Clause
18
Personal
accounts delivery
authority
Mr.
Waterson:
I beg to move amendment No. 81, in clause 18,
page 20, line 31, leave out subsection
(2).
The
Chairman:
With this it will be convenient to discuss the
following:
Clause
stand part.
Amendment
No. 8, in schedule 6, page 55, line 1, after ‘a’, insert
‘lay’.
Amendment No. 41, in schedule 6,
page 55, line 1, leave out ‘chairman’ and
insert
‘lay chair who is
not perceived to have a conflict of interest with regard to the
financial services industry, but is there to represent the views and
look after the interests of scheme members and prospective scheme
members,’.
Amendment
No. 9, in schedule 6, page 55, line 2, after ‘members’,
insert
‘(of which two
shall be appointed to represent the interests of
consumers)’.
Amendment
No. 42, in schedule 6, page 55, line 2, after ‘ members’,
insert
‘, of which at
least two out of nine members will be non-executive consumer directors
who represent scheme members and prospective scheme members and are
recognised professionally by consumer
groups,’.
Amendment
No. 10, in schedule 6, page 55, line 3, leave out ‘or
(3)’ and insert ‘, (3) or
(3A)’.
Amendment
No. 11, in
schedule 6, page 55, line 8, at
end insert—
‘(3A) Before
appointing, or approving the appointment of, any member representing
the interests of consumers for the purposes of sub-paragraph (1)(b),
the Secretary of State must consult such organisations as appear to him
to represent the interests of
consumers.’.
Amendment
No. 44, in
schedule 6, page 55, line 8, at
end insert—
‘(3A) Any
consumer appointments for the purposes of sub-sub-paragraph (1)(b) must
be discussed with consumer groups prior to appointment and the said
consumer groups will have the right to comment on the said
appointments.’.
Amendment
No. 12, in schedule 6, page 55, line 11, at end
insert—
‘1A Before
appointing any member of the Authority under sub-paragraph 1(1) the
Secretary of State must—
(a)
conduct and open recruitment competition inviting applications from
individuals with extensive knowledge, experience and expertise in the
fields of pensions or financial marketing or
both;
(b) consult organisations
which appear to him to represent key groups of
stakeholders;
(c) have regard
to the desirability of appointing a group of members whose expertise
collectively spans all aspects of occupational and personal pension
provision and financial
marketing.’.
Amendment
No. 13, in schedule 6, page 55, line 11, at end
insert—
‘1A In
appointing members the Secretary of State shall have regard to the
desirability of recruiting a group of members so that there is a
balance as the Secretary of State considers appropriate
between—
(a) members with knowledge
and experience of consumers’ pension
needs;
(b) members with
knowledge and experience of employers’ involvement in
pensions;
(c) members with
knowledge and experience of pensions from the pension
providers;
(d) members with
knowledge and experience of pensions from the relevant
regulators.’.
Amendment
No. 15, in schedule 6, page 55, line 30, leave out ‘or
other’.
Amendment
No. 82, in schedule 6, page 56, line 26, leave out sub-paragraph
(2).
Amendment No. 45, in
schedule 6, page 59, line 7, at
end insert—
‘(2) The
Authority shall establish a committee for the purpose of representing
scheme member and prospective scheme member interests, which shall be
chaired by a consumer
representative.’.
Amendment
No. 14, in schedule 6, page 59, line 20, at end
insert—
‘10A (1) The
Authority must establish a committee for the purpose of representing
the interests of scheme members and prospective scheme
members.
(2) The chairman of
the committee must be a consumer representative appointed under
paragraphs 1(1)(b) and
1(3A).’.
That
schedule 6 be the Sixth schedule to the
Bill.
New
clause 5—Application of Freedom of Information Act to
Personal Accounts Delivery
Authority—
‘(1) The
Freedom of Information Act 2000 (c. 36) is amended as
follows.
(2) In section 35
(formulation of government policy etc.) insert after subsection
(2)—
“(2A)
Information held by or provided by the Personal Accounts Delivery
Authority is not to be
regarded—
(a) for the
purposes of subsection (1)(a), as relating to the formulation or
development of government policy,
or
(b) for the purposes of
subsection (1)(b), as relating to Ministerial
communications.”
(3) In
section 36 (prejudice to effective conduct of public affairs) insert
after subsection
(2)—
“(2A)
Information held by or provided by the Personal Accounts Delivery
Authority is not be to
regarded—
(a) for the
purposes of subsection (2)(a), as relating to the maintenance of the
convention of the collective responsibility of Ministers of the Crown,
or
(b) for the purposes of
subsection (2)(b), as relating to the free and frank provision of
advice, or the free and frank exchange of views for the purposes of
deliberation; or
(c) for the
purposes of subsection (2)(c), as relating to the effective conduct of
public
affairs.”.’.
Mr.
