was cobbled together—a tribute to democracy. We welcome it, but it was not the best way to do it. It is now right for us to scrutinise the provision and to put some limits on this use of public money.

Later we shall talk about eligibility; whether, in principle, what is called a solvent wind-up will be covered. On that, it seems entirely reasonable to us, that there should be a fixed starting date. Given how long people have been waiting and how desperate the need is, it would be inconceivable for the first payments not to be made within a few months after the Act comes into force. Whether it is a specific date as the noble Lord, Lord Higgins, has suggested, which we are happy to support, or another date, that is fine.

Specifically on this amendment, I pressed the Minister on the issue of money coming from private funds, and I thought that she gave me a fairly clear assurance that I would have been happy to accept in principle. However, I defer to the noble Lord, Lord Higgins, with his greater experience of Bills in this House and of government commitments in this House. If he wishes to put the Minister's assurance on this point more firmly on the record, we shall support him, although I invite the noble Baroness to be as specific and as clear as she can. I am sorry if I have given more of a tour d'horizon of our general approach to the Bill, but, before coming to the first vote, I believe that it is helpful for noble Lords to have an idea of where we stand on the financial assistance scheme.

Make no mistake, this is a matter of great public concern outside, not just to the 65,000 or more people directly affected, but also to the many who fear that, before the PPF comes into effect, they may be affected. The injustice of the 65,000 people, who already are clearly suffering, is deeply felt. I support the amendment.

Viscount Trenchard

My Lords, I support the amendment of my noble friend Lord Higgins. We are unclear about exactly who will be covered by this financial assistance scheme and how the £400 million will be measured. I suspect that if the financial assistance scheme is restricted to only £400 million—or £250 million at the present day value—the level of benefits pensioners receive will be considerably smaller than those under the PPF.

In the light of the decision of the electors in the north-east last Thursday perhaps the £200 million set aside for regional government could more sensibly be redeployed to boost the amount the Government will put into the financial assistance scheme.

Baroness Hollis of Heigham

My Lords, I am sure that that suggestion will be received with enthusiasm in the relevant government departments.

Perhaps I may also ask the House's indulgence to do what the noble Lords, Lord Higgins and Lord Oakeshott, did to some degree, which is to make a slightly more general statement about where we are in our approach to the amendments. That will perhaps allow us to be much tighter in discussion on the subsequent amendments.

I accept, particularly from the Official Opposition Benches, that the way we are handling FAS is not the most desirable. It would obviously give me profound pleasure to be able to bring a polished scheme to the House, which could then be properly scrutinised. To do that, we would probably need to delay the introduction of FAS for another year. That is our dilemma. I think that your Lordships will understand the pressure we are under. The matter came up late in the day as we saw schemes beginning to collapse around us. The provision responds to our concern to offer decent and honourable support to those schemes, which were never intended to come within PPF. The financial assistance scheme has come up late. It is in a broad form. Its regulations will come before your Lordships and will be affirmative. So there will be ample opportunity to scrutinise the matter then.

I wish that we could handle the matter in a different way, but, frankly, we are between a rock and a hard place. The noble Lord, Lord Oakeshott, stated that there is real concern outside. For that reason we thought that it was better to go with a less polished scheme—an outline framework scheme—in order to progress the Bill, and to fill in the detail through affirmative regulations under the full scrutiny of the House. It is not the ideal solution, but it seems to be the least worst in the situation we are facing.

We are discussing Clause 284. We all share the desire to give greater certainty about how and when FAS will operate. Perhaps I may state where we are. Since FAS was announced in May—only five months ago—we have made good progress in identifying the scale and magnitude of an extremely complex problem, involving hundreds of different pension schemes with differing scheme rules and at different stages of winding up.

We have consulted with scheme members and trade unions and have been working with industry experts to gather and analyse data and explore options. Let me give one example. In many schemes perhaps 30 or even 40 per cent of potential beneficiaries are deferred members. Trying to find out exactly what they might be entitled to in working through the scheme system is extremely labour intensive and time-consuming. Many noble Lords have practical experience of operating pension schemes so they will understand that very well.

The report we published in June was based on an information-gathering exercise which enables us to provide estimates but only at scheme level. We are now undertaking an exercise to try to find out the profile of individual members, including deferred members, and the position of schemes' sponsoring employers. That will help us in implementing the FAS. When it goes live we will already hold details of a large number of schemes. So we shall be able—I hope—to progress more quickly towards paying members, which again I know is a matter of concern to noble Lords.

Your Lordships should bear in mind—and those who have previously been on these Benches will understand this—that this is the first time that government have sought to collect such comprehensive information from private sector occupational pension scheme trustees and actuaries. We do not hold this information as a rule. So we have had to devise systems and processes from scratch in a very short time. Even GAD has sometimes found it difficult to collect this information; so for us to do it on a very different basis is extremely laborious.

We are grateful for all the help we have received. There is a range of options. The first is to collect the information; the second is that there are some difficult policy issues behind what we do. Each option for the structure of FAS could have very different consequences in terms of the security that it would offer to FAS beneficiaries; the certainty it offers to trustees; the value for money it offers in terms of administrative overheads; how we treat fairly members of schemes whose schemes are still in the process; how we use the commitment of taxpayers' money so that those who have been hardest hit receive the most help; and/or should we have a de minimus provision? Should we give more to those closest to retirement? These are all difficult policy issues that we have to deal with and which must rest on the facts of the data we have collected.

The choices are not simple. We are looking at the pros and cons of those options and discussing with the relevant stakeholders.

It is instructive to compare where we are on the FAS with the development of PPF. For PPF we had a Green Paper published in December 2002 and it was announced in June 2003. We are operating FAS in less than five months. So unfortunately we have not been able to develop FAS in order to dovetail tidily with the Pensions Bill. I repeat what I said earlier. We will bring forward all the regulations which flesh out the provision through the affirmative procedure. Therefore, I do believe that your Lordships—admittedly belatedly—will be able to have full parliamentary scrutiny and control. I do not believe that noble Lords would want to say, "We are not going to have the FAS unless we see all the details now". Your Lordships will want FAS, but I am sure that you will also want to ensure that you can have a full debate about the particular details. I can offer your Lordships that.

