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Lord Lucas moved Amendment No. 12:

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

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

Baroness Hollis of Heigham: We agree with the noble Lord that the amendment is a good one and we

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support it. We hope that on a knock-for-knock basis we can expect the Minister's support on the next amendment.

On Question, amendment agreed to.

Baroness Hollis of Heigham moved Amendment No. 13:

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

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

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

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

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

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

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

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

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

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

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

5.15 p.m.

Lord Ezra: I support what the noble Baroness has said on the amendment. It was a great surprise to me that the Government did not accept the firm

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recommendation of the Goode Report. If the regulatory authority is to be a statutory, independent body, the Bill only goes half-way to establishing it in that respect. It makes it a statutory body, but for some unknown reason which did not come out in the Second Reading debate, the Government decided not to accept the financial consequence and have the scheme funded out of public funds.

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

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

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

The noble Baroness referred to the Press Council. I was chairman of the Newspaper Publishers Association for 13 years. Throughout that period the threat of non-payment to the Press Council was made over and over again. Sometimes it was made overtly; sometimes it was just implicit. Whichever way it was made, it was a fact that officers of the Press Council had to bear in mind. The provision is unhealthy and unnecessary. Even if, as is argued, it is a question of cost—and the Treasury can be quite silly about these matters from time to time—very real benefits accrue to the Government as a result of the whole of this Bill from private pension provision of this type, the cost of which is borne to a large extent by the employers. I ask the Minister to look carefully at this matter. What he is perpetrating is totally unnecessary. It is almost unique in my experience. On

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the occasions where the bodies being governed by authorities are financed by those authorities, it matters not how the rules are written: the pressures will be there.

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