Waterson:
I feel quite weak, Mr. Gale, faced
with such a large group of amendments and new clauses, but I shall try
to rise to the occasion. Unfortunately, I cannot promise to be brief on
this group, particularly as it includes clause stand
part.
We have now
moved on to the next important part of the Bill. It deals with the
system for personal accounts. It is worth setting out a few parameters
for the debate before I go through the various amendments and new
clauses, particularly as it includes clause stand
part.
I was
interested, as all members of the Committee were, to receive the
Minister’s letter of yesterday, which I thought had a hint of
nervousness about it, and I shall explain why. Our suspicion has always
been that the reaction of Ministers to this set of amendments would be
that they were all matters for the next Bill, which will come up next
year.
Mr.
Waterson:
The Minister says, right on cue, that they are.
Well, we beg to disagree. Of course, there are areas of detail about
personal accounts that it is inappropriate to go into here,
Mr. Gale, as I am sure that you would be the first to remind
us. However, we fear that there is a temptation into which Ministers
are
in danger of falling, and it is our job to help them not to fall into
it. The temptation is to pass the legislation with a sigh of relief,
then to pass the whole job over to some hot shots running the delivery
authority and leave it to them to make all the difficult, tricky
decisions. I would be the first to say that politicians are the last
people we want running something like that in any detailed way.
However, I think that it behoves us, particularly in view of the
timeline involved with the reports, to nail down some clear ideas about
the personal accounts system before we wave goodbye to the
legislation.
As I
said, I thought that the letter of 31 January betrayed a certain
nervousness on the part of the Minister. In the second paragraph, it
says that
“delivering and
managing a major occupational pension scheme such as personal
accounts... should not be a task for
government.”
The answer
to that, as I have tried to indicate, is yes and no. Of course, they
are right, as the Minister goes on to
say:
“We
therefore propose to bring in experts to help develop and deliver the
personal accounts
scheme.”
He goes on to
talk about the second pensions Bill later this year, and to stress the
advisory nature of the delivery authority. That is all well and good,
but to take one clear example before I move onto the weight of the
amendments, he talks about
“advising on the design of the
commercial strategy”.
As
I have made clear in more than one speech, the Opposition hope that
personal accounts will be a success, not only because they are the
right approach to take to such a massive change in our systems, but
because we may be the ones to inherit their implementation. We think
that personal accounts have got to have the right shape, in a very
general sense. I do not want the Minister to get too worried; we do not
want to be too prescriptive, but we need to feel that the system is
going to work. If it fails, and the accounts are not sufficiently
attractive to the target audience—we shall come later to issues
about whether the target group has changed—we want to do what we
can to try to put that right now.
James
Purnell:
I want to correct any impression that we were
nervous; it is more that we were confused by the number of amendments,
given that we think that they pertain to the White Paper consultation
and the next potential Bill. I refer the hon. Gentleman to
clause 19(2), which makes it clear that this is all about advice
on
“proposals by the
Secretary of State”.
There will not be an organisation taking
decisions; there will be an organisation advising the Secretary of
State. That is the hon. Gentleman’s grab handle if he is worried
about our falling off the cliff and giving it all to another body to
make the decisions. They will be decisions by the Secretary of State,
not by the authority.
Mr.
Waterson:
I take the Minister’s point, but I would
say two things. First, the body itself will probably benefit from some
sort of steer from the Committee as
to what shape personal accounts might have. Secondly, contrary to what
some members of the Committee may believe, I do not wake up in the
morning and dream up all the amendments and the concerns that we wish
to express. I do occasionally, but on the shape of personal accounts,
an awful lot of the amendments, if not most of them, are driven by the
industry—the very people who will have to make them work.
Therefore, when I am speaking, it might not really be me at all; it
might be the very people whom the Minster wants to enlist to make
personal accounts a
success.
I now turn to
annexe A—rather bizarrely, there is no annexe B—to the
Minister’s letter, in which he
says:
“The
Delivery Authority will be led by a Chair and Chief Executive with the
right skills and expertise...supported by appropriate legal, commercial
operational, business and financial
expertise.”
That is the
kind of issue that we want to explore in more detail. Crucially, he
moves on to marketing and communications. We think that marketing is a
crucial part of selling personal accounts; people will have to want to
buy them. I will also talk about that in more detail.
The annexe to the
Minister’s letter then refers to the role of the personal
accounts board,
which
“will be
responsible for the management, rather than the delivery, of the
personal accounts
scheme.”
That is an
important distinction. We are concerned that the delivery authority
should be set up. Although in law the authority and the board are
separate entities, we are worried that the Government want to see one
morph into the other. Each requires a wholly different skills set for
the introduction and delivery of the concept. The Minister recognises
that by saying:
“There is a clear
distinction between the work of the Delivery Authority and the personal
accounts board.”
We want
to underline that in these
debates.
