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Lord Lucas moved Amendment No. 167:

Page 49, line 3, leave out ("and other schemes falling within a prescribed") and insert ("or to other schemes falling within a prescribed class or").

The noble Lord said: In moving this amendment, I shall speak also to Amendment No. 167ZA. The purpose of Amendment No. 167 is to clarify the

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regulation-making powers in subsection (1) (a). We intend that regulations made under this subsection will modify the provisions contained in Sections 83 and 84 with regard to public service schemes or to other schemes of a particular class or description.

It is intended that regulations will set out the circumstances under which a public service pension can be forfeited. We intend these regulations to reproduce the effect of existing provisions contained in Section 78 of the Pension Schemes Act concerning the forfeiture of public service pensions. We believe that in certain circumstances the rules on the forfeiture of public service pensions should differ from those in the private sector. For example, in some cases forfeiture of pension is appropriate where it would be regarded as contrary to the public interest to pay a pension payable under a public service scheme.

The only other types of schemes we have in mind as suitable for possible modifications are schemes which do not have tax approval and which provide benefits in excess of Inland Revenue limits on earnings in excess of the earnings gap. Generally these so-called "top-up" schemes are not trust based and are unfunded. This power would enable us to make regulations, if necessary.

On a general note, I should like to reassure the Committee that we would only consider modifications where it was absolutely clear that certain provisions in Clauses 83 and 84 would be wholly inappropriate to a particular type of scheme.

Amendment No. 167ZA is intended to make the meaning of "pension" in Sections 83 and 84 clearer. In those clauses we want to protect all rights and entitlements under a scheme, not just those to pensions. This amendment would clarify that for the purposes of these clauses any reference to pension in relation to an occupational pension scheme includes any benefit under the scheme and any part of a pension or benefit. For example, this would include rights to a lump sum, to payments under an interim agreement or rights used to purchase an annuity. I beg to move.

On Question, amendment agreed to.

Lord Lucas moved Amendment No. 167ZA:

Page 49, line 7, leave out ("includes") and insert ("in relation to an occupational pension scheme, includes any benefit under the scheme and any part of a pension and").

On Question, amendment agreed to.

Clause 85, as amended, agreed to.

Clauses 86 to 99 agreed to.

Clause 100 [Provision of information]:

Lord Lucas moved Amendment No. 167A:

Page 58, line 13, leave out from ("in") to end of line 14 and insert ("such a manner, at such a place and within such a period as may be specified in the notice.").

The noble Lord said: This amendment will enable the Compensation Board itself to specify how, when and where evidence should be provided. As currently drafted, the arrangements for providing such evidence would be prescribed in regulations. We do not believe that this would give the Compensation Board sufficient flexibility. The circumstances of each case will be

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different and only the board will be in a position to decide what arrangements are appropriate. The amendment ensures that the Compensation Board has the flexibility it requires to discharge its functions. I beg to move.

On Question, amendment agreed to.

Clause 100, as amended, agreed to.

Clauses 101 to 104 agreed to.

Clause 105 [Offences by bodies corporate, partnerships and unincorporated associations]:

Lord Lucas moved Amendment No. 168:

Page 60, line 22, after ("a") insert ("Scottish").

The noble Lord said: In moving Amendment No. 168, I should like to speak also to Amendment No. 181.

Clause 105(3) provides that where a criminal offence under Part I of this Act is committed by a partnership and it is proved that it was committed with the consent or connivance of, or as a result of neglect by, an individual partner, then that partner is also guilty of the offence and is liable to be prosecuted and punished accordingly.

However, this provision is required in respect of only Scottish partnerships. This is because only a Scottish partnership can be treated as corporate body with its own legal personality—which can protect individual partners from prosecution for wrongful acts committed by the partnership. Amendment No. 168 takes account of the different legal position afforded to partners of Scottish partnerships. It provides for the authority to act against individual Scottish partners in the same way as against English partners.

Clause 112 provides interpretations of terms used in Part I of the Bill. To clarify the term "Scottish partnership", Amendment No. 181 inserts a definition of the term at the appropriate place. I beg to move.

On Question, amendment agreed to.

Lord Lucas moved Amendment No. 169:

Page 60, line 26, leave out subsection (4).

The noble Lord said: In moving Amendment No. 169, I should like to speak also to Amendment No. 170.

The effect of Amendment No. 169 is to delete Clause 105(4) from the Bill. As it stands, subsection (4) provides that where an offence is committed by an unincorporated association, any officer of the association or member of its governing body may be held responsible for the offence and be proceeded against accordingly. However, under UK law such an unincorporated association has no legal personality. Consequently, any action taken against such a body would have to be against its members, so subsection (4) is not required to provide for this.

Amendment No. 170 removes the words

    "or failure to comply with"

from Clause 106. This is because Clause 112, which sets down the interpretations of terms used in Part I of the Bill, provides that "contravention" includes failure to comply, and the term "contravention" is already used in Clause 106. I beg to move.

On Question, amendment agreed to.

Clause 105, as amended, agreed to.

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5.15 p.m.

Clause 106 [Breach of regulations]:

Lord Lucas moved Amendment No. 170:

Page 60, line 33, leave out (", or failure to comply with,").

On Question, amendment agreed to.