So, with that explanation, I hope that your Lordships will accept the position we are in. I fully accept that it is not desirable. I can perfectly understand that the Opposition have the right to be unhappy with the situation we are in. But to meet the Opposition's wishes would be to delay significantly the introduction of the FAS to those who will most need it. That is the dilemma we are in.

Turning to the amendments—and again perhaps I may give the quickest of oversights—my judgment is that the amendments tabled on Clause 284 fall into four main categories. It may be helpful to your Lordships if I give some indication of how we might wish to respond to the amendments.

The first group is mostly about timetables and dates—for example, Amendment No. 264. I have to say now that we cannot accept the amendments. It may be that your Lordships will have a different view; it may be that the Commons could have a different view. But from these Benches I cannot accept the amendments for strictly practical reasons. The statutory dates proposed in the amendments are simply not deliverable. I hope to persuade your Lordships that in looking at any legislation introduced by Members opposite—who had a far more extensive run-in period than they are apparently going to allow the Government on these—we have no option, should your Lordships decide to go for the amendments, but to seek to unpick them if we want to implement a sensibly designed workable financial assistance scheme.

I am not predicting how your Lordships will go; I am not trying to predict how the Commons will go; but the Government's position is that we cannot accept the amendments because they are too much of a straitjacket. We simply cannot meet them. They cannot be delivered. It would be foolish of me to pretend otherwise.

There is a second group of amendments where we are willing to consider whether acceptable wording could be put on the face of the Bill—Amendment No. 260 is one such amendment—or whether the concerns could be met through statements in Hansard. The amendments relate to any compulsory levy. I am happy to give reassurances, but if your Lordships are sufficiently concerned, perhaps we could consider whether to return to the matter.

Another such amendment is Amendment No. 266 in the name of the noble Lord, Lord Oakeshott. It requires three-yearly reports to be laid before Parliament on the financial assistance scheme. Whether the noble Lord is content with a verbal assurance or whether we need to revisit the matter we can discuss, but we do not have any substantive policy debate on this at all. We sympathise with where members of the Opposition are coming from. The third group of amendments covers topics where policy is still being developed—I cannot give your Lordships answers on these matters today—such as whether an individual's other income and capital should be taken into account when assessing his assistance from FAS—Amendment No. 261—or whether eligibility for FAS should extend to schemes which wind up all the way to the point where PPF becomes operational. These are topics where we are broadly sympathetic with the concerns that have been expressed, but we cannot yet have our hands tied before a final analysis of the complex problem is completed. Amendments Nos. 261 and 263 fall into that category. We are not unsympathetic, but we are not yet clear about what our final position should be.

Unsurprisingly, I hope to be able to persuade your Lordships that the amendments in the fourth and final category are simply wrong headed. They would require, for example, the scheme to be funded by the Treasury rather than from funds voted to the Department for Work and Pensions. Amendment No. 262 would disregard assistance payments in other income-related benefits. Somebody whose pension scheme had collapsed and gone into FAS would thereby be better off than somebody whose scheme had not collapsed at all. I cannot believe that that is what noble Lords intend, but maybe they have misunderstood the consequence of the amendment.

Those are the four broad categories of amendments. Where I can meet your Lordships' concerns, either through assurances in Hansard or even at Third Reading, I shall be happy to do so. However, there will be some areas where I cannot satisfy your Lordships with the detail that they require—I fear that we shall have to await regulations—and other areas where I hope to persuade your Lordships that the amendments as set out on the Marshalled List are simply misguided.

On Amendment No. 260, which relates to compulsory levy, I made it clear—the noble Lord, Lord Oakeshott, was gracious enough to accept it—that we have no intention to use the Bill to impose a statutory, compulsory levy or charge on private business to fund the financial assistance scheme. I cannot emphasise that strongly enough. However, I am unhappy about the amendment because it would have a second and far more damaging effect. By prescribing that the financial assistance scheme should make payments "entirely from public funds", the amendment would make it illegal for the scheme to receive voluntary donations from the private sector. It may be that that would not happen, but it would nevertheless be made illegal. As the scheme will increase confidence in pensions and benefit industry as a whole, we would like to keep that option open. I am sure that your Lordships will understand why that is so.

We are grateful for the voluntary and valuable expertise that we have had on this matter and we hope that it will be further supported. I cannot stop the noble Lord, Lord Higgins, pressing his amendment, but I can give him a categorical assurance that there will be no compulsory levy. However, the amendment would go further than we would wish and make it illegal for any voluntary assistance in cash or kind to be made available to FAS and it would be unwise to rule that out should organisations or sectors of industry wish to give that help either in cash or in kind. For that reason, I hope that the noble Lord will withdraw his amendment, but if he remains anxious about the matter, there is nothing to stop him or the Government tabling an amendment on the compulsory levy alone at Third Reading. I hope that with that explanation, the noble Lord will feel able to withdraw his amendment. I hope that the House will forgive me for addressing the amendments widely at this stage. I hope later to provide more tailored replies.

Lord Higgins

My Lords, throughout our discussions on the Bill, we have been grateful to the Minister for the sympathetic way in which she has dealt with these issues. We are all concerned to help those who suddenly find, through no fault of their own, that their prospects for retirement have been devastated.

I shall take up three points which the Minister made. She rightly summarised our amendments as falling into four different categories: timing; cash; policy; and whether we have simply got it wrong. On the latter category, I have some sympathy with her view on one of the amendments, which is why we shall not move it, but we shall come to each of the amendments in due course.

However, the Minister was being naïve, if I may presume to say so, as far as the procedural aspects of the matter are concerned. She said that the provision will be dealt with by affirmative resolution and reassured us that it will receive full parliamentary scrutiny and decisions. I have two points about that: first, such regulations are not amendable, either in this House or the other place. The way in which one would like to change what the Government propose is therefore limited simply to saying "yes" or "no", as opposed to debating the issue as we are now and tabling amendments and so on. The Minister's reassurance is therefore unsatisfactory.

