Environment Bill (Eighth sitting)
Tuesday 3rd November 2020
(3 years, 5 months ago)
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The Committee divided: - Ayes: 5 / Noes: 9 - Question accordingly negatived.
The Chair
May I start by welcoming the Committee back to the interrupted consideration of the Environment Bill and give you a few little parish notices? First, I start from the position of being a very traditional chairman. Chairmen come in different shapes and sizes, and I am at the traditional end of things and, therefore, try to use the procedures and practices we have in the main Chamber, although there may be some variations.
Secondly, we should be extremely careful about social distancing. The idea is to sit at the chairs with a blue tick, so the central row is not used, by and large. I think that is a matter for Members’ discretion, but perhaps people can make a point of keeping their distance throughout the process of the Bill. On social distancing, instead of passing notes to Hansard, which we would normally do, would Members kindly send by email any speeches they might make. I know that the Hansard Reporters would appreciate that.
Most members of the Committee are very experienced, but for those who might not be that experienced, the principle of what we are doing is that, having agreed the principle behind the Bill on Second Reading, we now consider the detail of the wording of the Bill, to make it a good Bill, no matter what we thought of the principle behind it. We can do that by considering the Bill line by line. The means by which that happens is that members of the Committee, whether Opposition or Government—or indeed people who are not members of the Committee, by means that I will describe in a moment—put down amendments to the Bill. Those amendments are then grouped for debate in a convenient way, bringing together topics that are similar.
Only members of the Committee may argue for amendments. However, hon. Members who are not members of the Committee may lay amendments if they can persuade a member of the Committee to move them, and I think one or two examples of that may occur during the Bill. Amendments must be laid by the rise of the House on Thursday for discussion on Tuesday and by the rise of the House on Monday for discussion on the Thursday. That is all I have to say by way of introductory remarks.
Dr Alan Whitehead (Southampton, Test) (Lab)
On a point of order, Mr Gray. I welcome you back to the Committee after our long break. It is a pleasure to serve under your chairmanship. I also welcome Committee members back to our proceedings.
Because of the particularly long break we have had, a number of events have occurred since the last sitting in the earlier part of the year, which those with a long memory will dimly recall. Those events are twofold. First, the Government decided during the period in which the Committee was in abeyance to table a large number of new amendments, particularly concerning the operation of the Office for Environmental Protection, which, certainly in the Opposition’s view, considerably alter how that office works.
Secondly, in the period between our original deliberations and now, the Government also brought forward a planning White Paper, which looks as though it will cut across many of the provisions of the Bill relating to environmental improvement and action areas, which depend on planning zones for their operation.
Both those developments fundamentally alter some structures of the Bill. Through the usual channels, we made representations that we should have new evidence sessions at the beginning of this Committee period so that the Committee is informed of those new developments, which would help to ensure that our deliberations are carried out in the best way possible. Unfortunately, that has not found favour, and we begin our proceedings this morning without the benefit of any new information that might allow the Committee to consider those developments.
Would it be possible, Mr Gray, to accommodate a statement from the Minister on those two issues, on which she could be questioned, so that the Committee can have some elucidation before it continues its proceedings? Whether that statement should be made immediately upon the resumption of the Committee this morning, or could be accommodated as early as possible in the Committee’s proceedings, is clearly a matter for discussion, but we strongly hope that such a statement could be agreed.
The Chair
I am grateful to the hon. Gentleman for that point of order, which is more of a point of information than anything else. The changes that have occurred since the Committee last sat will be considered via amendments submitted by Opposition and other Members during our proceedings. There is no facility for making a ministerial statement to the Committee, but the Minister will have ample opportunity to answer the points that the hon. Gentleman wishes to raise during the debates that we will have between now and 1 December, which is the agreed out date. If there were extra evidence sessions, that would delay the out date. Although it cannot be done, the hon. Gentleman has made a valid point and the Committee has heard it. I know that the Minister will seek to answer those points during the debates that lie ahead of us.
Robbie Moore (Keighley) (Con)
On a point of order, Mr Gray. As it is fairly warm in the room, would you mind if Members removed their jackets?
The Chair
It goes completely against my natural instincts and my absolute principles, but of course, gentlemen may remove their jackets if they wish during our proceedings. There is no need for a new point of order on every occasion. I assure the Committee that I will not be taking my jacket off.
Ordered,
That the order of the Committee of 10 March be varied as follows—
(1) In paragraph (1)(d), leave out “and 2.00pm”.
(2) In paragraph (1), leave out sub-paragraphs (e) to (l).
(3) After paragraph (1), insert—
“(1A) the Committee shall (in addition to its meeting at 9.25am on Tuesday 3 November) meet—
(a) at 2.00 pm on Tuesday 3 November;
(b) at 11.30 am and 2.00 pm on Thursday 5 November;
(c) at 9.25 am and 2.00 pm on Tuesday 10 November;
(d) at 11.30 am and 2.00 pm on Thursday 12 November;
(e) at 9.25 am and 2.00 pm on Tuesday 17 November;
(f) at 11.30 am and 2.00 pm on Thursday 19 November;
(g) at 9.25 am and 2.00 pm on Tuesday 24 November;
(h) at 11.30 am and 2.00 pm on Thursday 26 November;
(i) at 9.25 am and 2.00 pm on Tuesday 1 December;”.
(4) In paragraph (4), leave out “5 May” and insert “1 December”.—(Rebecca Pow.)
The Chair
We now move to line-by-line consideration of the Bill. The selection list of amendments arrived in the Committee Room a few moments ago. I hope that everyone has a copy. It shows how the amendments have been grouped, starting with clause 7.
One point that I omitted to make during my earlier remarks is that amendments are grouped for convenience of debate. However, if a decision has to be made on them, that decision comes at the point in the Bill to which the amendment refers. In other words, we may have an amendment to clause 7 and an amendment to clause 25 considered together, but the amendment to clause 25 will be moved formally at the time when we discuss clause 25.
Clause 7
Environmental improvement plans
Dr Whitehead
I beg to move amendment 88, in clause 7, page 5, line 7, leave out subsection (4) and insert—
“(4) The environmental improvement plan must include, as a minimum—
(a) measures which, taken together, are likely to achieve any targets set under sections 1 or 2 and will ensure that the next interim targets included in the plan are met;
(b) measures that each relevant central government department must carry out;
(c) measures to protect sensitive and vulnerable population groups (including children, older people, people with chronic illnesses and outdoor and transport workers) from the health impacts of pollution;
(d) a timetable for adoption, implementation and review of the chosen measures, and the authorities responsible for their delivery;
(e) an analysis of the options considered and their estimated impact on delivering progress against the relevant targets; and
(f) measures to minimise, or where possible eliminate, the harmful impacts of pollution on human health and the environment.”
This amendment looks to strengthen Environmental Improvement Plans by connecting them to; measures which are proportionate to targets set out in the bill, departmental action, vulnerable people, a timetable and analysis.
The Chair
With this it will be convenient to discuss amendment 112, in clause 7, page 5, line 7, leave out subsection (4) and insert—
“(4) An environmental improvement plan must set out the steps Her Majesty’s Government intends to take in the period to which the plan relates, which the Secretary of State considers will—
(a) enable targets set under section 1(1) and that meet the conditions at section 6(8) to be met, and
(b) make a significant contribution to meeting the environmental objectives irrespective of whether targets are in place to cover all matters relating to the environmental objectives.”
Dr Whitehead
This is potentially an important amendment. What we would expect to happen in a Bill is that as the legislation moves through its narrative, one part of the narrative connects to the next one in a coherent way. One of our criticisms of this Bill, although we have said that it is a good Bill in its own right in what it seeks to achieve, is that it fails to add to its coherence as the narrative of the Bill proceeds. What I mean by that is that the Bill tends to set itself out in a number of chunks, a little like an early picaresque novel, rather than a more recent novel that includes the present, the past and the future. I am not suggesting that the Bill itself is a novel, but others may have views on that.
