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Baroness Seear: My Lords, I support the amendment on the general principle about which we have complained again and again in your Lordships House: that the Government legislate more and more by

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regulation, and that that is constitutionally unacceptable. Of course a number of details which change as time goes on have to be provided for by regulation. We do not cavil about that. But the fact that the Government can insert a regulation into the Bill creating a possible criminal offence is totally unacceptable constitutionally.

Lord Boyd-Carpenter: My Lords, to substitute for a prescribed amount in two of the amendments the specific sum of £5,000 introduces an unnecessary rigidity into the Bill. It also does not take account of the fact that the value of money may change. Indeed, if we have a Labour Government the value of money will deteriorate very substantially indeed.

Baroness Hollis of Heigham: My Lords, there may be fewer offences.

Lord Boyd-Carpenter: My Lords, the value will go down enormously with the inflation which a Labour Government always produce. Therefore I believe it wiser to leave the amounts of the penalties to be prescribed in the circumstances of the time, taking into account the then value of money. I hope therefore that my noble friend will resist the amendment.

Lord Simon of Glaisdale: My Lords, I presume to agree with what the noble Baroness said on the general constitutional position. I am sure that the noble Lord the Minister cannot avoid knowing that we regard his department with the utmost suspicion when it comes to constitutional matters. That is, I am afraid, inevitable after the Child Support Act. Nor has it been mitigated by the modifications of that Act, including those that are now proposed in the Bill that is before the other place.

This amendment gives the Minister an opportunity to put things generally right. The Scrutiny Committee has been extremely indulgent and discriminating in its comments on the Bill. It has passed a great many matters as being of the nature of Henry VIII clauses but nevertheless being suitably dealt with by negative resolution. There are, however, one or two issues on which the Scrutiny Committee has drawn your Lordships' attention specifically to matters. I hope that when the noble Lord replies, he will say without any question that where the Scrutiny Committee has so signified a view, it will be unquestionably accepted by the Government.

Lord Mackay of Ardbrecknish: My Lords, I do not think that I will even be tempted to follow the noble and learned Lord down the trail of the Child Support Agency. That is—

Baroness Hollis of Heigham: You will, you will!

Lord Mackay of Ardbrecknish: That is coming to us, if the noble Baroness opposite will be patient. I think the principle of,


    "Sufficient unto the day is the evil thereof",

ought to be my maxim in this regard. Coming to the particular—

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Baroness Seear: Is the noble Lord then, admitting that it is evil?

Lord Mackay of Ardbrecknish: My Lords, I was using a phrase. Of course it is not evil. I do not want to go down that path. It is perfectly proper that men should pay for their children; they ought not to burden other taxpayers. But that is another issue.

In Committee, we discussed the Scrutiny Committee's comments about Clauses 9, 105 and 64. Noble Lords will recall that I agreed to take away the points raised and consider them. Noble Lords will see, further down the Marshalled List, that we have indeed tabled Amendments Nos. 218 and 229. These will ensure that regulations containing criminal penalties made under the powers contained in Clause 105 of this Bill and Section 168(2) of the Pension Schemes Act 1993 will be subject to the affirmative resolution procedure as the Scrutiny Committee suggested. I am sure that noble Lords will welcome these amendments when we reach them.

Noble Lords: Hear, hear.

Lord Mackay of Ardbrecknish: We have not been able to bring forward amendments on the other two areas of concern at this stage. But I should like to reassure noble Lords that work is under way to bring forward suitable amendments at the earliest possible stage.

I am afraid that I cannot accept the amendments proposed here which seek to make changes to the powers to prescribe the level of civil penalty fines that can be imposed under Clause 9. Amendments Nos. 16 and 18 set down that the maximum civil penalty fine for a breach must not exceed £5,000. While we agree that there should be a ceiling placed upon the amount that can be imposed by way of a civil penalty fine for a breach of a particular duty, I do not believe that these amendments offer the best way to achieve that.

First, civil penalties under this clause will not only be imposed on individuals. Some of the obligations in the Bill will be placed on companies, and a maximum penalty of £5,000 might be considered too low to act as an effective deterrent to wrongdoing. The Financial Services Act regulators, for example, have imposed fines on companies in excess of £100,000.

Secondly, placing an amount on the face of the Bill means that it can be up-rated only by further primary legislation, as my noble friend Lord Boyd-Carpenter mentioned in his intervention. We consider that that would not provide the necessary flexibility for any amount to be changed—for example, to allow for periodic up-rating.

We are continuing to explore the options open to us for addressing the understandable concerns raised to ensure that we find the most appropriate solution which overcomes these difficulties. Amendment No. 230 contains one option, but we would prefer to give it a little more thought and come back with a fully developed solution.

