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Mr. Webb: I should like to make a brief observation. The amendments take out some of the powers under clause 11 to extend or amend the role of the determinations panel. Amendment No. 128 applies to subsection (8), which mentions members of the panel or its sub-committees. We are starting to get the sense that there may be a large number of people involved. In the previous debate, Committee members will have observed that the Under-Secretary did not tell us who will pay those people, how much they are likely to cost or how what they do will relate to what the regulator does.
The third amendment refers to the panel's sub-committees. We have heard that they are going to contain well qualified lawyers and experts; they do not come cheap. There will be sub-committees, so there will have to be lots of them. We still do not know who pays them. If the regulator pays them they are employees of the regulator: that cannot be right. Presumably the Department pays them. Was that expenditure included in the figure for the cost of the regulator that we were given earlier? Can the Under-Secretary clarify that matter, to help our assessment of the amendments?
Mr. Pond: Clause 11 and Schedule 2 outline the determinations panel's duties. The amendments that have just been presented to the Committee would introduce regrettable inflexibilities. The purpose is that the determinations panel should be light on its feet.
The determinations panel will exercise the reserved regulatory functions set out in schedule 2. Amendment No. 126 would remove the ability to add or remove reserved regulatory functions by regulations, but that facility is needed if we are to have a genuinely flexible and proactive regulator. Any additions to or removals from the list by regulation will provide for parliamentary scrutiny to ensure that functions are delegated only in a responsible and effective way. In addition to exercising these functions, the panel may act on behalf of the regulator in exercising non-reserved regulatory functions. That will enable the panel to issue an improvement notice, for example, to which I referred a few moments ago.
Amendment No. 127 would prevent the regulator from delegating any non-reserved functions to the panel, which again would introduce unwelcome rigidities. Amendment No. 128 would require the whole panel of seven members to sit before any of its functions could be exercised. That would create a slow and cumbersome process. It is recognised practice for sub-committees to determine matters. There also needs to be some flexibility for cases where a panel member faces a conflict of interest. Sufficient safeguards are built into the process to allow directly affected parties a right to seek a review of a decision by the pensions regulator tribunal.
The hon. Member for Northavon asked who pays for the determinations panel. The money will come from the levy, in the same way as all the other costs of the regulator are met. On the basis of that clarification, I ask for the amendment to be withdrawn.
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Mr. Waterson: All that the Under-Secretary is saying, with his customary charm, is that the Government cannot be bothered to change what they have already put in the Bill.
There is little point in having clever people deciding what reserved powers this mysterious and omnipotent panel will deal with and then saying, ''Actually, on reflection, we think that it should deal with non-reserved powers as well, because the poor old regulator will want to offload things.'' The members will be light on their feet. Their first task is to try to delegate the regulator's functions to someone else—a sub-committee or one of its number. That strikes me as absurd, but I am in a relatively good mood so I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendment made: No. 11, in
clause 11, page 6, line 45, at beginning insert 'any of'.—[Malcolm Wicks.]
Clause 11, as amended, ordered to stand part of the Bill.
Schedule 2
The reserved regulatory functions
Amendments made: No. 75, in
schedule 2, page 174, line 16, after 'power' insert 'by direction'.
No. 76, in
schedule 2, page 174, line 18, after 'power' insert 'by direction'.—[Malcolm Wicks.]
Mr. Pond: I beg to move amendment No. 77, in
schedule 2, page 174, line 24, leave out '3' and insert '3(1)'.
The Chairman: With this it will be convenient to discuss Government amendments Nos. 78 and 80.
Mr. Pond: These are technical amendments to ensure that the correct sections of the Pensions Act 1995 are referred to in each case. Schedule 2 sets out the reserved regulatory functions, the exercise of which is reserved exclusively to the determinations panel. As drafted, the schedule does not refer to the correct subsections in respect of the power to which it relates. These amendments correct those drafting errors.
Mr. Webb: I shall not detain the Committee by pulling up the Under-Secretary on drafting and technical amendments, but grouped among those is Government new clause 3. That is assuming that I am discussing the right group—[Hon. Members: ''That is later on.''] I apologise; I thought that there were plusses on the end of each line.
Amendment agreed to.
Amendment made: No. 78, in
schedule 2, page 174, line 27, leave out '4' and insert '4(1)'.—[Mr. Pond.]
Mr. Pond: I beg to move amendment No. 79, in
The Chairman: With this it will be convenient to discuss Government amendments Nos. 81 and 83.
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Mr. Pond: Amendment No. 79 ensures that the power to extend the period for which a trustee is suspended in cases where criminal proceedings have not yet been instituted rests solely with the determinations panel. That will ensure that when the regulator proposes to extend a period of suspension it must send a warning notice to those directly affected. Their representations will be considered by the determinations panel. There will also be a right to make a reference to the pensions regulator tribunal.