On Question, Whether Clause 106, as amended, shall stand part of the Bill?

Baroness Seear: We oppose the clause standing part of the Bill because it embodies powers, by regulation, to create what are in effect criminal offences which, on summary conviction, can carry a fine of up to level 5. It has been said frequently during the debate that the Government are taking far too much power by regulation to deal with matters arising in connection with the Bill. We recognise that, given the nature of the Bill, a great deal has to be done by regulation, but we do not consider that "by regulation" should be a sufficient way of creating what is an offence carrying a considerable fine. An action which carries such a penalty should be an action resulting from provisions on the face of the Bill; it should not be an offence that is created by regulation. That is why we oppose Clause 106 standing part of the Bill.

Baroness Hollis of Heigham: I should like to support the noble Baroness, Lady Seear, in opposing the Question that Clause 106 stands part of the Bill. We also oppose the inclusion of Clause 134, which has been grouped with it. Of all the 200 or so regulatory powers in the Bill, I believe that those two clauses are the most worrying. Together, they give the Secretary of State power to make a criminal offence by regulation. What is more, the Secretary of State has specified no limit on the penalties that he may impose for the criminal offences that he has created. Furthermore, I understand that it will all be done by negative procedure so that neither House need have an opportunity to debate it.

That matter was of sufficient concern to the Delegated Powers Scrutiny Committee that it stated:

    "In view of the extent of the powers to create criminal offences and of the difficulty of assessing the significance of individual powers, the House may wish to consider with care whether the powers in Clause 106 and Clause 134 are sufficiently clearly defined"

It also questioned whether they should be,

    "subject to the affirmative rather than the negative procedure, to ensure at least some consideration in both Houses".

We expressed our concern about that both on Second Reading and earlier in Committee. We have since been joined by other noble Lords. However, the Government have not so far tabled any amendments to define the scope of their powers, to limit the penalties or to use the affirmative procedure. In the absence of any move from the Government, I support the noble Baroness, Lady Seear, in arguing that the clauses should not stand part of the Bill.

Lord Mackay of Ardbrecknish: These clauses empower the Secretary of State, when making regulations under Part I of this Bill or the Pension Schemes Act 1993, to provide for contravention of the provisions in those regulations to be a criminal offence. They also specify the maximum penalty for such an

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offence as level 5 on the standard scale, which is currently £5,000. Consequently, it is intended that any offences created will be summary ones and will not attract a prison sentence.

Clause 134, in addition, enables regulations made under the Pension Schemes Act 1993 to provide the alternative penalty of a civil fine imposable by the Occupational Pensions Regulatory Authority. It also makes it a criminal offence for any person knowingly or recklessly to provide the pension schemes registrar with false or misleading information.

The provisions in Clause 106 are similar to those in Section 168 of the Pension Schemes Act 1993 (which Clause 134 replaces), which enables regulations under that Act to provide for the contravention of their provisions to be a criminal offence and sets down the maximum penalty for such offences.

While we expect most of those responsible for the running of pension schemes to comply with the new obligations that are to be placed on them, clearly it is essential to have appropriate sanctions for non-compliance. I am sure that neither noble Baroness would disagree with that. Although the authority will have the power to impose civil penalties, we want to ensure that the punishment fits the crime. We consider that criminal penalties are appropriate for the most serious offences in order to emphasise the severity of the offence and provide a serious deterrent to wrongdoing.

These clauses are necessary because many of the obligations that will need to attract a penalty for non-compliance are likely to be created in secondary legislation—either under Part I of the Bill or under the Pension Schemes Act 1993. The Delegated Powers Scrutiny Committee recognised that regulation-making powers were necessary, as did the noble Baroness, Lady Seear, because the legislation covers detailed, complex and technical matters. Without the provisions of these clauses we could not underpin satisfactorily all the obligations created in secondary legislation with appropriate penalties. In addition, without the provisions of Clause 134 the enforcement structure for obligations introduced through the Pension Schemes Act would not mirror that available for those introduced through the powers in this Bill.

However, we recognise the concerns that have been raised about this approach. We are aware also that the scrutiny committee considered that the powers to introduce criminal offences under Clauses 106 and 134 were too wide. An alternative approach might be to provide, on the face of the Bill, that breaches of regulations made under any particular clause would be criminal offences, but that would not improve clarity. Very few of the obligations will need to be backed up with criminal penalties. These clauses enable us to be selective when attaching penalties to breaches.

It is right that criminal penalties should be included in the range of enforcement powers available to the authority. Nevertheless, we will consider whether we can focus the scope of these provisions to meet the scrutiny committee's concerns. One way of doing so would be to take up its suggestion of requiring any regulation introducing a criminal obligation to be subject to the affirmative procedure.

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We have already said that we will consider the options put forward by the scrutiny committee in respect of civil penalties introduced through the powers of Clause 9 and this clause. We did that during a previous debate. The alternatives proposed were that the Bill should set down the maximum penalty, or regulations introducing a civil penalty should be subject to the affirmative procedure.

I hope that what I have said persuades the noble Baronesses that I am alive to the criticism that has been made of those two clauses and that we are looking at two possible avenues which we think would answer the concerns expressed in this debate, on Second Reading, and by the scrutiny committee in its report.

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