Turning now to the final part of Amendment No. 230 concerning the powers to modify public service schemes, the noble Baroness, Lady Seear, moved an amendment in

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Committee which sought to ensure that orders made under Clause 64 would be regulations subject to the negative procedure. I promised to consider that. I am consulting the departments responsible for public service schemes, as I promised I would. Although we have not yet had time to prepare a suitable amendment, I want to reassure the House that it is our intention to make all the orders made under Clause 64 subject to scrutiny by the House by the negative resolution procedure.

Amendment No. 230 goes somewhat further than that. It seeks to make such regulations subject to the affirmative procedure. The Scrutiny Committee did not suggest that this was appropriate, and I do not believe it to be justified. Regulations made under this clause would not come into a category that the Brooke Committee suggested was appropriate for affirmative regulations, and I would not want to set such a precedent.

In view of what I have said about what is to come (I suspect later tomorrow) and my commitment to return either in this House or in the other place with amendments to deal with the other problems that I have outlined, I hope that the noble Baroness will withdraw her amendment.

4.45 p.m.

Baroness Hollis of Heigham: My Lords, I thank the Minister for his reply. It is a pity in a way that we could not have grouped all these amendments together. The Minister has indeed shown that he took the opinion of the House in Committee in respecting the problems that were identified by the Scrutiny Committee and is at least switching those powers by regulation which have a significant effect on the working of the schemes from a negative to an affirmative procedure. That is indeed to be welcomed.

This was a probing amendment. I take the Minister's arguments about company schemes. But I would point out that this was, again, one of those regulatory powers that the Scrutiny Committee suggested should not be handled by the negative, but by the affirmative, procedure. I think I am right in saying that the Minister did not accept the Scrutiny Committee's recommendation to that effect. If I am wrong, I should be grateful if he would correct me. He seems to be going down quite a lot of the paths outlined by the Scrutiny Committee—which is to be welcomed—but in respect of this particular one, which was also part of the Scrutiny Committee's recommendation for affirmative procedure, he appears not to be doing so. Is that a correct reading?

Lord Mackay of Ardbrecknish: My Lords, perhaps I can help the noble Baroness. We are currently looking to see what possible options are open to us to address the concerns of the House. That may be along the lines of the Scrutiny Committee, but it may be that other options are open to us. I should not like to go further than that.

Baroness Hollis of Heigham: My Lords, that is probably so far as we can go today. With the permission of the House, I should like to withdraw the amendment.

Amendment, by leave, withdrawn.

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The Earl of Buckinghamshire moved Amendment No. 17:


Page 4, line 27, at end insert:
("( ) No penalty may be imposed on a trustee under this section except in respect of the trustee's own personal act or default and then only if the Authority is of the opinion that—
(a) the trustee deliberately disregarded his duties or was reckless as to whether or not he was properly discharging his duties, or
(b) the trustee knew that he had contravened, or failed to comply with, relevant provisions of this Act or regulations and then deliberately, recklessly or negligently failed within a reasonable time either to remedy his act or default in an appropriate manner or to take other appropriate action.").

The noble Earl said: My Lords, at Second Reading I made a comment about the civil and criminal penalties that were being imposed on member trustees under this Bill. I believe that the noble Baroness, Lady Turner, made the same comments.

The Bill seeks to encourage, among other things, the appointment of member trustees. Yet at the same time, Clause 9 enables a regulatory authority to impose new penalties on trustees who contravene regulations. There are at least 17 references in the Bill to the application of Clause 9 to trustees who fail to observe the new requirements and subsection (2) enables any number of additional contraventions where Clause 9 applies to be created.

The problem with Clause 9, as drafted, is that it gives too much discretion and direction to the authority regarding the precise circumstances in which a penalty can be levied. It is likely that new trustees will be put off from coming forward to be trustees of pension schemes; and indeed existing trustees may well wish to resign when they understand the full import of what this Bill is doing to them.

The amendment that I put forward this afternoon seeks to do two things. First, it restricts the imposition of a penalty on a trustee to cases where he has acted or defaulted. In other words, no penalty can be levied against the trustee for acts or defaults on others. For example, if he voted against a particular incorrect course of action but was overruled by his fellow trustees, he would not be able to be penalised.

Secondly, the amendment would authorise the authority to impose a penalty only if they believe that the trustee was deliberately negligent, reckless, or knew that he had done wrong and then failed to put it right within a reasonable time. That will mean that an honest and conscientious trustee does not need to be concerned about being penalised the next morning for some inadvertent offence, committed by him or the scheme administrator, about which he knew nothing the night before.

The Minister may argue that, under the Bill as drafted, it is likely that the authority will act reasonably and not impose unfair penalties. Even if that turns out to be true, it will be some years before a pattern of changing penalties has been established. In the meantime, I have concerns about people coming forward to be trustees; or they may well hesitate about becoming or remaining a trustee.

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I commend the amendment to the House as a way of removing uncertainty on what I regard as a very important matter and as facilitating the appointment of more member trustees. I beg to move.


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