The amendment seeks to bridge the narrative gap in the Bill by ensuring that the measures in this clause relate back to the targets at the beginning of the Bill, which we discussed, as hon. Members with long memories will recall, when our proceedings started earlier this year. Those targets, which we agreed—indeed, we agreed not only the targets, but the mechanism by which they would be decided on—are very important in relation to the environmental improvement plan that will arise from the Bill. If we have an environmental improvement plan that does not relate to those targets and, indeed, has a narrative on environmental improvement that is actually a descriptive arrangement rather than an action arrangement, it is vital that the connection is properly made in the Bill itself and that the environmental improvement plan, essentially, is instructed to organise itself along lines that do relate to those targets in the first place.
As we discover when we go through this clause, an environmental improvement plan is, in effect, already in existence—or rather, this Bill will bring that environmental improvement plan into existence. The Bill describes the process by which an environmental improvement plan can be developed and put in place, and then the Bill says, “Oh and by the way, it so happens that there is an environmental improvement plan already in existence that we can adopt for the purpose of the Bill”—and that is “A Green Future: Our 25 Year Plan to Improve the Environment”. People will see that, in the legislation, it is specifically referred to as being the present environmental improvement plan, the one in front of us.
However, that improvement plan—as, again, I am sure hon. Members will know—was actually adopted in 2018. To show people how far back that goes, I point out that it has a “Foreword from the Prime Minister”, the right hon. Member for Maidenhead (Mrs May), and a “Foreword from the Secretary of State”, the right hon. Member for Surrey Heath (Michael Gove). Neither of them is in the same role at the moment, so it is quite an old document. Among other things, it does not address itself to the structure of the Environment Bill; it says a lot of very interesting things, but it certainly does not address itself to how those things should take place. I want to talk later in the debate about some of the issues in the environment plan, “A Green Future: Our 25 Year Plan to Improve the Environment”.
For the time being, suffice it to say that there appears to be a problem of connection, as far as the Bill is concerned. The amendment seeks to rectify that by clearly stating on the face of the Bill:
“The environmental improvement plan must include... measures which, taken together, are likely to achieve any targets set under sections 1 or 2 and will ensure that the next interim targets included in the plan are met”.
It therefore makes a direct connection between this part of the Bill and the first part. It states that the environmental improvement plan must include
“measures that each relevant central government department must carry out… measures to protect sensitive and vulnerable population groups… a timetable for adoption, implementation and review of the chosen measures… analysis of the options considered and their estimated impact on delivering progress… and measures to minimise, or where possible eliminate, the harmful impacts of pollution on human health and the environment”.
The amendment therefore comprehensively makes those connections.
I am sure the Minister will say that none of that is necessary, because everything is okay—it all works all right. However, I hope, at the very least, that, in explaining why that is the case, she will also explain why it is not necessary to make that link between this part of the Bill, the environmental improvement plan and the targets that we set out and agreed in previous sittings.
The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Rebecca Pow)
I thank the hon. Gentleman for his opening words. It is an absolute privilege to be back with the Committee. [Hon. Members: “Hear, hear.”] It is more than seven months since we had to adjourn, very unusually, and we all know why that occurred. Sadly, we are still in a tricky situation with the coronavirus pandemic, but I am pleased that we are able to carry on with this hugely important piece of legislation, which will change the way we think about our environment forever. We are all involved in a very significant piece of work, and it is a delight to have you in the chair, Mr Gray.
Despite the fact that we are in these very tricky times with the pandemic, we need to look ahead as a Government and as a country. As we build back, as the Prime Minister has said, we want to base the recovery on solid foundations, including a fairer, greener and more resilient global economy. I want to touch on a few of these issues before we carry on, because it has been such a long time since we reconvened.
On the points made by the shadow Minister, we took expert evidence before. Everyone is entitled to take their own evidence as we go along to inform anything that we do. Written evidence is also submitted to back up the Bill, and that is always welcomed. The hon. Gentleman mentioned planning issues, and I absolutely assure him that we will address those when we get to the right part of the Bill and particularly the nature chapter. I think the Chair covered the issue of a statement comprehensively, and I fully support your words, Chair.
The Chair
Order. I think “Mr Gray” is the right thing; otherwise, we will get mixed up between Chair and Chairman. Also, in passing, I know you are all pleased to serve under my chairmanship, but you do not need to say so—[Laughter.]
Rebecca Pow
But we love saying that, Mr Gray. Okay, I will try not to say it again.
The Chair
Order. Sorry to interrupt the Minister, who is speaking extremely well, but I intend to be very tough with the Committee to make sure that we address the amendments in this group. I think it is right to offer a reasonable reply to the hon. Member for Southampton, Test and the point of order he made regarding things that have occurred since we last met. However, I think the Minister is tending towards a Second Reading speech, and perhaps she could address more particularly the amendment in front of us.
Rebecca Pow
Thank you Chair, I get your point and I beg your forgiveness. I will not include everything, but I wanted to update the Committee because so much has happened since we stopped our consideration of the Bill. People think we have gone on hold, but absolutely we have not.
We will be doing much more work, and we will discuss our statutory EIPs, which will drive up environmental improvement, in the next few days alone, as well as how we will continue to protect the environment from damage by embedding environmental principles at the heart of Government policy.
Turning to the amendments, which is what you really want me to do, Mr Gray, I appreciate the desire of the hon. Member for Southampton, Test to strengthen the EIPs—that is what clause 7 is all about. I am delighted that he has raised the 25-year environment plan because I was at the launch of that plan. Although colleagues who filled those important posts are in different roles now, I was there as Parliamentary Private Secretary in this Department.
I am utterly delighted to introduce this—perhaps the shadow Minister failed to address this—as the 25-year environment plan is actually the first EIP. That is what this is all about. What we are doing with the EIPs is triggering what is set out in the excellent plan. The Bill’s statutory cycle of monitoring, reporting and planning is designed to ensure that the Government take early, regular steps to achieve long-term targets and are held to account through regular scrutiny by the Office for Environmental Protection and by Parliament.
The Bill creates a statutory triple lock, which we will hear about a great deal as the Bill progresses, to drive short-term progress. First, the Government must have an environmental improvement plan setting out the steps they intend to take to improve the environment and to review it every five years. When reviewing it, they must consider whether further or different measures should be adopted to achieve interim—five yearly—targets and long-term targets. When we review the EIP in 2023 we will update it as necessary to include the steps that we intend to take to achieve the targets that we set. That will be five years after the launch of the first plan in 2018.
Secondly, the Government must report on progress towards achieving targets every year. Thirdly, the Office for Environmental Protection will hold us to account on progress towards achieving targets. Each year it will comment on the progress towards targets reported in the Government’s EIP annual report and can flag early on whether it believes there is a risk of the Government not meeting their long-term targets. It may make recommendations on how progress could be improved, and the Government have to respond. Ultimately, the OEP has the power to bring legal proceedings if the Government breach their environmental law duties, including the duty to achieve long-term targets.
In requiring that EIPs set measures to deal with pollution, amendment 88 would single out aspects of the environment ahead of others. EIPs are defined as plans significantly to increase the natural environment. Measures on air quality, with corresponding benefits to human health, are already within the scope of EIP, so it is not necessary to place duties on particular matters in the EIP, which could undermine consideration of other important environmental goals.