I
shall assist the Committee by pointing out that clause 18, along with
schedule 6, is about pay and rations, as it were, or the nuts and
bolts. Clause 19 is about the wider issues—the purpose and scope
of personal accounts, the authority’s relationship with its
successor body and the definition of success or failure. There I fear
that we may bump up against the limits of consensus, but we will see
where the discussion takes
us.
I shall move
rapidly on to the large group of amendments, beginning with amendment
No. 81, which is a probing amendment that will allow me to raise a
couple of concerns. Subsection (2) makes it clear
that:
“The
Authority is not to be regarded as the servant or agent of the
Crown”
and therefore does
not enjoy Crown immunity or any claims. That raises an important issue,
which arises in the context of the European Court proceedings that have
just been concluded against the Government and the High Court
proceedings that have been brought by pensioners’ groups, which
are due to be heard on 7 February.
Whoever the Government are and
however the architecture ends up, there should be distance between the
Government and issues such as investment policy. I do not think that
the Government should be in the business dealing with that sort of
thing; they should be in the business of minimising as far as possible
the
political risk. I should therefore like to probe the Minister as to what
the Government have in mind on the question of Crown privilege. It is
right that Crown privilege should not apply, but does the Minister
envisage claims against the authority? If so, what sort of claims does
he envisage? Let me
move on. A cluster of amendments have been fomented, encouraged and
supplied by Which?, formerly the Consumers Association, and have
its seal of good housekeeping. The hon. Member for Yeovil occupies an
interesting parallel dimension, because in most if not all cases, his
amendments are identical to mine. I take it as praise
indeed.
2.30
pm
The first set
of amendments includes amendment No. 8, which is ours, and amendment
No. 41, which is the hon. Gentleman’s. Amendment No. 8 would put
“lay” in schedule 6. Its purpose is to ensure that all
chairs do not have any perceived conflict of interest with regard to
the financial services industry, and that they look after the interests
and represent the views of scheme members and of prospective scheme
members. It is a probing amendment. “Lay” is a difficult
word, and some definitions in other legislation are not directly
comparable. However, it is important that the Minister understands our
drift. The theme of many of the twinned amendments is to ensure that
the interests of consumers and of potential consumers are at the heart
of the way in which the authority undertakes its
business.
Likewise,
amendments Nos. 9 and 42 are again Conservative and Liberal Democrat.
The Bill does not state that there should be mandatory consumer
representation on the delivery authority. Which? is keen to
ensure that there is a focus on the best deal for scheme members and
for prospective scheme members. The amendments call for two mandatory
non-executive consumer directors who would be recognised in a
professional capacity by those stakeholder consumer groups that have an
active interest in the subject. Which? has been energetic in
attending many of those marvellous seminars, discussing with
us—and, I am sure, other parties—its concerns as time has
gone on. Emma Higginson, in particular, has been extremely helpful in
briefing on the concerns that it and its members have.
Which? takes the view,
and I am sure that there is a lot in what it says,
that
“consumer representation is fundamental
if trust and confidence in personal accounts is to be
upheld.”
It has carried
out its own research. Which? has consistently demonstrated that
consumers trust an independent board to administer their pensions. They
want directors who will provide expertise and knowledge of consumer
issues, who will represent the diverse needs and aspirations of
consumers, and who will ensure that mis-selling scandals are
avoided.
Amendment
No. 11, and amendment No. 44 tabled by the hon. Member for Yeovil,
would require the Secretary of State to consult such organisations as
appear to him to represent the interests of consumers before appointing
or approving the appointment of any member representing the interests
of consumers. It is important that the Secretary of State’s
definition of a
consumer representative is the same as that of recognised consumer
groups, and it makes sense to ensure that there is proper consultation
with those groups. My amendment does not specify those groups; that
might be a matter for secondary legislation. I am sure that the list is
obvious, but it is a point worth making in Committee. Amendments Nos. 14 and 45 say
that the authority must establish a committee. There is provision for
setting up any number of committees under the delivery authority, but
there should be a committee for the purpose of representing the
interests of scheme members and of prospective scheme members. Again, a
consumer committee could serve as a sounding board for personal
accounts issues, and for policy decisions in particular, given the
impact that they will have on the consumer. A committee would provide
extra scrutiny and advice to ensure the direct involvement of key
representatives and stakeholders, and, I hope, to improve the quality
of decision making. Amendment No. 10 is a consequential
amendment.
Amendment
No. 12 is, I hope, reasonably clear in its intention. It specifies that
before appointing any member of the authority the Secretary of State
must conduct an open recruitment competition inviting applications from
individuals with the relevant qualifications, consult organisations
representing key groups of stakeholders and
“have regard to the desirability
of appointing a group of members whose expertise collectively spans all
aspects of occupational and personal pension provision and financial
marketing.”