Secondly, although we on this side of the House reserve the right to vote against regulations on a "yes or no" basis, the Minister will know that that is very rarely done and only on matters of very great importance. It certainly would not be regarded as normal for this House to deal with regulations on this Bill by totally rejecting them. For both those reasons, it is important that we should do what we can to make amendments to the Bill at this stage.

On the issue of contributions, considerable concern has been expressed outside this House that, in addition to a levy, the private sector will suddenly find that it has to produce assistance in other ways. The Minister referred to the report, Insolvent Pensions Wind-Up—Report on Numbers Affected, which was published by the Government on 30 June 2004. Paragraph 8 states: In addition there is the question of what private sector contributions to the scheme may be forthcoming". Paragraph 11 states: We continue to work with the business community and others to explore the scope to garner support in terms of finance". This is a worrying matter. It would be better if the situation were made absolutely clear. Therefore, I shall test the opinion of the House on this amendment.

3.36 p.m.

On Question, Whether the said amendment (No. 260) shall be agreed to?

Their Lordships divided: Contents, 132; Not-Contents, 110.

Division No. 1
Addington, L. Brooke of Sutton Mandeville, L.
Allenby of Megiddo, V. Brougham and Vaux, L.
Ampthill, L. Caithness, E.
Anelay of St Johns, B. Campbell of Alloway, L.
Attlee, E. Carlisle of Bucklow, L.
Avebury, L. Carnegy of Lour, B.
Baker of Dorking, L. Cope of Berkeley, L. [Teller]
Barker, B. Craigavon, V.
Beaumont of Whitley, L. Crickhowell, L.
Biffen, L. Darcy de Knayth, B.
Blatch, B. Denham, L.
Bonham-Carter of Yarnbury, B. Dholakia, L.
Bowness, L. Dixon-Smith, L.
Bradshaw, L. Dykes, L.
Eccles of Moulton, B. Naseby, L.
Eden of Winton, L. Neuberger, B.
Elis-Thomas, L. Noakes, B.
Elles, B. Northover, B.
Elliott of Morpeth, L. Oakeshott of Seagrove Bay, L.
Elton, L. O'Cathain, B.
Ezra, L. Park of Monmouth, B.
Falkland, V. Patten, L.
Falkner of Margravine, B. Perry of Southwark, B.
Fearn, L. Platt of Writtle, B.
Feldman, L. Plummer of St. Marylebone, L.
Fookes, B. Quinton, L.
Forsyth of Drumlean, L. Rawlings, B.
Fowler, L. Razzall, L.
Freeman, L. Redesdale, L.
Garden, L. Rennard, L.
Geddes, L. Renton, L.
Gilmour of Craigmillar, L. Roberts of Llandudno, L.
Glentoran, L. Rodgers of Quarry Bank, L.
Goodhart, L. Roper, L. [Teller]
Goschen, V. Rotherwick, L.
Hanham, B. St John of Fawsley, L.
Hanningfield, L. Sandberg, L.
Harris of Richmond, B. Scott of Needham Market, B.
Hayhoe, L. Seccombe, B.
Henley, L. Selborne, E.
Higgins, L. Sharp of Guildford, B.
Home, E. Sharples, B.
Howe, E. Shaw of Northstead, L.
Howe of Aberavon, L. Skelmersdale, L.
Smith of Clifton, L.
Hunt of Wirral, L.
Hurd of Westwell, L. Stevens of Ludgate, L.
Jenkin of Roding, L. Strathclyde, L.
Swinfen, L
Kalms, L. Taverne, L.
Laidlaw, L. Tenby, V.
Laing of Dunphail, L. Thatcher, B.
Lamont of Lerwick, L. Thomas of Walliswood, B.
Lester of Herne Hill, L. Thomson of Monifieth, L.
Liverpool, E. Tordoff, L.
Livsey of Talgarth, L. Trenchard, V.
Lucas, L. Trumpington, B.
Luke, L. Waddington, L.
MacGregor of Pulham Market, L. Wakeham, L.
Wallace of Saltaire, L.
Maclennan of Rogart, L. Walmsley, B.
Maddock, B. Walpole, L.
Marsh, L. Warnock, B.
Mayhew of Twysden, L. Weatherill, L.
Miller of Hendon, B. Wilcox, B.
Molyneaux of Killead, L. Williams of Crosby, B.
Mowbray and Stourton, L. Williamson of Horton, L.
Murton of Lindisfarne, L. Windlesham, L.
Acton, L. Christopher, L.
Ahmed, L. Clarke of Hampstead, L.
Alli, L. Clinton-Davis, L.
Amos, B. (Lord President of the Council) Corbett of Castle Vale, L.
Crawley, B.
Andrews, B. Dahrendorf, L.
Archer of Sandwell, L. David, B.
Ashley of Stoke, L. Davies of Oldham, L. [Teller]
Ashton of Upholland, B. Desai, L.
Bach, L. Drayson, L.
Barnett, L. Dubs, L.
Bassam of Brighton, L. Eatwell, L.
Berkeley, L. Evans of Temple Guiting, L.
Bernstein of Craigweil, L. Falconer of Thoroton, L. (Lord Chancellor)
Bhattacharyya, L.
Borrie, L. Farrington of Ribbleton, B.
Brooke of Alverthorpe, L. Faulkner of Worcester, L.
Brookman, L. Filkin, L.
Campbell-Savours, L. Fyfe of Fairfield, L.
Carter, L. Gale, B.
Gavron, L. Monson, L.
Gibson of Market Rasen, B. Morgan, L.
Golding, B. Morgan of Drefelin, B.
Goldsmith, L. Morris of Aberavon, L.
Gordon of Strathblane, L. Morris of Manchester, L.
Gould of Potternewton, B. Patel of Blackburn, L.
Graham of Edmonton, L. Pitkeathley, B.
Grenfell, L. Ponsonby of Shulbrede, L.
Griffiths of Burry Port, L. Prosser, B.
Grocott, L. [Teller] Ramsay of Cartvale, B.
Hannay of Chiswick, L. Rendell of Babergh, B.
Harris of Haringey, L. Richard, L.
Hart of Chilton, L. Rooker, L.
Haskel, L. Rosser, L.
Haworth, L. Royall of Blaisdon, B.
Hayman, B. Sainsbury of Turville, L.
Hilton of Eggardon, B. Sawyer, L.
Hogg of Cumbernauld, L. Sheldon, L.
Hollis of Heigham, B. Simon, V.
Howie of Troon, L. Slim, V.
Hoyle, L. Snape, L.
Hughes of Woodside, L. Strabolgi, L.
Hunt of Kings Heath, L. Symons of Vernham Dean, B.
Jones, L. Taylor of Blackburn, L.
Jordan, L. Thornton, B.
Judd, L. Triesman, L.
Lea of Crondall, L. Truscott, L.
Leitch, L. Tunnicliffe, L.
McDonagh, B. Turner of Camden, B.
McIntosh of Hudnall, B. Uddin, B.
MacKenzie of Culkein, L. Wall of New Barnet, B.
McKenzie of Luton, L. Warner, L.
Mason of Barnsley, L. Wedderburn of Charlton, L.
Massey of Darwen, B. Whitaker, B.
Merlyn-Rees, L. Williams of Elvel, L.
Mitchell, L. Woolmer of Leeds, L.