The Bill includes a duty to set a legally binding target for PM2.5, the air pollutant with the greatest impact on human health, in addition to a further long-term air quality target. The introduction of measures to meet the air quality target will reduce exposure to harmful pollutants and deliver significant improvements to human health. Other targets that meet the criteria set out in clause 6(8) already have their own statutory regimes, including any appropriate requirements to set out plans and measures to achieve them. It is therefore unnecessary to require that EIPs include measures to achieve them.
Amendment 112 would explicitly link the measures in the EIP to “meeting the environmental objectives”, and I address this with the assumption that the environmental objectives are to achieve and maintain a healthy and natural environment, as set out in new clause 1. The Bill’s provisions already ensure the delivery of the significant environmental improvements that the hon. Member for Southampton, Test seeks through the amendment and ensure that the Government can be held to account. Targets and EIPs have the objective under clauses 6 and 7 of delivering significant improvements to the natural environment, so I urge the hon. Gentleman not to press the amendment.
Daniel Zeichner (Cambridge) (Lab)
As you suggest, Mr Gray, I will not go through all the formalities. It is a pleasure to be on this Committee, although it is a little like the philosopher’s axe: which part of this Committee is still part of the preceding Committee? Many of us are new to this, and it has been a long-running process.
The Minister is notorious for her optimism—[Interruption]—or has a reputation for optimism. When she talks about the 25-year improvement plan, I wonder whether that is 25 years forward or whether it is taking us 25 years back, because it is about filling the gaps left by our leaving the European Union and the protections that came from that membership. I fear, as my hon. Friend the Member for Southampton, Test explained earlier, that the heart has been ripped out of the Bill.
To turn to the amendment, as you directed Mr Gray, I listened closely to the Minister’s observations and I do not quite understand why she is not sympathetic to some of the amendment’s proposals. I particularly query her attitude to the natural environment. She will have seen the representations from the National Trust about including heritage within the ambit of natural environment, and that prompts a big question. There is no natural environment; we have been part of the environment as human beings for many, many years and we have had huge impact on it. I suspect we will pursue this matter in further discussions, but I would welcome her observations on why heritage is not included among the proposed protections.
In particular, I do not understand why the Minister does not favour the inclusion in the environmental improvement plans of proposed paragraph (b) in amendment 88, which calls for the reporting of
“measures that each relevant central government department must carry out”.
All of us involved in rural policy know that it is an endless issue, and that virtually every part of government touches on the environment of rural areas. Those policies must be included as an essential safeguard to ensure that the environmental improvement plans work properly.
Rebecca Pow
The hon. Gentleman has hit the nail on the head: the natural environment is very complicated and complex. We have set out the Bill as it appears so that it takes an holistic approach to the environment, as I believe he will see as we proceed in our deliberations.
I believe that the hon. Gentleman was referring to rurality in particular, but the Bill covers everything about the environment, and not just one thing or another. It takes an holistic approach, and is a great deal more holistic than anything that the European Union has done. The environmental improvement plans are significant because there are no equivalents to them under EU law: member states were not required to maintain a comprehensive long-term plan to improve the environment significantly, but that is a key issue of the Bill. Nor was there any requirement on member states to report annually on progress towards any kind of significant improvement. EU law tends to require member states to prepare or publish plans to achieve particular targets, for example on air quality or water quality, but it does not offer the holistic approach of the Bill. By leaving the EU, we have an enormous opportunity to look at the environment in the round. I hope that helps Members.
Dr Whitehead
I am sorry, but I am just not convinced. I will consider clause 7 in further detail later, but the gap that we have identified in terms of the connection between this part of the Bill and the first six clauses is egregious, and does not appear to relate at all to what is in the 25-year environment plan, interesting though that plan may be in its own right.
The amendment is important because it addresses those shortcomings and it should not be set aside on the grounds that everything will be all right, and that the Bill is quite an holistic Bill after all. For that reason, I am afraid that we will seek to divide the Committee.
Question put, That the amendment be made.
Richard Graham (Gloucester) (Con)
I beg to move amendment 201, in clause 7, page 5, line 10, leave out “may” and insert “must”.
This amendment would require the Government to include steps to improve people’s enjoyment of the natural environment in its Environmental Plan.
The Chair
With this it will be convenient to discuss amendment 202, in schedule 2, page 127, line 11, leave out “may” and insert “must”.
This amendment would require the Government to include steps to improve people’s enjoyment of the natural environment in its Environmental Plan and is consequential on Amendment 201.
Richard Graham
This is likely to be the shortest amendment proposed to the Bill. It simply substitutes the word “must” for “may” in clause 7, which would in turn require the Government to include steps to improve people’s enjoyment of the natural environment in their environmental plan. Why does this one-word change, which amounts to a net increase of one letter to the Bill, matter so much? The clue is in clause 7(5) and its clear intent to improve people’s enjoyment of the natural environment. The Government explicitly recognise the importance of that in the environmental improvement plan, which will set interim targets for each five-year period, and the amendment would ensure that the Bill includes people’s enjoyment in the five-year targets.
Many of us would argue that people’s enjoyment of the natural environment is always important, but it is especially so now, during the period of this pandemic. Many more of us have been enjoying green spaces during lockdown, and park visits in the UK were up 195% in the six weeks to 25 May compared with February. The amendment would put a greater legal burden on the Government to enhance access to such spaces as they set out new environmental policies in their environmental improvement plan.
The amendment acknowledges the value of parks and green spaces to all of us and all our constituents. This is a chance to appropriately fund our parks and green spaces, including the organisations that maintain them. Some of us will be aware of the Government scheme for pocket parks, which was announced by the Communities Secretary in March 2020. It was a £1.35 million fund—a very small fund by comparison with many of those that have had to be launched to support businesses, culture and many other organisations—and it created 68 new pocket parks around the country in order to transform urban spaces into green havens. They were hugely helpful, and I believe that further rounds would be both welcome and possible. They would help fund the priorities identified in the five-year targets for people’s enjoyment that should be created.
At this stage, I would like to bring as a remote witness the Ramblers organisation, which has made the point that access to, and enjoyment of, the natural environment has multiple benefits that are relevant to the aims of the Bill and to wider Government objectives. They include encouraging pro-environmental behaviours. There is evidence to suggest that people who spend more recreational time in natural settings are more likely to report engaging in a range of pro-environmental behaviours. In simple speech, that can often amount to volunteers joining litter-picking groups to ensure that our parks and green space are kept clean and are attractive to more visitors.
A survey shows that 85% of adults in England and Wales believe that being able to experience the countryside is important for children’s understanding of the environment. I think that is true in all our constituencies. In my constituency of Gloucester, we have the joy of the Robinswood Hill country park right in the middle of our small city. I believe that every child should have the experience of sitting on their mother’s or father’s shoulders for their first visit up the hill to watch the sunset over the River Severn in the summer. It is one of the most beautiful things that anyone can do, and it stimulates enjoyment and healthy behaviours.
There is also the issue of physical and mental health. More than eight out of 10 adults believe that visiting the countryside is good for their physical fitness and mental wellbeing. In a sense, we do not really need surveys to confirm that; we know it is true. People who live within 500 metres of accessible green space are 24% more likely to achieve the 30 minutes of daily physical activity that doctors constantly recommend. Access to green space is associated with reductions in long-term conditions such as heart disease and cancer, and close connections to green space are also associated with significantly less income-related health inequality, weakening the effects of deprivation on health. During the pandemic, there has been a huge increase in mental health problems, and during a lockdown period green spaces are in many ways people’s one chance of restoring some balance to their mental health.
In the current 25-year environment plan, which will be given statutory footing on Royal Assent, there are broad aspirations on engagement with the natural environment, but there are opportunities to improve them. I will turn briefly to some of the aspects that could be addressed. Evidence shows that access to nature and the outdoors is not entirely equal: for example, children in lower income areas and people from black, Asian and other minority ethnic backgrounds have the poorest access to green spaces and the natural environment. That is not always the case—in my constituency of Gloucester, the ward that is closest to Gloucester park, Barton and Tredworth, is also the area with the highest concentration of ethnic background diversity—but in general, access to the outdoors is unequal in our larger cities compared with towns or countryside.