Those
last three words are important for reasons that I have already
mentioned. Whoever takes on this job must have a marketing background
or at least have people around them who do. Ultimately personal
accounts may stand or fall on the success of the marketing campaign and
therefore that is a particularly important provision in this Bill. The
National Association of Pension Funds has indicated its support for
amendment No. 12. It says that it wants to see members with the
relevant experience and knowledge, particularly of occupational
pensions. We agree with that.
We want to tease out from the
Minister the kind of people he has in mind. What kind of people will or
are being recruited? I hope that he can share with us the extent to
which the Government are already seeking recruits for these positions.
There is always this slightly delicate issue of what a Government can
do before a piece of legislation receives Royal Assent. I seem to
remember that on the 2004 Act there was a bit of an up and downer about
hiring the head of the Pension Protection Fund before the Bill had gone
through all its stages. I do not want to get too formal about it, but
it behoves the Minister to tell us what is happening. Has the Secretary
of State appointed a firm of headhunters to beat the bushes in the
financial services and other sectors? If so, what criteria are being
given to the headhunters in that search? It is only fair that the
Committee be put in the
picture.
Amendment No.
13 states:
“The Secretary of State
shall have regard to the desirability of recruiting a group of members
so that there is a balance as the Secretary of State considers
appropriate between—(a) members with knowledge and experience of
consumers’ pension needs; (b) members with knowledge and
experience of employers’
involvement in pensions; (c) members with knowledge and experience of
pensions from the pension providers; (d) members with knowledge and
experience of pensions from the relevant
regulators.” I would
hope, again on the basis of this probing amendment, that the Minister
will feel able to say that these are all criteria that he is already
operating. That would be very reassuring. I can almost hear his
argument coming that these are not matters that should be on the face
of the Bill. But in the light of reasonable assurances from the
Minister, I am sure that we can come to some accommodation on
that.
Amendment No. 15
is to schedule 6. It relates to paragraph 2(6) about conflicts of
interest, which
reads:
“In this
paragraph and paragraph 3 ‘conflict of interest’, in
relation to a person, means a financial or other interest which is
likely to affect prejudicially the discharge by him of his functions as
a member of the
Authority.”
It would
obviously be wrong if someone with a clear financial interest was
involved because there would be a conflict of interest. But what wealth
of potential problems is contained in the otherwise innocent words
“or other”? What kind of situation or conflict do the
Government have in mind? Would the Minister mind sharing that with
us?
On amendment No.
82—
Mr.
Laws:
Does the hon. Gentleman agree that amendment No. 82
removes a paragraph that allows the Secretary of State to pay pensions,
allowances or gratuities to the chairman and the non-executive members
of the authority at his
discretion?
Mr.
Waterson:
That is a helpful intervention for which I am
most grateful, and the hon. Gentleman is right. This is a probing
amendment, because I am a bit puzzled as to why the delivery authority,
which will have a short existence, should be in the business of paying
pensions, allowances or gratuities—I do not know what that would
mean. Would the members be given a couple of quid in their hands for
turning up to a meeting? Paragraph 4(1) reasonably makes it clear that
they should get remuneration and allowances. That is perfectly proper
and is to be expected. However, I am not entirely convinced about where
pensions, allowances and gratuities would come in.
Amendment No.
14 exactly parallels amendment No. 45 from the Liberal
Democrats. That, I understand; it is about representing the interests
of scheme members in a committee.
I think that
the last issue that I need to deal with in this group is new clause 5,
which concerns freedom of information. The Personal Accounts Delivery
Authority will be subject to the Freedom of Information Act 2000, but
the Act exempts information relating to the formulation of Government
policy and the free and frank provision of advice. Those provisions are
intended to protect the confidentiality of advice given by officials to
Ministers and internal discussions within Government. However, we would
want to underline the fact that the delivery authority will be
independent from Government, not part of it, and I am sure that the
Minister will be eager to say that, too. We are supported by the
Association of British Insurers, among others, in thinking that it is
important to make it clear that the advice tendered by the delivery
authority about the best way to run personal
accounts should be freely available to the public and the industry, so
that everybody can judge the value of its recommendations and assess
any final decisions taken by the Secretary of State on the basis of
that advice. Although
I am always open to criticisms of my drafting, I think that the new
clause achieves that purpose. It is designed to ensure that members of
the public and others are able to make applications under the 2000 Act
in respect of the delivery authority, and that there will not be any
bar to that on the basis set out in the clause.
I hope that I have dealt
adequately with the new clause and all the amendments, even those that
were not tabled by my party, and I hope that there is something in
there that the Minister might accept.
The Chairman: I have no
desire to curtail the right of any hon. Member to make whatever
in-order comment he or she wishes. However, it has not escaped my
notice that the provenance of some of the amendments seems to be
remarkably similar. It is therefore likely that the arguments might be
remarkably similar, so in order to expedite matters I should be
grateful if hon. Members would eschew
repetition.
2.45
pm
Mr.