Resolved in the affirmative, and amendment agreed to accordingly.

3.46 p.m.

Lord Higgins moved Amendment No. 261:

Page 235, line 25, at end insert—

"( ) Payments made under this section shall be made to eligible scheme members regardless of their other income or capital."

The noble Lord said: My Lords, in moving this amendment, which stands in my name and that of my noble friend Lord Skelmersdale, it would also be convenient to debate Amendment No. 262. The noble Baroness, in her opening remarks, gave a general survey of all the amendments and commented in particular on Amendment No. 262. She indicated four categories of amendment, of which the last was those where the Opposition had simply got it wrong. I am prepared to accept that that is probably the case with Amendment No. 262, and I therefore shall not move it.

On the other hand, Amendment No. 261 cannot possibly be wrong because it encapsulates word for word the point made by the noble Baroness in Grand Committee. Therefore, I should have thought that it would be acceptable to the Government. It says: Payments made under this section"— that is to say, the financial assistance scheme— shall be made to eligible scheme members regardless of their other income or capital". Those were the expressions used by the noble Baroness.

We are anxious to ensure that the payments made under this section shall not be means tested. I was worried that the noble Baroness seemed to indicate that decisions had not yet been made on this policy area. It will be necessary to gather data on some aspects of the Bill, such as the number of people who may be affected, the cost and so on, but one need only take a decision in principle on this issue.

Given that the people affected will no doubt get significantly less than they would have done had their pension schemes survived, it would seem inappropriate if suddenly they found that they were effectively being means tested. Means-testing is the hallmark of the present Chancellor of the Exchequer; no one has done more to increase means-testing than he has. But it would seem wholly inappropriate for it to apply to distributions under the financial assistance scheme. The fact that people may have been more or less prudent otherwise and that they may have had income or capital otherwise ought not to affect the extent to which they are eligible for help under the scheme.

This is a very important point, about which Members in another place, not least Mr Frank Field, have expressed concern. In the light of that, I hope very much that the noble Baroness can accept the amendment and then we can move on to the next one. I beg to move.

Baroness Barker

My Lords, we, too, on these Benches support the noble Lord, Lord Higgins, on Amendment No. 261, particularly in the light of his comments on Amendment No. 262, which would have muddied the waters somewhat. Along with our colleague in another place, Steve Webb, we believe that this is the right thing to do.

The one common factor to all people who fall within the auspices of the financial assistance scheme is that they had planned for their financial future, which has now gone. What people require more than anything else from the financial assistance scheme is certainty. It is quite clear from the way in which the scheme is set up that we are not talking about the full replacement of income or anything like it. It should be a scheme which enables people not only to recover some of what they have contributed, but to begin to put together the financing of their later life.

One reason in particular why we support this amendment is that we believe it is highly likely in practice that people who made sacrifices to belong to occupational pension schemes are more likely than other pensioners to have capital behind them. Therefore, we believe that, taken as a whole, this is an important statement of principle, as the noble Lord, Lord Higgins, said, in making sure that the money gets to the right people. Therefore, we support the amendment.

Baroness Hollis of Heigham

My Lords, this amendment seeks to ensure that when assessing entitlement to assistance under FAS, any income or capital that the member might have is disregarded in full.

I would like to remind your Lordships that in Grand Committee I said: Planning work on the FAS is proceeding on the assumption that we will not determine eligibility for assistance from the scheme through an assessment of any income or capital which an individual may have, other than … the pension income that they have lost through a scheme winding up underfunded".—[Official Report, 13/10/04; col. GC 128.] However, we are still examining in detail various options relating to how assistance from FAS will be paid out. My concern again here is trying to close down options too early. If we completely ruled out taking some account of other assets in advance of fuller information and analysis on the individual members, this could compromise our ability to design a coherent scheme. We need to make best possible use of the available funds which will ensure that those who have lost the most will receive the most help.

As I said in Committee, although we are working on the assumption that we will not take account of other assets, it is surely not sensible to rule that out completely until we know more about individual members' losses. Some element of this approach could—it is a very tentative "could"—prove to be the best way to target a significant, but cash-limited pot of assistance at those who need it most.

I understand the concern of noble Lords, but in light of what I have said, I hope that they will support us during the design phase and allow us the time we require to gather the data we need and to explore the options available to us to make FAS deliver what we all want. It is not a path I want to go down. It is possible, and just conceivable, that it may be a path one will have to use in order to protect those who are poorest under the scheme. As a result, I hope that noble Lords will be willing to withdraw these amendments.

