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Mr. George Osborne (Tatton) (Con): We are a little more consistent than the Liberal Democrats, so our enthusiasm for the regulator is not waning after just three hours of discussion. However, we have concerns about new clause 3 and the fact that it has been tabled at a late stage, and I agree with the hon. Member for Northavon about the confusion that that might give rise to. The Minister needs to clarify why he feels that the new clause is required.
I suggest that the Government needed the new clause to achieve their objective because there are elements of compulsion in clause 52, which require people to pay for the expert advice. They probably needed a legal basis on which to do that. However, later we shall debate many other clauses that require employers, trustees or other people to provide information to the regulator. Why is the additional requirement necessary? I did not feel that the Minister properly explained that.
Would it be entirely within the discretion of the trustee, the employer or anybody issued with a notice to employ any expert advice that they wanted, or would the regulator have to agree who that skilled person would be? As I read the clause—I may be wrong about this—the person issued with the notice could choose the person from whom to commission a report, and would not have to seek the regulator's approval. What would happen if the regulator said that that person's advice was not expert, or that it would not have liked that person to compile the report?
On my reading of the clause, there seems to be an element of compulsion. Under subsection (2),
''A report notice must require the person appointed to make the report to be a person''
and it then sets out who such a person would be. There is obviously an element of compulsion there. However, subsection (9) compels anyone else
''who is providing (or who at any time has provided) services to the notified person in relation to a matter on which the report is required''
to
''give the person appointed to make the report such assistance as he may reasonably require.''
That is a very wide-ranging power: under the new clause, all people who have provided advice to a
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company may be required to provide certain sorts of information.
I pick up the point made by the hon. Member for Northavon: that information goes to the determinations panel. The same company may be in the process of being crawled over by the regulator, which may ask it for almost identical information. Not only will that make it more difficult for the company or trustees involved, but it will add to the cost. In many cases, the costs may ultimately be borne by pension scheme members.
There is plenty of scope for duplication, as the hon. Member for Northavon has pointed out. Before we allow the new clause to be added to the Bill, it would be good to hear from the Under-Secretary about why he thinks it so necessary.
Mr. Pond: Some important issues have been raised. Let me clarify. We did not seek these powers because we thought that it would be a good wheeze to have the expert reports carried out, or to insist that they were paid for. The purpose of the new clause emerged from the experience of OPRA itself. It found a weakness in its ability to carry out its regulatory powers effectively. Although there might have been a wealth of legal, pension and actuarial expertise readily available and on tap, there was not necessarily the sort of expertise necessary to make a judgment about the viability of a particular employer or the sector in which it operated, or about the ability of that employer to make the payments that the determinations panel might require.
I must also clarify that the determinations panel would exercise its functions on behalf of the regulator. In the circumstances that we are discussing, the regulator would tell those involved that it proposed to ask for a report, and whom it intended to pay for it. The determinations panel would decide how that would be implemented, to be fair and impartial. The regulator would direct who would prepare the report; subsection (2) makes it clear that that person would be nominated or approved by the regulator.
There is an issue about the exchange of information, to which the hon. Member for Northavon referred. We must be clear that the regulator requires that. There is a legal requirement to co-operate in the introduction of reports and enable the regulator to direct that the third party pays for the report. The hon. Member for Tatton (Mr. Osborne) was spot-on in his assumption about why we need legislation to make those powers available to the regulator. To answer the hon. Member for Northavon, the regulator will have the power to disclose the contents of the reports to the PPF when necessary.
I hope that hon. Members will recognise that although we will be considering a substantial piece of proposed legislation during the next few weeks, we are not adding to it for the sake of doing so. These are necessary powers that the regulator and a determinations panel will require in order to do the job that my hon. Friend the Minister of State said was necessary to provide for people the confidence and
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protection in the operation of these types of pension scheme.
Amendment agreed to.
Schedule 2, as amended, agreed to.
Clause 12
Annual reports to Secretary of State
Question proposed, That the clause stand part of the Bill.
Malcolm Wicks: The clause proposes that the regulator should publish an annual report, which is a good, sensible idea.
Mr. Waterson: I said earlier in a different context that I did not regard myself as being in a drafting competition, which is just as well because the amendments that I drafted were miserably inappropriate and were not selected. I suppose that they were out of order. I shall deal with those on stand part.