Laws:
I am grateful not only for that advice,
Mr. Gale, but for the fact that you did not look me directly
in the eye when giving it. It is clearly designed for all members of
the Committee. I did not, as you know, speak to clause 17 because the
passport for that seemed to be having a joke about Calvin Coolidge. As
I did not have one, I felt it was not appropriate for me to contribute.
However, I agree that these amendments look rather similar. We are
discussing a shadow delivery authority and have eight amendments
shadowing each other—probably, I fear, in the wrong direction
from my perspective, but arguably so closely that we will not split
hairs.
Amendment No.
8, as you rightly say, Mr. Gale, shadows amendment No. 41,
amendment No. 9 shadows amendment No. 42, amendment no. 11 shadows
amendment no. 44 and amendment No. 14 shadows amendment No. 45. They
all come from Which? so the hon. Member for Eastbourne and I
will be happy for it to have the full credit for them. It is quite
right to say that I have, essentially, been able to contract out the
selling of these fine amendments to the hon. Gentleman, who has done a
magnificent job in setting them out.
All I really need add, then, is
that these amendments clearly demonstrate the importance of this body
having consumer interests at its heart and not just being a sort of
industry-Government fix. I need add nothing
else.
James
Purnell:
Now there is a practice that we should continue
in future, Mr. Gale; but I do not want to give you advice,
as I am surely not allowed to do so. I am tempted to agree with the
spirit behind all these amendments, and leave it at that. We do,
however, have a disagreement of substance on the one about freedom of
information, so I shall come to that. Yet people would feel
short-changed if we did not set out, on the record, a little response
to the desire for our thinking to be teased out. So, I will go through
the amendments as requested.
First, when
the delivery authority takes on its next incarnation—if
Parliament is willing to give us another Bill next year—then it
will, we hope, move from being an advisory body to a genuine delivery
authority. At that stage it will be important for this House to make it
clear that the delivery authority should have genuine
independence—both on investments and operationally—and
the ability to recruit the skills that it needs. Personally, I think
that an important point within that will be for us to establish clearly
that it should make investment decisions on behalf of its members and
with their interests at heart, rather than under political direction.
That will be an important precedent to
set.
However, that is
not the delivery authority that we are discussing today. As I said
earlier, the one under discussion is one that is advising the Secretary
of State on the proposals that he will be making. So, the bedrock of
parliamentary accountability here—and the answer to the
questions set out by the hon. Member for Eastbourne at the start of his
speech—is that it will not be going off to make a whole bunch of
decisions for which Parliament cannot hold it to account. It will be
advising the Secretary of State, whom Parliament can hold accountable
during this period of its operation in exactly the normal
way.
On the detail of
process in the amendments, I also want to echo what has been said about
Which? and the important role that it has played throughout the
process of developing these policies, while representing in particular
the interests of consumers and members. Which? has much
influenced our proposals, and all parties have welcomed that. Its
central point—that members and consumers should be absolutely at
the heart of personal accounts—is right, and we indeed intend to
reflect that in our proposals following the White Paper that we
published in December.
An open
question in the White Paper asks people to come forward with
suggestions on how members should be represented, involved and
consulted. We have a genuinely clear and open mind on that area, and
are keen to have suggestions; we look forward to what the Work and
Pensions Committee says on that as well. In making personal accounts
work, it will be important both that the criterion for the
authority’s decision making is clearly established to be the
interests of its members—as it is their pensions that we are
talking about—and that the members themselves feel confident
that they have appropriate representation and influence over the
decisions being made on their behalf.
We will be discussing those
items in the light of the response that we get to our consultation,
which bore in mind the work of the Work and Pensions Committee. We will
publish our response to that Committee, which hon. Members will have a
chance to scrutinise over the next few months. Those are the general
issues that we will be able to discuss, but the amendments that we are
talking about today—to which I now want to turn—are much
more specific.
Clause
18 establishes a Personal Accounts Delivery Authority, which we want to
give independent advice to Government while using the professional
expertise and knowledge that exist in the private sector. The
establishment of such an authority has generally been welcomed by
stakeholders, both those in financial services and representatives of
consumers and trade
unions. I am pleased to see that the Opposition parties also support the
principle of having a delivery
authority. Schedule 6
covers the membership, proceedings and organisational parameters within
which the delivery authority must operate. We envisage the authority
operating on the basis of a small board, with executive and
non-executive members, supported by staff and specialist committees.
Initially, under the provisions set out in the Bill, the delivery
authority will provide advice, supporting the Government in
understanding the operational and commercial implications of policy
options. It will also advise on the design of the commercial strategy,
including the financial, technical and commercial analysis needed for
policy development. That is the general approach. I will now turn to
specific
amendments.
On Crown
immunity, I understand that the intention of the hon. Member for
Eastbourne is not to give the organisation Crown immunity, but to test
whether we believe that it should be subject to judicial procedures in
the normal way, as any organisation advising on policy in this way
should be. That is our intention. If he wanted to press his amendment,
we would resist, but I hope that gives him the comfort that he wants.
