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The Earl of Clanwilliam: Will my noble friend clarify a point for me? I do not wish in any way to criticise the amendment moved by the noble Baroness but she mentioned that there were 150,000 occupational pension schemes, of which 90 per cent. have only 11 members. Has my noble friend any information as to how many of those schemes in the 90 per cent. are director occupational pension schemes which do not include any worker element at all?

Lord Mackay of Ardbrecknish: I am not sure whether the information for which my noble friend asks is available and I certainly do not have it at the moment. However, I shall look into the matter as I saw the direction in which he was heading. With this amendment we are talking about schemes of a reasonable size; I shall not quantify the number of people covered. It may not be many; and it involves people who are not directors but employees of a firm.

The amendments proposed by the noble Baroness all relate to the authority's power to appoint trustees. The security of pension rights depends crucially upon the integrity and diligence of the trustee. If trustees put that security at risk by failing to comply with their statutory duties, there must be a power to appoint a trustee where it is necessary to ensure that the scheme is properly run. I do not believe that there will be any dispute between us about that.

First, Amendment No. 29 is unnecessary. If the authority is satisfied that trustees have seriously or persistently breached any of their responsibilities under Part I of the Bill, including those to implement the requirements relating to member nominated trustees, it

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is able to remove those trustees. Clause 6 allows the authority to appoint a trustee to a scheme where it has taken action to remove a trustee. So I hope that when the noble Baroness reads what I have said on her amendment, she will realise that Amendment No. 29 is, in our view, unnecessary.

Where the authority takes the serious step of appointing a trustee to a scheme, there may be significant problems with the scheme's administration. That will often be the case. It is important that we are able to set down minimum standards of experience, competence and integrity for those whom the authority is able to appoint. While Amendment No. 33 seeks to ensure that the field of candidates is not unduly limited, it may inadvertently prevent adequate minimum standards being set. I do not wish to accept that amendment to the Bill as it may weaken the powers of the regulatory authority when it comes to appoint a trustee for a pension scheme which may be in difficulty.

Amendment No. 34 proposes to set the period within which the appointment of a trustee has to be reviewed. I believe that it is an unnecessarily bureaucratic addition to the responsibilities of the authority and is not necessary.

On the general question of issuing regulations, we intend to issue them and will wish to consult on what will be in them before they are issued. I hope that with those explanations of what the Bill does and of the amendments, the noble Baroness will feel able to withdraw them.

Baroness Dean of Thornton-le-Fylde: I thank the Minister for that reply. On Amendment No. 29, I took a little comfort—I hope I was right in doing so—from the Minister's assurances that the Bill more or less provides what we were seeking. I shall read the Minister's words with care when I receive Hansard.

As regards Amendment No. 33, I was pleased to hear that the Minister has given an undertaking that there will be consultation. Can he give me an assurance that the consultation will be wide-ranging and include people who are at present member trustees of the funds of their organisations and that the consultation will not be restricted?

However, I was not as happy with the response on Amendment No. 34. The Bill provides specific periods of office for trustees and I see no difference between a member who is elected or appointed as a trustee and someone appointed by the authority. It needs to be made clear how long the appointment is for, and the amendment which we put forward provided for a review. I am not happy with the answer which I received from the Minister on that amendment and before reaching a decision to withdraw it I invite his response on whether he can give me an assurance about consultation on the regulations.

Lord Mackay of Ardbrecknish: One thing I have learnt about my department is that we consult pretty widely. I suppose the words I should use are "where appropriate", which prevents me from feeling obliged to consult many people who may not have much to

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contribute. However, we shall consult all the people we consider to have an appropriate and proper interest in the matter. We shall listen to what they have to say.

Baroness Dean of Thornton-le-Fylde: I thank the Minister, although not 100 per cent. That is as far as we can go this evening, but we shall watch this space closely. With that, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Hollis of Heigham moved Amendment No. 30:


Page 3, line 38, leave out subsection (4).

The noble Baroness said: I freely confess that this amendment is a hook on which to hang a matter trailed by the Minister in a previous amendment. The role of regulation in the Bill is of major concern to many people in the field. I approach the topic with trepidation because many Members of the Committee present are infinitely more senior and experienced in such matters. I hope that they will feel able to contribute.