Lord Higgins

My Lords, this again follows on from the opening debate and the same issues apply. We and the noble Baroness, Lady Barker, are quite clear where we stand on the issue. We believe that effectively it is a question of policy, but the noble Baroness said that the Government have not made up their mind for sure. The problem is that if we do not vote on the matter this evening, the Government may suddenly return, after the Bill has become law, and introduce a regulation which states that they have decided that they should means test after all. Given the Chancellor's propensity for that, it would not be a great surprise to these Benches. We shall then find that we cannot amend the amendment. Our only option would be to vote against the regulation. We would then find ourselves in a position which I described earlier where the only option is whether to vote against the matter completely. It might be better to amend it. But we will not have the option to fine tune it.

The noble Baroness said that there are various detailed arrangements to be made and so forth. I believe that voting on this amendment will not close down the options but clarify the situation. I believe that the House would be doing its job in taking a clear view on what is a very straightforward issue. Therefore, I seek to test the opinion of the House.

3.55 p.m.

On Question, Whether the said amendment (No. 261) shall be agreed to?

Their Lordships divided: Contents, 139; Not-Contents, 117.

Division No. 2
Addington, L. Hamwee, B.
Ampthill, L. Hanham, B.
Anelay of St Johns, B. Hanningfield, L.
Astor of Hever, L. Harris of Richmond, B.
Attlee, E. Hayhoe, L.
Avebury, L. Henley, L.
Baker of Dorking, L. Higgins, L.
Barker, B. [Teller] Home, E.
Biffen, L. Howe, E.
Blatch, B. Howe of Aberavon, L.
Bonham-Carter of Yarnbury, B. Hunt of Wirral, L.
Bowness, L. Hurd of Westwell, L.
Bradshaw, L. Jellicoe, E.
Brooke of Sutton Mandeville, L. Jenkin of Roding, L.
Brougham and Vaux, L. Kalms, L.
Caithness, E. Laidlaw, L.
Campbell of Alloway, L. Laing of Dunphail, L.
Carlisle of Bucklow, L. Lamont of Lerwick, L.
Carnegy of Lour, B. Lester of Herne Hill, L.
Cope of Berkeley, L. [Teller] Liverpool, E.
Craigavon, V. Livsey of Talgarth, L.
Crickhowell, L. Lucas, L.
Dearing, L. Luke, L.
Denham, L. MacGregor of Pulham Market, L.
Dholakia, L.
Dixon-Smith, L. Maddock, B.
Dykes, L. Marsh, L.
Eccles of Moulton, B. Masham of Ilton, B.
Eden of Winton, L. Mayhew of Twysden, L.
Elis-Thomas, L. Miller of Hendon, B.
Elles, B. Molyneaux of Killead, L.
Elliott of Morpeth, L. Monro of Langholm, L.
Elton, L. Monson, L.
Ezra, L. Morris of Bolton, B.
Falkland, V. Mowbray and Stourton, L.
Falkner of Margravine, B. Moynihan, L.
Fearn, L. Murton of Lindisfarne, L.
Feldman, L. Naseby, L.
Fookes, B. Neuberger, B.
Forsyth of Drumlean, L. Newby, L.
Fowler, L. Noakes, B.
Freeman, L. Northover, B.
Garden, L. Oakeshott of Seagrove Bay, L.
Gardner of Parkes, B. O'Cathain, B.
Geddes, L. Park of Monmouth, B.
Gilmour of Craigmillar, L. Patten, L.
Glentoran, L. Perry of Southwark, B.
Goodhart, L. Platt of Writtle, B.
Goschen, V. Plummer of St. Marylebone, L.
Quinton, L. Stevens of Ludgate, L.
Rawlings, B. Strathclyde, L.
Razzall, L. Swinfen, L.
Redesdale, L. Taverne, L.
Rennard, L. Tenby, V.
Renton, L. Thatcher, B.
Roberts of Llandudno, L. Thomas of Walliswood, B.
Rodgers of Quarry Bank, L. Thomson of Monifieth, L.
Roper, L. Tordoff, L.
Rotherwick, L. Trenchard, V.
St John of Fawsley, L. Trumpington, B.
Sandberg, L. Waddington, L.
Scott of Needham Market, B. Wakeham, L.
Seccombe, B. Wallace of Saltaire, L.
Selborne, E. Walmsley, B.
Sharp of Guildford, B. Walpole, L.
Sharples, B. Weatherill, L.
Shaw of Northstead, L. Wilcox, B.
Skelmersdale, L. Williams of Crosby, B.
Slim, V. Williamson of Horton, L.
Smith of Clifton, L. Windlesham, L.
Acton, L. Hannay of Chiswick, L.
Ahmed, L. Harris of Haringey, L.
Alli, L. Hart of Chilton, L.
Amos, B. (Lord President of the Council) Haskel, L.
Haworth, L.
Andrews, B. Hayman, B.
Archer of Sandwell, L. Hilton of Eggardon, B.
Ashley of Stoke, L. Hogg of Cumbernauld, L.
Ashton of Upholland, B. Hollis of Heigham, B.
Bach, L. Howie of Troon, L.
Barnett, L. Hoyle, L.
Bassam of Brighton, L. Hughes of Woodside, L.
Berkeley, L. Hunt of Kings Heath, L.
Bernstein of Craigweil, L. Jones, L.
Bhattacharyya, L. Jordan, L.
Borrie, L. Judd, L.
Brooke of Alverthorpe, L. Lea of Crondall, L.
Brookman, L. Leitch, L.
Campbell-Savours, L. McDonagh, B.
Carter, L. McIntosh of Hudnall, B.
Christopher, L. MacKenzie of Culkein, L.
Clarke of Hampstead, L. Mackenzie of Framwellgate, L.
Clinton-Davis, L. McKenzie of Luton, L.
Corbett of Castle Vale, L. Mason of Barnsley, L.
Crawley, B. Massey of Darwen, B.
Dahrendorf, L. Merlyn-Rees, L.
David, B. Mishcon, L.
Davies of Oldham, L. [Teller] Mitchell, L.
Desai, L. Morgan, L.
Drayson, L. Morgan of Drefelin, B.
Dubs, L. Morris of Aberavon, L.
Eatwell, L. Morris of Manchester, L.
Elder, L. Ouseley, L.
Evans of Temple Guiting, L. Patel of Blackburn, L.
Falconer of Thoroton, L. (Lord Chancellor) Pitkeathley, B.
Ponsonby of Shulbrede, L.
Farrington of Ribbleton, B. Prosser, B.
Faulkner of Worcester, L. Prys-Davies, L.
Filkin, L. Ramsay of Cartvale, B.
Fitt, L. Rendell of Babergh, B.
Fyfe of Fairfield, L. Richard, L.
Gale, B. Rooker, L.
Gavron, L. Rosser, L.
Gibson of Market Rasen, B. Rowlands, L.
Gilbert, L. Royall of Blaisdon, B.
Golding, B. Sainsbury of Turville, L.
Goldsmith, L. Sawyer, L.
Gordon of Strathblane, L. Sewel, L.
Gould of Potternewton, B. Sheldon, L.
Graham of Edmonton, L. Simon, V.
Griffiths of Burry Port, L. Snape, L.
Grocott, L. [Teller] Strabolgi, L.
Symons of Vernham Dean, B. Uddin, B.
Taylor of Blackburn, L. Wall of New Barnet, B.
Thornton, B. Warner, L.
Triesman, L. Wedderburn of Charlton, L.
Truscott, L. Whitaker, B.
Wilkins, B.
Tunnicliffe, L. Williams of Elvel, L.
Turnberg, L. Woolmer of Leeds, L.