The amendment would make a substantial difference by requiring the Government to take a strategic and coherent approach to issues of access to and enjoyment of the natural environment. Some non-governmental organisations have suggested that the amendment might put people’s enjoyment over the value of the natural environment to wildlife—that, for example, people and the environment are in competition and their goals are necessarily incompatible—but I reject that suggestion, because I believe that there are very clear examples of how people and the environment go well together.
The easiest way to shine a light on that is by talking about sensory gardens, which, as many of us know, are a frequent feature in schools that handle people with the greatest physical disabilities. Years ago, my family helped to raise funds for a sensory garden that was full of biodiversity. Not only was it a wonderful environmental joy, but it brought great joy to those with disabilities who attended the school. It is important therefore that the amendment be seen not as pro-people and anti-environment, but as pro-people and pro-environment.
Nor is the amendment intended purely to benefit urban dwellers—far from it. Aspects of it will hugely benefit the countryside as well. Research commissioned by the National Trust estimates that people across Great Britain are missing out on 500 million park visits a year because of poorly equipped facilities. Basic facility upgrades, from toilets and income-generating cafés to play areas, can help accessibility; litter collection, which I have already mentioned, is also incredibly important. Natural England has reported that insufficient footpaths in the presence of busy or dangerous roads can prevent easy access and deter their use. One in eight households has no access to a private or shared garden, a figure that rises to 21% of households in London, which highlights the importance of enjoyment of our green spaces.
Overall, parks in England deliver an estimated £6.5 billion of health, climate change and environmental benefits every year, including £2.2 billion in avoided health costs alone. It is not for me to challenge those figures; I think we can all intuitively relate to them, and I hope that as guesstimates, which are inevitably imprecise, those are as accurate as they can be. For every £1 spent on parks in England, an estimated £7 in additional wealth is generated for health and wellbeing and the environment.
These anecdotal examples of evidence, surveys and research make a strong case for making sure that the people’s enjoyment of our public spaces is included in the Bill as a “must”, rather than a “may”. In a sense, the Environment Secretary showed his support for such concepts in July 2020 in a speech announcing £4 million for a two-year pilot project to bring green prescribing to four areas hit hardest by coronavirus, saying:
“Studies across the spectrum, from health to financial risk, remind us that it is in our best interests to look after nature. We know that a connection with nature contributes to wellbeing and improved mental health.”
I could not agree more. I know that the Minister who is taking the Bill through the House, and whose whole career in the House of Commons has been dedicated to working on the environment, shares those feelings.
I draw attention to two other aspects. First, in September 2019, Julian Glover published his independent “Landscapes Review”, sometimes known as the Glover review, into whether protections for national parks and areas of outstanding natural beauty are fit for purpose. The Government have not yet formally responded to that review, but I believe they are broadly supportive. Its proposals include:
“A stronger mission to connect all people with our national landscapes, supported and held to account by the new National Landscapes Service”,
and,
“A night under the stars in a national landscape for every child”.
What a wonderful idea. Millions of children in this country have never had the chance to do that, and if this could stimulate that experience, what could be better? Also proposed is:
“New long-term programmes to increase the ethnic diversity of visitors”.
That has to be the right way forward. Different ethnic communities in my city have not had the same experiences in enjoying our national parks. We need to encourage them, and to make sure that national parks are seen as open, accessible and to be enjoyed by everyone. The proposals continue:
“Expanding volunteering in our national landscapes”,
and,
“A ranger service in all our national landscapes, part of a national family”.
All those recommendations, alongside the nature recovery network that is part of the Bill and that aims to join up green spaces and landscapes, only emphasise the value of replacing “may” with “must” in the Bill, which will help to achieve some of the recommendations.
My one-word amendment has the backing of the Conservative Environment Network, which my hon. Friend the Minister and I were founder members of. It has the support of the Ramblers, as well as the support of all the heritage organisations that come together in a group chaired by a former colleague of ours. Some of those aspects are reflected in amendment 202, which no doubt somebody else will talk to. It highlights the importance of archaeological, architectural, artistic, cultural and historical interest in our parks.
I particularly draw the attention of those listening from my constituency to the great Jurassic landscape in Robinswood Hill country park; stones that are millions of years old are sitting there on our doorstep. Having been a civil servant in another life, I recognise that no Department welcomes changes to its Bills, and that “must” implies additional responsibilities and work that is unlikely to be welcomed; however, I believe that this one-word change is a worthwhile measure. My hon. Friend the Minister is likely to have only one chance to lead a major new environmental Bill through the House. She will want it to be as strong and successful as possible. All Members on the Government Benches and, I suspect, on both sides of the House, share her ambition. I move this probing amendment in the hope that she will see this one written word as an entirely positive contribution to the spirit and intent of the environmental plan and the Bill.
Dr Whitehead
I commend the hon. Member for Gloucester on bringing the amendment forward. It is an important amendment in its own right. It is also important in terms of something we did at the beginning of the Bill and which was briefly discussed during the earlier stages in the spring. The Bill is littered with “mays” where there ought to be “musts” and we drew attention to about 25 instances where there are “mays” in place and they should be “musts”.
Dr Whitehead
I am putting that to the Committee for its comfort and security. However, there is a continuing real issue in the Bill with the way in which it has been drafted with those “mays” and “musts”. While we have done part of our job by drawing attention to that and putting those amendments down, even though we are not going to pursue them in detail, it is within the powers of other members of the Committee—as happened this morning—to draw attention to the effect that a “may” instead of a “must” has on a passage as we go through the Bill. I fear that that will be, even without my intervention, a recurring leitmotif as we go through the Bill, and that hon. Members will be particularly concerned about that formation as it relates to a thing they are concerned with as the Bill goes through. They may raise that concern independent of our portmanteau amendments on “mays” and “musts”.
I hope the Minister will reflect on that. I observe that she has been assiduous in tabling amendments. It is unfortunate, that those amendments do not include any recognition that this is a particular problem with the Bill. There are amendments that could be put forward that would rectify that.
I hope the Minister will take from this exchange that there is a real concern about how that particular formulation works through the Bill, and especially in this instance. I hope she will consider, at least in some of the instances where those “mays” and “musts” collide, tabling some amendments later in the Bill’s passage to rectify or ameliorate those parts of the Bill. That piece of sunny optimism on my part perhaps goes with the Minister’s sunny optimism on many things. Let us see whose optimism gets the upper hand in this instance.
Finally, it might have been a little mischievous of us to seek to draw the hon. Member for Gloucester into supporting a vote on this clause. Out of sensitivity to his general circumstances in life, we will not seek to do that, because I think the hon. Gentleman will withdraw his amendment. I think it illustrates, however, that this concern is held not only on this side, but across the Committee, so there is an additional onus on the Minister to think about whether there are instances where those “mays” and “musts” can cease colliding and can be amended for the better purposes of the Bill as a whole.
Rebecca Pow
I thank my hon. Friend the Member for Gloucester for his excellent speech. He knows that I hold him in great respect and I always listen to what he says. He collars me many a time. I have given this a huge amount of thought and talked to a great many people about it, because it has been preying on my mind—he can be absolutely sure of that. He has explained a bit about my background, so he will know that I am not making that up.
My hon. Friend painted a lovely picture of life in the countryside, especially in his lovely constituency, including in the Robinswood Hill park, which I know because I briefly worked on rural and countryside issues in Gloucester many years ago. That was one of the places people revered even then.
I am dealing with the “may” as it relates to this amendment, which I think is the right thing to do.