If people feel that they need judicial recourse against the authority,
they will be able to resort to it in the normal
way.
Mr.
Waterson:
I do not want to labour the point, but it seems
odd to envisage legal claims against the delivery authority rather than
the board in due course. I wonder what kind of claims the Minister
envisages being made. Is any provision made for possible claims in the
amount set out in the regulatory impact assessment, which is £21
million for the delivery authority up to the second Bill being dealt
with by
Parliament?
James
Purnell:
If people wanted judicial recourse against the
authority, they would sue the Secretary of State in the normal way.
They would have judicial review of the Secretary of State. I hope that
that gives the hon. Gentleman the assurance that he wants. If there was
a feeling that the authority had acted in a way that needed judicial
review, that would be
possible.
Mr.
Waterson:
So, I assume that in due course the board would
have a different set-up? That body, once it is up and running, is
envisaged as the one to be sued, rather than the Secretary of
State.
James
Purnell:
That is absolutely right. In the
authority’s next incarnation, when not giving advice but
actually making proposals, then it would obviously be subject to normal
judicial review and other legal
proceedings.
On
freedom of information, I am just not sure that I agree with the hon.
Gentleman. I can see the desire for transparency. However, in the same
way as civil servants give advice to Ministers, which they would
sometimes not be comfortable having in the public domain, so is the
role of the delivery authority in giving advice to the Secretary of
State, where the analogy would apply as well.
There are some side effects of
his amendment that I think the hon. Gentleman would not want, such as
anybody applying for an interview being able to ask for the questions
that they were going to be asked in advance, or so I am told.
Apparently anyone wanting to get into the authority’s IT system
could ask for the passwords. I know that that is not the
amendment’s intention. On the basis of wanting effective
policy-making at this stage it would be better for the Freedom of
Information Act to apply to Departments, as it does now. That is why we
will resist the amendment if the hon. Gentleman divides the Committee
on the proposal. We do not propose to exempt the authority from
protection for policy and advice because it would not be conducive to
their giving frank and impartial guidance, which is exactly why
Parliament put those provisions into the Freedom of Information Act in
the first
place.
On
amendments Nos. 12 and 13, I reassure the hon. Gentleman and the hon.
Member for Yeovil that as with all other public bodies, when appointing
non-executives we are required to follow the code of practice of the
Office of the Commissioner for Public Appointments for ministerial
appointments to public bodies, which is a guide to the steps that must
be followed to ensure a fair, open and transparent appointments
process. Independent scrutiny is a mandatory element of the process and
no appointment may be made unless an independent assessor has been
involved. In appointing initial executive members we will follow an
open and transparent process that follows best practice and standard
employment procedures.
The hon. Member for Eastbourne
wanted to know whether we had started recruiting. I can tell him that
we engaged headhunters on Monday and we plan to start the recruitment
process in February. If he knows of anyone who may want to apply, he
can refer them to a firm called Egon Zehnder. I hope that that gives
the hon. Gentleman the information that he
wanted.
Mr.
Waterson:
As soon as we adjourn today I shall be polishing
my CV.
Two questions
arise from what the Minister said: first, will he share with the
Committee the job descriptions of the positions of chairman and chief
executive that he has given to Egon Zehnder, a reputable and well-known
firm in the field? Secondly, what is the Cabinet Office or other rule
about recruiting people and spending money when the Bill has barely
scratched the surface of its parliamentary process? These people do not
work for charitable
purposes.
James
Purnell:
I think the rule is that the process can start
after Second Reading. We will be careful to follow the application
procedure in keeping with Cabinet Office and Treasury guidance on the
spending of public money under this
Bill.
The hon.
Gentleman asked whether we would want specific marketing expertise and
we are happy to discuss that with him and with
stakeholders.
Mr.
Waterson:
I hope that the Minister has not forgotten my
first point.
James
Purnell:
I probably have. [Interruption.] We are
happy to share that with the hon. Gentleman. We want to discuss it with
our headhunters first, as their expertise is in formulating all that.
If the hon. Gentleman wants to make any suggestions we will be happy to
consider them and we will happily commit to sharing the job description
with him. The process can begin after Second Reading but the
appointment will be after Royal
Assent.
3
pm
We did not
envisage requiring marketing expertise to be specified in legislation.
It will be for the chairman and the chief executive to decide the
expertise that they want on that issue. However, we do not want to put
that in the Bill, as we want a nimble organisation that can be flexible
in deciding whom it
recruits.
As I was
saying, independent scrutiny will be a mandatory element in the process
and no appointment will be made without an independent assessor. We
recognise the importance of ensuring that the board contains
individuals with a breadth of knowledge and experience from a range of
backgrounds. At the initial stage of delivery, it will be small, so it
will be particularly important to ensure that we have the right skills
and expertise in place.