Resolved in the affirmative, and amendment agreed to accordingly.

4.6 p.m.

[Amendment No. 262 not moved.]

Lord Higgins moved Amendment No.263:

Page 235, line 25, at end insert—

"( ) New qualifying members shall continue to be eligible for membership of the financial assistance scheme until such time as the Pension Protection Fund is fully in operation."

The noble Lord said: My Lords, Amendment No. 263, which stands in my name and that of my noble friend Lord Skelmersdale, is an important amendment. In the two previous debates, we have discussed to what extent issues are of policy, how much money is involved and so on. On this amendment, there ought to be general agreement. We shall be fascinated to hear the reaction of the Government.

To the surprise of those people who saw the Bill when it was first introduced there are effectively two quite separate schemes now being produced by the Government. On the one hand, there is the financial assistance scheme, which we have been debating on these clauses, that is essentially a Treasury finance scheme to help those whose pension schemes have already collapsed. On the other hand, the main thrust of the Bill is the Pension Protection Fund, where funds will be raised from money that is levied on other company final salary schemes. Alas, to some extent, the effect of that will be to discourage employers who have such schemes from continuing.

Between the two schemes, there seems to be a gap: there is the immediate financial assistance scheme for those schemes that have already collapsed, but it will be some while before the Pension Protection Fund comes into operation. The amendment seeks to bridge that gap; that is, if a company scheme collapses between now and when the Pension Protection Fund comes into operation, members of that scheme will be eligible for assistance under the financial assistance scheme.

If the amendment is not accepted, the danger is that such people will not get the benefits that we hope they will receive. We have discussed moral hazards at enormous length in previous debates, but that is not relevant in this context. The benefits, if such they be, under the financial assistance scheme are likely to be less than under the Pension Protection Fund. Therefore, there is no great incentive for companies to speed up the process of collapse; rather, if anything, there is an incentive to delay it until the Pension Protection Fund comes into operation.

Amendment No. 263 is a sensible amendment, which, on reflection, the Government could accept. I cannot believe that there is some policy consideration about whether there should be such a gap: it would be absurd if the people to be covered by the financial assistance scheme and those who fall within the Pension Protection Fund are helped, but that those who happen to fall between the two receive no help whatever.

I hope that the noble Baroness will agree that this is a sensible amendment and is able to fill the gaps in our knowledge of how the scheme will operate. I beg to move.

Lord Oakeshott of Seagrove Bay

My Lords, we think that this amendment speaks for itself. Given the two new protection structures being set up, it is quite clearly unthinkable to leave a gap between them. Like the noble Lord, Lord Higgins, I cannot see an issue of moral hazard here, but even if there were, would that be the fault of members of schemes who have been paying in honestly for many years? I would not want to have to face the workers at Turner & Newell if it turns out that they may fall into that gap or, indeed, any other group, and give them a lecture on moral hazard. Simply to state the words makes that ridiculous.

I am always impressed by the ingenuity of the noble Baroness, but for the life of me I cannot think of a credible argument in support of reserving the right, frankly, to leave people in the lurch between the two schemes. I cannot see how that could possibly be fair or how it could arise. I hope that she will accept the amendment.

Baroness Hollis of Heigham

My Lords, I hope that the noble Lord will empathise with me rather more after my speech in response.

This amendment would permit members of all underfunded pension schemes that start to wind up until the introduction of the PPF to have access to the financial assistance scheme. I appreciate the intention behind this amendment and, like others, I am keen to ensure that members of schemes that start to wind up before the introduction of the PPF from next April—we hope—are not subject to the kind of devastating losses that have inspired the Government to set up the financial assistance scheme.

As noble Lords will be aware, non-pensioner members of schemes that start to wind up after 10 May 2004 benefit from the change to the priority order. As a result, they will be less likely to suffer the scale of losses to their pensions that they would have experienced under the old priority order. While this may not provide a panacea to the problems of underfunding, it should help to ensure that the assets within schemes are distributed more equitably between scheme members. Your Lordships will recall that this is where indexation will come at the bottom.

It is for this reason that we were initially minded to exclude schemes that started to wind up after May 2004. However, we have stated on numerous occasions that we have not ruled out help for members of schemes which start to wind up between May this year and the introduction of the Pension Protection Fund next April. We continue to monitor the position of these schemes and to undertake further research and consultation before taking final decisions on eligibility. Those, in turn, will be based on sound principles and fairness.

I ask noble Lords to appreciate, however, that there would be significant risks in providing assurances of financial assistance scheme qualification for schemes which have not yet started to wind up. That would present an issue of moral hazard. We have all read newspaper articles, many within the past couple of weeks, about pension schemes that are threatened with wind-up. And we have followed with interest the negotiations between employers and trustees to increase scheme funds. Providing an assurance on the face of the Bill now that such schemes might qualify for assistance could seriously affect any such negotiations. Indeed, we have been advised by OPRA that this is already influencing people's considerations. It would not be right to announce a decision now on the inclusion of members of such schemes before we have had an opportunity to assess their circumstances and until the moral hazard risks to which I have referred are minimised.