Rebecca Pow
It is cheeky of the shadow Minister to try to widen out the “mays” and “musts” at this juncture.
Connecting people with the environment is really important to our health and wellbeing. It is a core objective of the Government’s 25-year plan, which we can all have a look at later to remind ourselves. It is written in there, I assure my hon. Friend the Member for Gloucester, that connecting more people from all backgrounds with the natural environment for their health and wellbeing is a key part of the 25-year environment plan, which is our first environmental improvement plan. When reviewing the environmental improvement plan, the Government must consider whether further measures are needed to achieve the targets. Under the Bill, long-term targets can be set out for any aspects of the natural environment or people’s enjoyment of it. As he will know, the Bill requires the Government to set out at least one target in four priority areas—air quality, biodiversity, water waste and resource efficiency—as well as the fine particulate matter target. Other targets can be set later, as we go along. There is huge scope for that.
We are already implementing many projects and schemes to connect people with nature. My hon. Friend has named a number of them already. For example, there is the children in nature programme, on which I, as the Environment Minister, link up with the Department for Education. There is the green social prescribing shared outcomes fund; he touched on the funding that has just been given. I was at the launch of the National Academy for Social Prescribing last year, when I was briefly a Minister in the Department for Digital, Culture, Media and Sport. I went with that hat on, although I had done a lot of work as a Back Bencher on green social prescribing; my hon. Friend is absolutely right about how important it is and what a difference it makes to people’s lives.
My hon. Friend the Member for Gloucester touched on pocket parks. That fund was launched last year by the Ministry of Housing, Communities and Local Government, to the tune of £1.35 million, and community groups can still bid for that now. If my hon. Friend or other hon. Members know any groups that would like to bid for that money, please encourage them to do so, as that would be worthwhile. We have also launched a £40 million green recovery challenge fund, supporting projects across the country to connect people with nature and generate jobs at the same time. So, there are a lot of ongoing projects, which will not stop. We expect public authorities to consider how to help to tackle the issue of health and wellbeing, through actions to comply with the strengthened biodiversity duty introduced later in the Bill, in clause 93.
I know my hon. Friend knows that the environmental improvement plan can set out the steps that the Government intend to take to improve people’s enjoyment of the natural environment. I have touched on that already, but that is engrained in the Bill. As my hon. Friend said, people’s enjoyment of the natural environment can, in some instances, have a negative impact on the natural environment. For example, if too many visitors go to a beach, it can negatively impact the wildlife and habitats, including through litter left behind. I am really conscious of that, because we have had some significant incidences of it over the summer. I had to engage with local authorities about it, including those in Cornwall, where it was raised as being a terribly difficult issue to deal with.
Our enjoyment of nature cannot take precedence over our stewardship of that environment for the future. That is why we do not necessarily want to give equal prominence to environmental improvement and people’s enjoyment in EIPs, as would result from these amendments. I understand that Greener UK agrees that the focus should be on improving the whole, holistic natural environment, not diverting it from its primary status. My hon. Friend the Member for Gloucester touched on that.
I highlight the link between the Environment Bill and the new environmental land management scheme, which is being brought through under the Agriculture Bill. ELMS will be one of the tools for delivery in the 25-year environment plan and one of the measures in the Environment Bill. It will pay for delivery of public goods. Listed among those public goods are beauty and heritage, as touched on earlier by the hon. Member for Cambridge, as well as engagement with the environment. That is actually listed as something that can be delivered as a public good through the Ag Bill and the new ELM system. There is a direct link with what my hon. Friend the Member for Gloucester touched on, and I hope that gives him some assurance.
Richard Graham
I am very grateful to the Minister for doing detailed research to anticipate most of the points that I was likely to raise. I am also grateful for the comments of the hon. Member for Southampton, Test.
The Minister is quite right that it is appropriate at this stage to tackle the one-word change to the clause only, rather than the wider principle, which the hon. Member for Southampton, Test tempted her to pursue. I am absolutely sure that she not only understands exactly where I am coming from but is entirely with me. The question is whether she can bring me with her in the direction that we want this Bill to go, rather than come from. Everything she said only emphasised the value of bringing something more concrete to the clause. We are in wide agreement on almost every single issue, except the important net increase of one letter that I am hoping for.
I hope the Minister will reflect on some of the thoughts that I offered, particularly on the vital notion that nature and humans do not need to be in conflict. I was brought up partly in east Africa, and I have seen over my lifetime how the occasional obsession with trying to separate the role and the perfection of the environment from the role and desires of the humans living in and beside it can cause conflict unless people work hard to realise that the two can go together very well. We have seen in the most successful environmental schemes around the world how effective that can be; whether in the marshlands to the north of Hong Kong, or in the wildlife protected in India and Africa. The same can be done here, in our own country. There are opportunities to pursue, and in that spirit I hope my hon. Friend the Minister will look at this closely for the Report stage of the Bill—she is nodding. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Chair
Order. Before we move on to the next group, I would like to say that I have been very relaxed so far. We have had some very discursive contributions to the two groups we have had in the past hour and 10 minutes. We should all collectively seek to address our remarks particularly to the absolute detail of the amendments in front of us and not stray into other areas, however interesting.
Dr Whitehead
I beg to move amendment 87, in clause 7, page 5, line 13, at end insert—
“(5A) It may also set out the steps Her Majesty’s Government intends to take to improve the conservation of land environments of archaeological, architectural, artistic, cultural or historic interest, including improving people’s enjoyment of them (and if it does so references in this Part to improving the natural environment, in relation to that plan, include conservation of land environments of archaeological, architectural, artistic, cultural or historic interest, including improving people’s enjoyment of them).”
This amendment invites the government to consider the historic environment in environmental improvement plans.
We are enjoined to concentrate on the amendment in front of us and how it affects the Bill as a whole. It would be useful to put to the Committee where we stand on clause 7. The clause states that the Secretary of State must prepare an environmental improvement plan. The beginning of the clause appears to suggest that the Secretary of State must sit down—presumably with a towel round his head—and work out an environmental improvement plan and present it to the House.
The clause then sets out what an environmental improvement plan is—significantly improving the natural environment in the period to which the plan relates—and that that period must not be shorter than 15 years. As the hon. Member for Gloucester mentioned, an earlier clause provides that the EIP should include
“steps Her Majesty’s Government intends to take to improve people’s enjoyment of the natural environment in that period.”
Clause 7 then takes an abrupt handbrake turn. It says that is all very well, and all those things must be done by the Secretary of State. However, in the great tradition of “Blue Peter”, here is one I prepared earlier. It states in subsection (7):
“The document entitled ‘A green future: our 25 year plan to improve the environment’…is to be treated as an environmental improvement plan”.
That is, it has already been done before the Secretary of State has to put pen to paper as provided earlier in the clause, to produce an environmental improvement plan. It then specifically states in subsection (8) of this clause:
“References in this Part…(a) to the first environmental improvement plan, are to that document; (b) to the current environmental improvement plan, are to the environmental improvement plan for the time being in effect.”
That is the 25-year environment plan—
The Chair
Order. We have a very long Bill to consider, with a great deal of amendments. I therefore intend to be tough on both sides of the Committee. I know that that may upset every member of the Committee equally, but we need to make some progress. I therefore suggest that the hon. Gentleman should speak not to the whole of clause 7—he will have an opportunity to do that, if he chooses, in a stand part debate shortly—but specifically to his amendment, which refers to the conservation of land environments. Broader discussion of the clause may wait for later.