We agree that a report is a good idea. Every day every one of us gets lots of glossy reports from all manner of organisations, and we read them carefully before consigning them to the circular filing cabinet. I agree with the Minister that it is important, particularly in the early years, that what the regulator does is set out in an annual report. We have no quarrel with that. However, we want to make two changes. First, we want those reports made not to the Secretary of State, but to Parliament. They are so important that they should be made directly to Parliament. Secondly, we want the reports to be debatable. The Government should provide time every year for a debate on them so that we can all see how our new creation—not least the determinations panel—is getting on. I shall be following the panel's career with a closeness that defies belief.
Mr. Osborne: My hon. Friend will be on them.
Mr. Waterson: Indeed, if there is a sufficiently good package, I might even apply.
We want to see how the system works in practice, our constituents will want to see, and the people out there who have to make it work in the industry will also need to see that. An annual report is an excellent idea, but I urge the Minister to make it a report to Parliament, rather than the Secretary of State, and to ensure—and at least to indicate—that in the early years there is a full debate on it at some point so that we can all see how it is developing and whether it is developing as we predicted in Committee. I am sure that hon. Members would be clamouring to speak in such a debate.
My amendments did not pass the test, but I have made my points.
Malcolm Wicks: As for whether the annual report goes to the Secretary of State or Parliament, my instinct is to say ''same difference''. The clause provides for an annual report to the Secretary of State, but the Secretary of State will lay a copy of every report he receives under the clause before both Houses of Parliament—and will send one by special
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courier to the hon. Members for Northavon and for Eastbourne. I need to move the amendments allowing that on Report, but that is our intention.
I do not want to go over the same overture, but the OPRA practice was to lay the report before the Secretary of State, and we are following that practice. However, Parliament will have ample opportunity to receive and discuss the report.
Question put and agreed to.
Clause 12 ordered to stand part of the Bill.
Clause 13
Provision of information,
education and assistance
Question proposed, That the clause stand part of the Bill.
4.30 pm
Mr. Pond: This is another short clause. It gives the regulator the power to provide information, education and assistance to those involved in the administration of work-based pension schemes. Those people include trustees, managers and employers, and those who advise the trustees and managers of such schemes. The clause also enables the regulator to help employers understand and comply with any responsibilities that they may have to provide their employees with access to pensions information and advice.
Empowering the regulator to assist trustees, managers and advisers in that way will implement one of the key recommendations of the quinquennial review of OPRA, which is that a proactive regulator should encourage compliance through the provision of educational and guidance material. The new regulator will operate a proactive regulatory approach, and the provision of information, education and assistance is a fundamental constituent of that approach. We believe that providing assistance at an early stage may help to prevent larger, more complex problems from occurring later, and in the long run, that will mean better protection for members.
Mr. Webb: It is hard to be against information, education and assistance, but we will have a go. An issue that the hon. Member for Havant (Mr. Willetts) often raises, to give him his due, is that of employers who are nervous about giving advice to their employees on pensions matters. Various rules about the giving of financial advice and about who can and cannot give it have scared them off.
Even if the employer runs a very good scheme and puts a lot of money into it, and even if he does so in a robust industry where everything is rosy, he cannot say to his workers, ''It's a good bet; you'd be well advised to go for it.'' The hon. Member for Cardiff, West is not with us, but if he were, he would already be on his feet to say, ''And look what happens when people do that.'' However, there is clearly a case for enabling employers to give their workers more advice about their occupational pension scheme. We know that even firms that run very good schemes with generous levels of employer contributions do not have 100 per cent. membership of those schemes. Life is never certain in pensions, but there are people working for such
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employers in whose best interests it would almost certainly be to join the scheme, particularly in the world of the pension protection fund. At the moment, employers cannot even have a conversation with them about the matter.
How far will the clause enable the regulator—the bit on the open part of the wall—to support employers who want to say to their employees, ''We encourage you to join our occupational pension scheme''? To look back to an earlier discussion about the objectives of the regulator, one of those objectives is to promote schemes and occupational provisions. Surely one of the best ways to do that is to support employers who run good schemes in encouraging and informing their members about joining them. Will the Minister give the Committee a steer as to whether, under the clause, it is envisaged that the regulator will encourage and support employers who are currently frightened to talk to their workers about the company scheme for fear of being seen to give them advice, which they cannot do? Will that taboo be broken by the clause? If possible, we want employers to feel more confident about doing that. It is not clear to me whether that is something that the regulator would do under the clause.
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