I do not want to focus too long on the unintended effects of the amendment. However, as drafted it does carry an additional risk. It has not been timed by reference to the coming into force of any relevant PPF provision. As a consequence there is a risk of overlap of eligibility for both the PPF and the financial assistance scheme, and thus further amendment would be required. Not all of the various PPF provisions will be in force from the same date. For example, due to the fraud compensation provisions, the PPF will not assume responsibility for any scheme until at least 12 months after the introduction of the PPF.

Lord Higgins

My Lords, would the noble Baroness be kind enough to repeat the last point she made?

4.15 p.m.

Baroness Hollis of Heigham

My Lords, I am sorry. Not all of the various PPF provisions will be in force from the same date. For example, due to the fraud compensation provisions, the PPF will not assume responsibility for any scheme until at least 12 months after the introduction of the fund, thus allowing for the assessment period. PPF compensation payments cannot be made before that time has elapsed. To all intents and purposes, the PPF will not truly be fully operational until such payments can be made. Thus, as the amendment stands, members of qualifying schemes could be eligible simultaneously for compensation from the PPF and for assistance from the financial assistance scheme. If this amendment were accepted, it would be seriously technically flawed.

In view of the risks I have outlined, which I think are serious ones regarding moral hazard, although with my earlier acknowledgment that we will continue to monitor the position of schemes, together with the effect of the amendment as drafted producing overlapping access, I ask the noble Lord to withdraw his amendment.

Lord Higgins

My Lords, before the noble Baroness sits down, could she clarify her point about overlap? While there is clearly the danger of a gap, I do not fully understand her remarks as regards an overlap. Is she saying that an eligible group that was entitled under the financial assistance scheme could also become eligible for benefit under the PPF? Given the interim period at the beginning of the PPF, will there be a problem with overlap? Could any group receive two lots of benefit?

Baroness Hollis of Heigham

My Lords, the trouble is that the amendment does not make clear the point at which FAS protection would end and PPF protection would begin. Because schemes would come within the protection of the PPF from 5 April 2005, or least they will do so potentially because they would be included in the assessment period of the PPF which is to last a year or so even though payments are not to be made until around a year thereafter, and given that the noble Lord's amendment as drafted does not indicate a terminal point for qualification under the financial assistance scheme, there is a potential for groups ultimately to be able to access both schemes.

Lord Higgins

My Lords, our objective on this side is to improve the Bill so that when it is returned to another place, despite the arguments originally advanced in this House, the Government will have been persuaded that these are the right things to do. Given the size of the majority in the other place, it is very much a question of persuasion over there rather than winning votes. Regrettably, at the moment it is difficult to win a vote at the other end. Having said that, I am reluctant to press this amendment to a vote if the argument at the other end would be simply that it is technically flawed.

We need to give this point some further thought between now and Third Reading, and I hope that the noble Lord on the Liberal Democrat Benches will take the same view. Perhaps we shall be able to devise an amendment which is not so technically flawed and deals with the problem of overlap mentioned by the noble Baroness. In the light of those considerations, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Higgins moved Amendment No. 264:

Page 235, line 25, at end insert—

"( ) The first payments under the financial assistance scheme shall be made no later than 1st June 2005."

The noble Lord said: My Lords, I apologise for my brief hesitation. This is another amendment which has been degrouped and is concerned with the date of the first payments to be made under the financial assistance scheme. We suggest that they should be made no later than 1 June 2005. It is important to clarify exactly how the various dates are to stack up, not least in the light of the comments made by the noble Baroness a few moments ago. As I understand it, she envisages that the PPF will be operational by April next year. Can she give us some indication of when PPF payments are likely to commence? I presume that the levy starts in April next year. Approximately when does the noble Baroness expect the first payments under the PPF to begin to be made?

On the previous amendment we referred to overlaps and gaps. We believe that the financial assistance scheme should come into operation as soon as practicable. This obviously will depend on some of the policy decisions that we have been considering but we should have a deadline. If the noble Baroness does not like the six months in the Liberal Democrat amendment and does not like our suggestion of 1 June, can she give an indication of what she considers to be an appropriate deadline?

There is a case for a deadline. Otherwise, no doubt, internal government discussions will go on indefinitely; the Chancellor will not be paying out the money he has promised; to that extent, the national debt will not go up as quickly and the interest payments by the Government will be less. All these considerations—sordid though they may be—could lead to the scheme not starting as quickly as we would like.

I hope that the noble Baroness will be able to clarify the situation. In the absence of any convincing arguments, of course, it will be appropriate to vote on the issue, but we shall wait to hear what she says in reply. I beg to move.

Lord Oakeshott of Seagrove Bay

My Lords, we are quite happy to support Amendment No. 264 or, in the light of the Minister's remarks, we may prefer to press Amendment No. 267 a little later—but the principle of a fixed and early start date is very important for the reasons I gave earlier.

On various occasions in Grand Committee, when we tried to probe or help in some detail on the FAS, the Minister kept saying, "Don't chip away. Don't chip away at this". Frankly, at the moment there is very little to chip away at. Laying the firm foundation of when this scheme will start is a simple and clear thing to do. It is something for which people have been waiting desperately for years.

This is a reasonable matter for Parliament to decide. I would be happy with either the start date set down in the noble Lord's amendment or the one set down in our own, but we must have a firm date. In the absence of a firm date, we will press this matter to a Division.

Baroness Hollis of Heigham

My Lords, I very much hope the noble Lords will not do that. I want to persuade them that what they are asking for cannot be done—and therefore the amendments would have to be unpicked later—not because we do not wish to do it but because we cannot do it. I do not say that lightly; I say it in absolute good faith.

Both amendments seek to impose a date by which payments must start to be made from the FAS. As to the direct question of the noble Lord, Lord Higgins, in regard to when payments from the PPF would come into play, we would expect them to begin to be made from the second year. The first year will be an assessment period and payments will begin to be made from the second year.