Dr Whitehead
Thank you, Mr Gray. I will, of course, follow your guidance closely, but I feel it is necessary to set out what part of the clause we seek to amend, and why, in order to explain the status quo ante. By tabling the amendment, we seek to set out steps for Her Majesty’s Government to take to improve the conservation of land environments of, among other things, archaeological, architectural, artistic, cultural or historical interest, including improving people’s enjoyment of them. The clause as it stands mentions people’s enjoyment of the natural environment. The amendment would place one of the definitions of the natural environment into the context of what has happened to it over a very long period of history.
One little example of that, close to my constituency in Southampton, is the New Forest. The New Forest is not new and it is not, by and large, a forest. It is a very large and precious part of our natural environment, but it is not the natural environment it was originally. Actually, it is a spectacularly complex and superbly varied environment that has been worked on substantially by humans over 10 centuries. Substantial sections of the New Forest that were originally forest are heathland, for example, with their own habitats and precious areas of rare species within them. Those habitats have come about only as a result of human activity in the original area of the New Forest, clearing what was forest and working on, draining, changing, enriching and variegating the land. As a result, those species have colonised those areas and are now, to the human eye, indistinguishable from the natural environment as part of that forest.
Daniel Zeichner
My hon. Friend is making a powerful case. In the east of England, the Broads landscape is a similarly excellent example. It was long thought to be an example of the natural environment, but it now turns out to be a consequence of human intervention. The definition of what is natural is extremely important.
Dr Whitehead
My hon. Friend is right. The Broads came about as a result of peat extraction by Saxon and early medieval inhabitants of the area, and an amazing interlinked lakeland and wetland environment has developed as a result. Landscapes of archaeological, environmental, artistic, cultural or historic interest are an important part of the natural environment. They should be conserved and preserved, and loved and looked after for that reason, and not because they are a variation from the original landscape that was in place once upon a time.
Rebecca Pow
I want to assure the shadow Minister that the Government were elected on a manifesto that promised to protect and restore our natural environment after leaving the EU, and that is why the environment improvement plans and targets share an objective of significantly improving the natural environment.
I will whizz through my response as briefly as I can. The hon. Member touched on the fact that the natural world does not exist in a vacuum. We are in complete agreement. It is a very complicated scene. We interact with it; we use it and rely on it; and we change it, as the hon. Member referred to in many examples. It becomes part of our life, our history, our values and it is a natural heritage and inheritance that we should all be proud of. That is why the 25-year environment plan has at its heart that we will improve the natural environment and recognises that we cannot manage it in isolation.
The plan committed us to
“Safeguarding and enhancing the beauty of our natural scenery and improving its environmental value while being sensitive to considerations of its heritage.”
That is what the plan mentions, so I want to give absolute assurances. I believe the shadow Minister is not aware that this point is all part and parcel of the Environment Bill already.
I understand that those outside this House who have been calling for the amendment feel that greater confidence would be given by an explicit reference in the Bill to these particular heritage features of land. I know that lots of people have been concerned about this, so I want to reassure them that the Bill ensures that our 25-year environment plan, including its stated recognition of the connection between the natural environment and heritage, will be adopted as the first environmental improvement plan. It will set the benchmark for future plans, including how to balance environmental and heritage considerations.
The approach we took in our 25-year environment plan on heritage was welcomed by stakeholders and is expected to be mirrored in future environmental plans by the future Government. I hope that give assurances. The shadow Minister raises some serious points about heritage, but I think we are actually in agreement, so I would ask him to withdraw the amendment.
Dr Whitehead
I am not sure that the Minister can point to the exact part of the Bill where those things take place in the way that she has suggested they do, although I am a little reassured by the fact that she clearly has a good understanding of the problem that we have set out today and is alive to the issue. I hope the Minister will follow up this debate with some equally assiduous work as previously, to ensure that it is a substantial feature of the next, or revised, environmental improvement plan. I hope it will give great reassurance not just to people in this House, but to those concerned with our natural heritage and the way that our heritage as a whole impacts on the natural environment and the changes that have been made within it over time. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 7 ordered to stand part of the Bill.
Clause 8
Annual reports on environmental improvement plans
Dr Whitehead
I beg to move amendment 89, in clause 8, page 5, line 32, at end insert—
“and,
(c) consider biodiversity reports published by authorities under section 40A of the Natural Environment and Rural Communities Act 2006 (as amended by section 94 of this Act).”
Clause 8 is concerned with the preparation of annual reports on the implementation of the current environmental improvement plan. The amendment would additionally require the consideration of annual reports on the plan’s implementation and operation. The clause sets out a number of ways in which that should be done. By the way, I cannot resist stating that, as hon. Members will observe, subsection (1) says:
“The Secretary of State must prepare annual reports”.
The Secretary of State has no option but to do this. It is not a question of the Secretary of State “may”; rather, he “must prepare annual reports”. There is obviously some careful writing going on here.
Subsection (1) says:
“An annual report must...describe what has been done, in the period to which the report relates”
and
“consider...whether the natural environment has, or particular aspects of it have, improved during that period.”
Later in the Bill, clause 94 amends the Natural Environment and Rural Communities Act 2006 to require the Secretary of State to look at biodiversity reports, which
“must contain...a summary of the action which the authority has taken over the period covered by the report...a summary of the authority’s plans for complying with those duties... any quantitative data required to be included in the report”,
and
“any other information that the authority considers it appropriate to include in the report.”
I will not read out the entire clause—as you will be delighted to hear, Mr Gray—but it sets out a number of other things that the biodiversity report should include. Nevertheless, in terms of biodiversity reports, that appears to be fairly central to the idea of reporting, on an annual basis, what has happened to that environmental improvement plan. That is, those biodiversity reports, which are coming out on a regular basis, should inevitably be included in the annual changes that have happened, which are required to be reported on by the Secretary of State as far as the improvement plan is concerned.
However, as hon. Members can observe, there is no linkage in clause 8 with clause 94 as far as biodiversity plans are concerned. We are concerned that, without something on the face of the Bill to link those biodiversity reports and the progress of the environmental improvement plan, those reports will be set aside, not taken into account and not included in the Secretary of State’s progress reports, and will have much less effect as a result. The amendment would therefore require the Secretary of State to
“consider biodiversity reports published by authorities under section 40A of the Natural Environment and Rural Communities Act 2006 (as amended by section 94 of this Act).”
That is the important part. We are considering an amendment to the 2006 Act later in the Bill specifically to do with biodiversity reports, yet we leave them hanging elsewhere in the legislation. The amendment introduce create an important linking passage between those two issues. The Committee ought to think carefully about whether it wishes that link to be explicit on the face of the Bill, or whether the inclusion of those biodiversity reports in the Secretary of State’s update on the environmental improvement plan should be left to chance.
Rebecca Pow
I thank the hon. Member for his consideration of the Bill and the amendment. However, I assure him that the amendment is not needed. Clause 8 places a duty on the Secretary of State to produce annual reports on progress in implementing the environmental improvement plan. As the current 25-year environment plan shows, EIPs have a very broad scope. We have already touched on that. The reporting requirements that the Government have proposed are equally broad in scope, describing what action has been taken to implement the plan, and considering whether aspects of the natural environment are improving. This consideration should draw upon relevant existing data. Specifying that particular reports must be considered is not necessary.
The Bill will introduce a requirement to produce biodiversity reports as part of a strengthened biodiversity duty on public authorities. These reports will provide valuable data, but are already in the scope of the existing reporting duty of the annual EIP reports. To ensure that the annual EIP reports are as robust and comprehensive as possible, we want them to be based on the best evidence. We also want to retain the flexibility to consider the most relevant evidence for a particular context.
Daniel Zeichner
I suspect that we will be discussing the same points on a number of different amendments, but this amendment raises the whole issue of those biodiversity plans. It also raises the issue referred to by my hon. Friend the Member for Southampton Test at the beginning of today’s sitting, which is that we have seen significant changes over the summer in terms of the Government’s stated intent for the planning White Paper.