Amendments Nos. 8, 9, 10, 11,
41, 42, 44, 14 and 45 relate to the important issue of consumer
representation. The principle that consumer involvement and expertise
is vital to the work of the delivery authority is recognised by all
parties. However, at this stage I am wary of starting to mandate
individuals on boards to represent individual stakeholder groups. We
might end up with stakeholders in the financial services industry,
stakeholders among employers providing schemes and stakeholders in
trade unions, and we would be in danger of creating the sense that
certain people on the board had responsibility for one particular
section or interest rather than for the effectiveness of personal
accounts as a whole. Like the BBC and Ofcom, which do not have people
representing specific interests, we want the board as a whole to be
responsible for the whole success of personal accounts. That means
representing consumers and performing the other duties that, initially,
the personal accounts board and the delivery authority will
have.
While
supporting the principle that consumers and people with expertise in
consumer issues should have appropriate involvement in personal
accounts, we are reluctant to legislate specifically for
that.
Mr.
Laws:
Has the Minister had a chance to meet the most
prominent consumer organisations to think about how he might satisfy
their concerns within the context of those reservations? Would he be
willing to do so if they wished to take him up on it before the measure
is taken
further?
James
Purnell:
We met with them a number of times in the run-up
to publication of the White Paper, and will be happy to do so again. In
fact, we had one running meeting—the Division bell rang half way
through and we continued it while running to the Division Lobby. The
issue is not new, and the views of
those people shaped the section of the White Paper covering consumer
representation. We are happy to listen to any specific proposal.
However, we do not think that we should necessarily legislate for the
detail. We will continue to discuss the issue; indeed, my officials are
in regular discussion with the stakeholders who have been mentioned and
others, as well as through our much-referred-to series of
seminars
As
for the calls for a lay chair, all members of the delivery authority
board will be expected to act in the interests of all prospective
scheme members in performing their roles. That duty will apply to
everyone. Given that we are trying to create an organisation with a
relatively small board, we do not want to specify backgrounds that
would not be suitable for particular jobs. We recognise that those
interests will have to be taken into account, and that people with
expertise in those issues will have to be involved in personal
accounts, but we may come to regret disqualifying anybody with a
financial services background from chairing the authority if the best
person to do so happens to have that background. In that, we disagree
with the thrust of the amendment. We want the delivery authority to
have the flexibility to recruit the best people for the job, and we do
not want to tie their hands. With that, I shall move on from consumer
representation, unless hon. Members have any burning issues to
raise.
Amendment
No.15 relates to conflict of interest. There is nothing hugely
mysterious about it. Most conflicts of interest would be financial, but
it possible to envisage a conflict of interest that was not directly
financial. For example, a member of someone’s family might run a
company that could be affected by the introduction of personal
accounts, or there might be other non-financial conflicts of interest.
The only reason for having the words “and other
interests” is to give the Secretary of State the flexibility to
deal with any potential non-financial conflicts, having regard to legal
advice as
necessary.
As
for amendment No. 82, again there is no great mystery here. We are
replicating the financial remuneration framework that applies to
non-departmental public bodies, which gives the Secretary of State,
should he so determine, the flexibility to pay or make provision for
payment of pensions, allowances or gratuities to non-executive members
or their dependants, survivors, spouses or children. There is nothing
new about that; that is how we remunerate people generally, and we will
consider the exact remuneration package at a later
stage.
I hope that I
have given the hon. Member for Eastbourne the information that he
wanted, and that I have dealt with all the amendments that we are
discussing with the clause. I thank hon. Members for tabling the
amendments; it is important that we have had a chance to discuss them,
and I hope that we have been able to allay any concerns. As I say, we
support the general thrust behind most of the amendments. We want hon.
Members involved at the very heart of personal accounts; their support
and confidence in the organisation will be central to making it a
success. They have asked genuinely open-minded questions about how that
should be done in the next phase of personal accounts. In this phase
there will be a nimble, small body that gives us advice based on the
best financial, consumer and other expertise. I urge hon. Members to
withdraw their amendments.
Mr.
Waterson:
I am grateful to the Minister for going through
all the amendments in such detail. Let me try to pick up some of those
points as briefly as I am able, given the size of the group of
amendments—the largest group that the Committee has considered
so far.
I am grateful
for the clarification on Crown immunity. I was genuinely puzzled by
that, and I am now clear that the legal situation in terms of the
claims of the delivery authority will be quite different from that of
the board in due course. It is important that there is in due course a
separation between the body that is delivering personal accounts in the
long term and the Government of the day.