It should be remembered that although a scheme may come into the PPF, it does not mean that liabilities will be immediately paid out. Liabilities will be paid as they fall and the bulk of people will not normally, unless they are existing pensioners, be required to receive payments within a month or three months. This is rather different from what may turn out to be the case with the FAS, which might involve a question of purchased annuities. I shall come back to the House on that in due course.

I have to repeat what I said in Grand Committee—we all want the money to be made available by government as quickly as possible. I understand and fully accept the decency of the motivation behind the amendments in seeking to give people guarantees as to when they might be paid, but when I say I cannot do so I am being realistic.

Let me make some comparisons. The Government's proposals for pension credit were published for consultation in November 2000; the State Pension Credit Act gained Royal Assent in June 2002; and the first payments were made in October 2003, some 15 or 17 months later. We published a consultation paper on tax credits in 2000; the Tax Credits Act gained Royal Assent in July 2002; the first payments were made in April 2003. Under a previous administration, there was the Social Security Act which received Royal Assent in 1986. I am sure noble Lords can tell me when the first payments were made on that, but if they do not recall I will remind them that they were made in April 1988, nearly two years later. I see that I am getting an endorsement from the noble Lord, Lord Fowler. I am sure the subject is dear to his heart. So, in all those Acts, there was a timetable of at least a year, sometimes more, from the date the Bill received Royal Assent to when the first payments were made.

Lord Oakeshott of Seagrove Bay

My Lords, how many millions of people were affected by those Acts and how many people are we talking about in respect of the FAS?

Baroness Hollis of Heigham

My Lords, that is not the point. It is simple if everyone is receiving the same sum of money, but if you have to assess every individual entitlement, that is very different. The FAS will certainly be making payments to much smaller numbers but, whether a payment scheme is large or small, a set of pre-conditions have to be in place: the regulatory framework to enable payments to be made; a detailed business design; IT; accommodation; telephony; and properly trained and supported staff.

I stress that, unlike the situation with income support—whether it was called supplementary benefit or whatever—which we have been delivering since Beveridge, this is an entirely new area for government. It is the first time that a government are seeking to pay taxpayers' money directly to members of winding-up pension schemes. We have to devise systems and processes which mesh with those already being operated by independent trustees and administrators during a complex winding-up process—and we have to devise them from scratch.

Committing to a statutory deadline for making first payments—and in particular one which would be only a few months after the principle of the Bill has been, I hope, accepted by your Lordships' House and the other place—could seriously compromise the successful delivery of FAS. We cannot do it. Noble Lords may argue with me, but I tell you that we cannot do it. I wish we could. There is no difference between us in that we want to see the scheme flowing as quickly as possible, but it cannot be done. It is an important principle that FAS should determine levels of assistance and make payments only when it is ready to do so.

Even if your Lordships pass the amendments today—and I do not doubt that you may have the numbers to do so—it cannot be done. We are a grown-up House. When we are dealing with matters such as technical dates, there is no point in going for gesture politics that will have to be unpicked. This is not about a statement of principle where it may be important to flag up such a gesture; this is about a technical handling of when we start to pay.

It cannot be done. If your Lordships pass the amendments against the advice of the Government, we will seek—and I am reasonably confident that we will succeed—to overturn them because we cannot meet the deadlines proposed. I wish we could, but we cannot. It is an administrative matter, not a political one, and Members opposite who have been in Government know that perfectly well. I hope the noble Lord will not pursue the amendment.

Lord Higgins

My Lords, does the noble Baroness agree that there is a case for a deadline? If she does not like this particular deadline, is there not a case for ensuring that the matter does not drag on indefinitely between one department and another? If she does not like this date, does she agree there is a case for a deadline of some kind?

Baroness Hollis of Heigham

My Lords, the noble Lord must accept—I am sure that he does—that we want payments from FAS to be made as soon and as speedily as possible. It may be that we can make payments earlier to some people nearer retirement and be more confident about it than for members of schemes coming in later but only when we have the regulations to bring before your Lordships' House—probably in the spring—will I be in a position to give your Lordships a deadline I am confident of delivering.

I am not trying to be awkward. I cannot do what noble Lords ask. I wish I could but I cannot. As I say, I expect the bulk of the regulations to be brought forward in the spring of next year. At that point we should have some idea of a deadline. If I can give any information to noble Lords before then, through correspondence and so on, I shall be delighted to do so. Indeed, I suspect that my right honourable friends in the other place will wish to make a Statement to that effect because the matter is of such major importance.

But I cannot do it now and I cannot accept the amendments. I am afraid that whatever your Lordships may do today, they cannot remain on the face of the Bill because they are undeliverable administratively.

Lord Higgins

My Lords, one of the most difficult tasks for Ministers—and, by extension, for the House—on decisions of this kind happens when officials say that something is impossible. I can think of two past examples: when the late Barbara Castle was told that something was impossible, she said go ahead and do it none the less. The thing turned out to be impossible, and it was a total disaster. The other example was when officials told my noble friend Lord Barber, when he was Chancellor, that something was impossible. He said do it none the less, and it turned out to be all right. But it is a fairly high risk strategy.

Lord Lea of Crondall

My Lords, has the noble Lord taken into consideration the fact that my noble friend did not say it was impossible just because the officials said it was but because of what we called in Committee the blank cheque problem? Once you have the regulations and you know that there is a likely number of claimants with regard to the £400 million, you have better leverage when it comes to how much to pay each person. Unless I have got it wrong, that seems a very substantial reason indeed. It is not simply a matter of officials talking about maintaining flexibility. I am not sure that I have heard the noble Lord address what I think is a very strong argument.

Lord Higgins

My Lords, I was not necessarily rejecting the argument. There are official impossibilities and there are other impossibilities. I accept that there can be very real problems with a timescale of this kind. I am not totally persuaded that there is not a case for a deadline of some sort, no matter how far away, to concentrate minds, not least those of officials. But on balance, I am persuaded by the argument, so I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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