When we look at the information that goes into the environmental improvement plans, my concern is that, as my hon. Friend has suggested, the data needs to be there to make any kind of sensible judgment. It is suggested, through the links to clause 94, that local planning authorities will be providing much of that information, yet the Government now propose to create a planning system that makes that nearly impossible. We will return to that, but it points to the great difficulty for the Opposition, in that, without an evidence session to explore these points, it is difficult to have a rational discussion at this point in our proceedings. My hon. Friend’s suggested amendment very much strengthens the Government’s ability to draw up a coherent plan. If we do not have that, we will end up with a nice-looking document that is not based on any real information.
This debates also touches on a more fundamental issue: the relationship between this Bill and the Agriculture Bill. I had the pleasure of leading on the Agriculture Bill in this very room some months ago, and we raised the point then. The interaction between the two is complicated and sophisticated, particularly in relation to environmental land management schemes. The Minister mentioned that earlier. Without the relevant information, we will not be able to have the planning strength we would all like to see.
Dr Whitehead
The points made by my hon. Friend the Member for Cambridge are important in the wider context of the Bill. They explain why we are finding it difficult to easily track what the various parts of the Bill are against each other. As my hon. Friend says, we will return to that in the next amendment. It is beholden on the Minister to explain a bit better how these things fit together—or indeed do not—than she has this morning. We legislate today not just for those who might be well-disposed towards the Bill and have its architecture well-embedded in their heads, and would therefore hopefully be able to move about within the Bill to put its bits together in terms of future directions. I refer to Ministers and those who are well-disposed towards its ideas—in this instance biodiversity reports. We are legislating for future circumstances where those required to carry out the terms of the Bill might not have the same enthusiasm, dedication and support for the issues as the Minister does. I am sure she will have a long reign as Minister, but she is nevertheless the present Minister.
It is important that we ensure as best we can that the legislation is malevolence-proof and that what we decide in respect of future Governments’ duties, both in this Committee and when the Bill goes through the House, really happens. The amendment is an example of something that could be included in the Bill. I accept what the Minister said about there being some measures that, with some good will, can ensure that those things happen, but they are far from the sort of long-term assurances we want. Although I will not press the amendment to a vote, I am afraid that what the Minister has said laid out this morning is very much dependent on her good will towards the Bill.
Ruth Jones (Newport West) (Lab)
The shadow Minister is making a powerful point—we are future-proofing for generations to come. To my mind, it is important that legislation is easy to read and understand, and it must be secure and tight. Future generations will be looking to us to set an example, which is why that is so important. A year ago, nobody knew about covid, so we cannot always read the future, but we must set things down tightly in legislation. That is why amendment 201, which was withdrawn, focused on the use of “may” and “must”—wording is so important. I agree with my hon. Friend that we must make the legislation as future-proof as possible.
Dr Whitehead
That is precisely my view of what we should be doing in Committee and throughout the passage of the Bill. I hope that the Minister will reflect on whether the clause is really tight enough to ensure that the provisions work, not just for her purposes but for the purposes of people in the future, and that she will look over the legislation at her leisure—there is plenty of time on Report—to see whether anything more needs to be done to ensure that that point is properly taken on board. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Dr Whitehead
I beg to move amendment 90, in clause 8, page 5, line 32, at end insert
“and,
(c) include an analysis of whether the policies and measures set out in the environmental improvement plan will ensure that any targets set under sections 1 and 2 and any interim targets set under sections 10 and 13 are likely to be met.”
This amendment is another example of the theme that we have been developing, first on the extent to which the later parts of the Bill link properly to the earlier parts, and secondly on whether provisions should be included in the Bill to ensure that those links are made when the Bill becomes law and are not just in the minds of the Minister and well-disposed civil servants.
The amendment, which also relates to clause 7(5), proposes that the environmental improvement plan should include
“an analysis of whether the policies and measures set out in the environmental improvement plan will ensure that any targets set under sections 1 and 2”,
which we have agreed to,
“and any interim targets set under sections 10 and 13”,
which we will talk about later,
“are likely to be met.”
It is important to the proper functioning of any environmental improvement plan that it is drawn up on the basis of the targets. The Minister has mentioned that this is not just a question of the targets that are in the Bill; other targets can be set on the basis of the framework in clause 1. It seems to me that if that is one of our prime mechanisms for ensuring that what happens under the Bill as a whole works, it has to be a prime function of an environmental improvement plan. The idea of setting up an environmental improvement plan to miss, subvert or undermine those targets would be anathema to us, but there is nothing in the Bill to prevent that from happening. The two clauses are just not linked together. We therefore think, as I have mentioned before, that the amendment is important to rectify architectural defects in the Bill.
Under the amendment, the analysis would be one of the things the Secretary of State was required to include when preparing an environmental improvement plan. Of course, when the environmental improvement plan that we have at present was produced, no targets were in place, no targets had been set and no targets had been considered. This is therefore an entirely new thing that would have to go into the revision of the environmental improvement plan that the Secretary of State is required to do in 2023.
I hope that the Minister will be fairly generous in considering whether to put this provision in the Bill. I think that it is an important change that needs to be made and, given that we have thought about it for a while, we will consider dividing the Committee if there is not a reasonable response to what is a serious and considerable lack of joining up between this clause and the earlier clauses.
Rebecca Pow
I thank shadow Minister for his proposal that the Government annually assess the sufficiency of environmental improvement plan measures for achieving our targets. He is clearly aware, as are we and, indeed, all the people who have put so much work into the structure of the targets and the EIPs, that it is very important to keep the EIPs on track. With that in mind, I assure him that the whole system that has been set up—the Bill’s statutory cycle of monitoring, planning and reporting—is designed to ensure that the Government regularly assess the sufficiency of their actions, while allowing some flexibility in how they do so.
The EIP annual reports are intended to be a retrospective assessment of what has happened in the preceding 12 months. The five-yearly EIP review is a more comprehensive assessment in which the Government must look not only backwards but forwards and consider whether the EIP should include additional measures. If so, the EIP may be updated and a new version laid before Parliament.
The Office for Environmental Protection will comment yearly on the progress reported in each EIP annual report, providing it with the opportunity to flag early on where it believes there is a risk that the Government might not meet their legally binding, long-term targets. It may also make recommendations on how progress towards meeting targets can be improved, to which the Government must respond.
The Chair
Order. The Minister has finished her remarks; the hon. Gentleman is replying to the debate.
Dr Whitehead
Indeed. I am wondering in a non-specific way, Mr Gray, what the Minister might think about this issue, having responded to the debate so far.
The provision that we wish to place in clause 8(2) appears in subsection (3), so will the Minister consider including it in subsection (2), which states what an annual report must consist of, whereas subsection (3) states that the report might consider these matters. Surely those targets and interim targets are central to any annual report and are not a consideration that might arise in the report.
I do not know whether the wording is slack or whether there is a reason why the consideration of relevant targets under clauses 1 and 2 are in subsection (3) and not in subsection (2). Our amendment expresses the centrality of targets to annual reports.
Daniel Zeichner
I have to say that I am finding this a slightly dry discussion, Mr Gray.
I listened to the Minister carefully and I am trying to understand the amendment’s effect in the real world. For those that influence the environment—I think of water companies and transport authorities—the extra clarity offered by the amendment would make it far more likely that they would amend their planning and investment decisions at the right time, which seems to be key to what we are trying to achieve.
Dr Whitehead
I thoroughly agree with my hon. Friend, although it is perhaps going a little too far for an hon. Friend to say that I am involved in dry discussions. On his suggestion, I will try to make my discussions a little damper in future.