Clause 6 allows the regulatory authority to appoint a trustee in prescribed circumstances. That is harmless enough, except that it is the first of 200 regulatory powers in the Bill. I wish to use the first power in order to raise a more general issue. Clearly it is silly to litter the Bill with items more appropriately confined to regulations. We all accept that. But virtually every reputable body in the pension field—and doubtless less reputable ones—has expressed anxiety about the scale and significance of many of the regulatory powers which the Secretary of State has taken to himself. As the National Association of Pension Funds has said, the breadth of the regulatory powers leaves too much room to the Executive to make major shifts of policy. For example, it cites minimum solvency and speed of paying back. In other words, not only do we not know what the implications of certain clauses will turn out to be in practice, but the Bill gives further draconian powers to the Secretary of State, without even the assurance in some cases that they will be handled by the affirmative procedure. The House of Lords Delegated Powers Scrutiny Committee has given serious warning of some of its concerns in the field. It behoves us to take those concerns extremely seriously.

Perhaps I may give examples of matters which might worry the Committee on territories which the Secretary of State has taken to himself under regulation. The first—admittedly it is a slender example, but it is the first to occur in that form—is the provision in Clause 6 that regulations will determine under what circumstances a person may be appointed by the authority to a trust board. Clearly, one would expect minimum standards of competence. But given the major issues which we hope to raise on the next Committee day on the balance and composition of trustee boards, there is clearly a concern that the power could be used to undermine the agreed proportion of scheme members to others.

Let me take another instance. Clause 9 allows the authority to impose a penalty of a sum whose limit will be determined by regulation—in other words, a penalty whose limit is not specified in primary legislation. That

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applies not only to this Act but is inserted retrospectively into the consolidating Pension Schemes Act 1993. We shall put forward amendments later to limit that either to a fixed ceiling, such as £5,000, or to a more general concept of what is reasonable.

I move on to Clause 65. I am just picking out the examples that are of particular concern. Many others also concern us. Clause 65 allows a government Minister to modify a public service pension scheme. What is worse, if it is done by the Secretary of State for the Department of Social Security, it can be done by the negative procedure; but if it is done by any other department, it is done by the affirmative procedure. As the Scrutiny Committee reminds us, it is surely not right that whether an important regulation is handled by negative or affirmative procedure should depend on which particular departmental Minister brings it forward.

Most worrying of all—and let me flag it now because we shall resist it quite strongly—Clauses 106 and 134 allow regulations to create a criminal offence. A criminal offence will be created by regulation—and not only in this Bill but retrospectively in the 1993 pensions Act—and, I assume, by negative procedure. I have singled out only some of the instances; this particular amendment deals with the first. It is very clear that, not only in relation to Amendments Nos. 1 and 7 and codes of practice is the Minister refusing to clarify the functions, duties and powers of the regulator, but in addition there is a hidden Bill, namely, one of regulation. It is the one that we are not debating today—especially if it is handled by the negative procedure. We may not even subsequently debate it if it is not brought forward. And if it is subsequently debated in this Chamber under either the negative or affirmative procedure, we will be able neither to amend it nor, by convention, to reject it.

Let us suppose that the Government's will prevails and under Clauses 106 and 134 a criminal penalty can subsequently be introduced by regulation. Let us assume that it is done by negative procedure and that, nonetheless, the industry of your Lordships ensures that it is debated. What then happens? We cannot amend it; we cannot reject it. Only one House will have reviewed something that is vital; namely, a criminal penalty. It will be reviewed properly only by the House of Commons.

Given that the very distinction between primary and subordinate legislation is our inability to amend and our unwillingness to reject, is it wise to allow quite so much of this Bill to be cast in the form of regulation, which this Chamber cannot effectively review? That is what it means. It is within that context that I beg to move the amendment.

7.30 p.m.

Baroness Seear: I very much support this amendment for the reasons that were put forward by the noble Baroness, Lady Hollis. At this point we are putting down a marker concerning our resistance —which will be very strong—to the use of regulations to the extent that it is laid down in the Bill that regulations will be used. Of course we recognise that in a Bill of

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this kind a number of matters have to be dealt with by regulation. That is not in dispute. But what is very much in dispute is the occasions in the Bill on which regulations are being used when in our view it is quite clear that primary legislation is required—we shall debate this matter at greater length when the clause arises—particularly where by regulation a criminal penalty can be created. The fact that the Government can think it appropriate to use regulations to produce a criminal penalty is, I must say, a cause for very considerable alarm. It indicates how little they understand the resistance that this Chamber has put up.

I am very glad to see that the noble and learned Lord, Lord Simon of Glaisdale, is in his place. I fully expect that he will make a far more powerful contribution to this part of the debate than any of the rest of us could. The Government have chosen to ignore the consistent resistance of this Chamber to the use of regulations for matters for which primary legislation is plainly needed, including the use of regulations to this extent in this Bill.


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