I am
disappointed by the Minister’s reaction on freedom of
information. I suppose that all Ministers develop in that way
eventually, and it is rather upsetting to see this Minister, who is so
young, succumbing to what the right hon. Member for Manchester, Gorton
(Sir Gerald Kaufman) calls “ministeritis” in his
excellent book, “How to be a Minister”, the third edition
of which has just come out and which I commend to the Minister. Again,
this is not just some mad Tory obsession, or even a mad Liberal
Democrat obsession. It is a point initially raised by the Association
of British Insurers, which has a legitimate interest on behalf of its
many members. In a way, it suggests to me that the Government are now
stepping back.
We
have all immensely enjoyed the succession of seminars, where there has
been cross-fertilisation between Ministers, officials, the industry and
others. It seems as if we are now going to take a step backwards. Given
that the body will be primarily delivering advice to Ministers about
the future shape of personal accounts, I cannot believe that it can
claim a monopoly of wisdom, expertise and experience in those matters.
I think that it is important that bodies such as the ABI and its
members, and many others such as Which? or any body with an
interest, should have access to the documents. As for the ludicrous
examples given—with due respect to the Minister—I do not
know whether he has ever tried to make a freedom of information
application under this Government, but the notion that someone going
for an interview could get the questions in advance by putting in a
freedom of information application is just risible. I forget what the
other example was.
John
Penrose:
IT
passwords.
Mr.
Waterson:
Yes, gaining access to the IT system. I am sure
that some exclusion can be crafted to put the Minister at ease on that.
All that we are talking about is people with a legitimate interest and
genuine expertise and knowledge of these matters having access to the
advice tendered to Ministers. My intention—I am not quite sure
where it comes in our deliberations, Mr. Gale—is to
press new clause 5 to a vote. I urge Opposition Members to join me on
that.
James
Purnell:
I give the hon. Gentleman an assurance that we
want the authority to be open and consultative in everything that it
does. There may well be occasions when it wants to give advice in
confidence. I am sure that he can imagine circumstances in which it
would want to do that. That is why we think that freedom of information
should apply to this body in the same way that it applies to other
Government bodies.
Mr.
Waterson:
I see that. I do not suggest that this is the
beginning of some slippery slope to a police state, any more than we
have one at the moment but without the police, but there is a genuine
issue here. I hope that whoever runs this body will have the good sense
to meet regularly with us. If consensus is to mean anything, it needs
to be a continuing process. I regard the position on freedom of
information as being counter consensual in that sense.
I hope that we can get round
that by having regular meetings with this bod or bods who will tell us
their troubles. We do not want to sweep into office in two or three
years’ time to find that they have been advising Ministers that
this whole thing is doomed to fail miserably. We will keep coming to
the seminars, because we are sad people with nothing else to do, but
also because they can be quite interesting. But I urge the Minister to
reconsider that
point.
I am grateful
for the Minister’s openness on the appointment procedures. I am
delighted to hear that he has Egon Zehnder on the case. I shall be
interested to see what comes from his discussions with that firm. I
assume that the usual rules about political affiliation will be
observed. I was grateful for his confirmation that the appointment can
be made only after Royal Assent. I suppose that any money can be spent
only then too. I hope that Egon Zehnder is aware of
that.
There is a
serious point about marketing experience. David Norgrove or Laurence
Churchill are both excellent and incredibly able and competent men, but
a different animal is needed here. I am not suggesting PY
Gerbeau, but we are looking for someone with a bit of pizzazz and
salesmanship and a marketing strength which is not required in
something like the Pension Protection Fund, which in effect has a
captive audience. That is the point that I was trying to make, if I can
put it in a
nutshell.
I
think that I am happy with the Minister’s assurances about
consumer representation. He clearly stated that
the Government were also grateful for the input from Which? and
others. As I said in my opening remarks, I can understand the argument
that we should not necessarily state in the Bill precisely who should
be taken on. The Minister reassured me enough that I shall not press
the amendments. I accept that the wealth and variety of experience
referred to in the amendments, as well as consumers’ views, will
be taken into account. That is a win for our point of
view. I mentioned
earlier the £21 million which, according to the RIA, has been
budgeted for the delivery authority between now and the next Bill. I
should have done so earlier, but let me say that I shall be immensely
grateful if the Minister will write to us with a breakdown of how that
figure was reached.
I
was satisfied by what the Minister had to say on conflict of
interest—he confirmed what he had had in mind. However, as he
says, the great bulk of such potential cases would be based on a
financial conflict of interest.
3.15
pm
I am happy not
to pursue any of the amendments tabled in my name; of course, I cannot
speak for the Liberal Democrats. However, I would like to vote at the
appropriate moment on new clause 5.
I beg to ask leave to withdraw
the amendment.
Amendment, by leave,
withdrawn.
Clause
18 ordered to stand part of the
Bill.
The
Chairman:
We have had the substantive debate on the
principle behind schedule 6, but we are yet to debate two groups of
amendments to it.
Further
consideration adjourned.—[Mr.
Heppell.]
Adjourned
accordingly at sixteen minutes past Three o’clock till
Tuesday 6 February at half-past Ten
o’clock.
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