Amendments Nos. 81 and 83 are necessary to ensure that only the determinations panel may exercise the power contained in sections 9 and 32 of the Pensions Act 1995 to vest or transfer properties consequential to the appointment or removal of the trustee. That power may be exercised when, for example, a trustee is appointed to a scheme that previously had no trustees. It might be that some of the scheme's assets are held in the name of a past trustee. The power allows the regulator to transfer such property to the appointed trustee.
As the power is only exercisable by the determinations panel, directly affected parties will be able to make a reference to the pensions regulator tribunal.
Amendment agreed to.
Amendments made: No. 80, in
No. 81, in
schedule 2, page 174, line 33, at end insert—
'The power under section 9 to exercise by order the same jurisdiction and powers as the High Court or the Court of Session for vesting property in, or transferring property to, trustees in consequence of the appointment or removal of a trustee.'.
No. 83, in
schedule 2, page 175, line 2, at end insert—
'The power under section 30(2) to exercise by order the same jurisdiction and powers as the High Court or the Court of Session for vesting property in, or transferring property to, the trustees where a trustee becomes disqualified under section 29 of that Act'.
No. 82, in
schedule 2, page 175, line 9, after 'power', insert 'by direction'.—[Mr. Pond.]
Mr. Pond: I beg to move amendment No. 84, in
The Chairman: With this it will be convenient to discuss the following:
Government amendment No. 34.
Government new clause 3—Reports by skilled persons.
4.15 pm
Mr. Pond: The new clause will give the regulator the power to obtain expert opinion and analysis to assist it to exercise its functions. It will be used to inform the regulator in the exercise of its functions in a particular case. For example, if the trustee and employer are unable to agree the schedule of contributions since the
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employer contends it cannot make the payments, the regulator might require a report on the strength of the employer's business and ability to sustain the funding of the scheme. That would enable the regulator to determine what schedule of contributions was appropriate, and work with the employer and trustee to improve the funding situation. That is an important power to enable the regulator to allow it to act to protect members' interests.
Amendments Nos. 34 and 84 are necessary to give effect to new clause 3. A person who is required under subsection (9) of the new clause to co-operate with the person making the report will be able to disclose appropriate information to that person, even if it is classified as restricted information. The power to require a report will be reserved to the determinations panel. That ensures that those affected by the decision will have the chance to comment before the decision is made and, if they so wish, to refer the decision to the tribunal.
Mr. Webb: I am beginning to warm to recurring themes, and there are two prompted by new clause 3.
First, new clause 3 comes within the scope of schedule 2, which relates to the determinations panel. That panel is able to commission experts, who are presumably highly paid pension experts although they are not expert enough for this sort of thing. Those experts therefore pay somebody else to do expert work for them. We are talking about the determinations panel, which is independent of the regulator—it is not paid by the regulator, but out of the levy, which I suppose means that it is paid by the Department, although I am slightly hazy on that. Can panel members show the contents of the expert report to the people to the other side of the Chinese wall? Perhaps they cannot. If the regulator needs an expert opinion, there should be another new clause—perhaps the Government have yet to table one—which relates to the fact that the regulator will be able to commission expert advice. Alternatively, perhaps the regulator is an expert so it does not need to commission expert advice.
People will start to say, ''Come on, what's going on here?'' There are different bits of different organisations. Provisions apply to one bit, but not to the other bits. People can tell others about one bit, but not others. Things are becoming tortuous, and one wonders whether the new clause is designed to facilitate the smooth running of the regulator. I do not necessarily object to the regulator asking for expert reports, although I am surprised that we need an Act of Parliament to enable it to do that—I do not see why, if the regulator does not know the answer to something, it cannot ask someone and pay them for their advice. If we need a new clause, I do not understand why it has to be to schedule 2, which refers to the bit the other side of the wall. Why cannot the whole regulator benefit? I am concerned about the determinations panel and this artificial subdivision.
There is another issue, relating to the dreaded pension protection fund, which we have not yet reached. The example that the Under-Secretary gave when speaking to the new clause was that the Government might need to work out the state of
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play of an industry and the viability of the company—which is, presumably, meat and drink to the pension protection fund. The fund will want to know whether a particular industry will have lots of people going to the wall and making claims on the PPF. Will it also be conducting expert research into the state of the steel industry or airline industry or whatever? Will the determinations panel be allowed to tell the PPF the contents of the report? Will it be required to? Will three different sets of people end up commissioning the same single expert because none of them are allowed to talk to one another?
I sense a lot of overlap between different bits of the system. I began as an enthusiast for this regulator, but within three hours my enthusiasm has waned. I hope that the Under-Secretary can reassure us on the points that I have raised.
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