To be honest, I do not think the Minister has given us a good reply. I do not want to press the amendment to a vote, but I want to put it on the record that we think it is important that these issues should be gathered together centrally in the annual reports and not put in the considerations about the annual reports. Again, I would hope—it is not a general reflection on this occasion, but an actual reflection—that the Minister might look at the fact that the wording applies to the documentation of the report and consider whether a drafting amendment to put subsection (3) into subsection (2) might not be a wise course of action at a future date.
Amendment, by leave, withdrawn.
Clause 8 ordered to stand part of the Bill.
Clauses 9 to 15 ordered to stand part of the Bill.
Clause 16
Policy statement on environmental principles
Dr Whitehead
I beg to move amendment 91, in clause 16, page 10, line 6, leave out “proportionately”.
This amendment removes ministerial estimates of proportionality as a limitation on the policy statement on environmental principles.
The Chair
With this it will be convenient to discuss amendment 92, in clause 18, page 11, line 13, leave out subsection (2).
This amendment removes the proportionality limitation on the requirement to consider the policy statement on environmental principles.
Dr Whitehead
I am afraid that we might be here discussing slightly dry propositions for a little while. Amendments 91 and 92 look at the wording in the Bill that relates to the proportionality of the interpretation by Ministers of the Crown when making policy. Clause 16(2) defines what a policy statement on environmental principles is. It explains that it
“is a statement explaining how the environmental principles should be interpreted and proportionately applied by Ministers of the Crown when making policy.”
Although that appears to be an innocuous point, our view is that it is not remotely as innocuous as it looks, because it is not just talking about the statement on how the environmental principles should be interpreted. It is stating that, even after that interpretation, there is a second course of action that may be taken: Ministers of the Crown may decide to apply them proportionately. As far as I can see, there is no definition of the word “proportionately” in clause 16 or in the Bill as a whole, even though it is quite usual to place an interpretation of particular words in a Bill.
My understanding is that the word “proportionately” has to be attached to something—it is proportionate to something, or proportionately a part of something. When it is stated in the—
Pension Schemes Bill [ Lords ] (First sitting)
Tuesday 3rd November 2020
(3 years, 5 months ago)
Public Bill CommitteesRead Full debate Pension Schemes Act 2021 View all Pension Schemes Act 2021 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 3 November 2020 - (3 Nov 2020)
The Committee divided: - Ayes: 2 / Noes: 10 - Question accordingly negatived.
The Chair
Before we begin scrutiny, I have a few preliminary announcements. I will stop the sitting if Members do not respect the social distancing guidance. I remind Members to switch electronic devices to silent. Tea and coffee are not allowed during sittings. If drinks have been brought in, please remove them from the desk. I know that most speeches are spontaneous, but if Members have speaking notes, please email them to our Hansard colleagues at hansardnotes@parliament.uk. That would be helpful. We will first consider the programme motion on the amendment paper. We will then consider a motion to enable the reporting of written evidence for publication. Given the time available, I am sure we can do both of those without debate.
Ordered,
That—
(1) the Committee shall (in addition to its first meeting at 9.25 am on Tuesday 3 November) meet—
(a) at 2.00 pm on Tuesday 3 November;
(b) at 11.30 am and 2.00 pm on Thursday 5 November;
(2) the proceedings shall be taken in the following order: Clauses 1 to 6; Schedule 1; Clauses 7 to 44; Schedule 2; Clauses 45 to 48; Schedule 3; Clauses 49 to 57; Schedule 4; Clauses 58 to 95; Schedule 5; Clauses 96 to 99; Schedule 6; Clauses 100 to 116; Schedule 7; Clause 117; Schedule 8; Clauses 118 to 120; Schedule 9; Clauses 121 to 123; Schedule 10; Clauses 124 to 129; Schedule 11; Clauses 130 to 132; new Clauses; new Schedules; remaining proceedings on the Bill;
(3) the proceedings shall (so far as not previously concluded) be brought to a conclusion at 5.00 pm on Thursday 5 November. —(Guy Opperman.)
Resolved,
That, subject to the discretion of the Chair, any written evidence received by the Committee shall be reported to the House.—(Guy Opperman.)
The Chair
Copies of written evidence that the Committee receives will be made available in the room. We now begin line-by-line consideration of the Bill. The selection list for today’s sitting is available in the room. It shows how the selected amendments have been grouped together for debate. Amendments grouped together are generally on the same or similar issues. Please note that decisions on amendments do not take place in the order they are debated, but in the order they appear on the amendment paper. The selection and grouping list shows the order of debates. Decisions on each amendment are taken when we come to the clause to which the amendment relates.
Clause 1
Collective money purchase benefits and schemes
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
Clauses 2 to 6 stand part.
That schedule 1 be the First schedule to the Bill.
Clauses 7 to 25 stand part.
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
It is a great pleasure to serve under your chairmanship, Mr Stringer. I thank colleagues for attending today’s debate. I hope to proceed with cross-party agreement on those matters that are relatively uncontested, so that we can make progress and then focus on and debate properly those matters that are genuinely contested.
I stand to introduce clause 1 and the associated clauses up to clause 25 and to speak in support of the new form of occupational pension that we are introducing, commonly called collective defined contributions. In CDC schemes, members and employers make fixed-rate contributions to the pension fund. At retirement, members receive their regular pension income paid out of the fund each year until death. The rate or amount of the pension is not guaranteed and will be adjusted annually depending on how much money is in the fund and the projected cost of providing benefits under the scheme. CDC schemes offer the security of an income in retirement, which we know many people value, without individuals having to purchase an annuity on retirement. However, CDC schemes do not require the employer to make additional financial contributions to the scheme if the scheme’s financial position weakens. CDCs have been introduced under a cross-party approach, with great support from all parts of the House. The pioneers of the scheme are the Communication Workers Union and the Royal Mail, which have proposed a way forward.
The Bill allows us to extend CDC provision to master trusts or non-connected multiple employers through further secondary legislation when appropriate, and we look forward to working with such employers in the industry on how such provision should operate and be regulated. It is a brave man who cites Tony Blair in aid of his proposals, but I genuinely believe that this is a third way in terms of pensions, as an alternative to defined-benefit and defined-contribution schemes. It is unquestionably something that huge numbers of people have sought to bring forward, so that we can address things in the main.
Ms Angela Eagle (Wallasey) (Lab)
The Minister talks about the third way. Will he also take a little time in his opening remarks to recognise that pensions policy is best if it is done cross-party? We are dealing with changes to the Pensions Act 2004, which was cross-party legislation that introduced opting in. Changes and tweaks to the system are far more likely to last across different Governments and across time if we have some form of cross-party consensus. It is not only a third way. The only way we will end up with a workable pensions scheme is by building in sustainability across Governments and across time. As a former Pensions Minister who put the auto-enrolment regulations on to the statute book prior to our loss of office in 2010, I am committed to cross-party working and I hope that the Minister is, too.
The Chair
This is an ideal opportunity to say that I do not think that members of the Committee will have any difficulty in catching my eye, but interventions should be brief and to the point.
Guy Opperman
I endorse that approach, Mr Stringer, but I also take the opportunity to welcome the cross-party approach to so much of pensions. I am conscious that two former Ministers of the Department for Work and Pensions are sitting on the Back Benches and that they will correct me and intervene regularly. I accept entirely that pensions policy works on a cross-party basis, whether it be automatic enrolment—which was introduced by the Labour Government through the Turner commission, brought forward by way of statute under the coalition, and expanded under this Conservative Government—or such successes as the Pension Protection Fund, which was one of the great successes of Blair’s Labour Administration, and the variety of reforms that we have introduced. There are some cross-party matters, such as the increase in the state pension age, that some parties do not necessarily wish to continue to own and embrace after they have left office, but such is the way of life.
As I tweeted yesterday, this Bill has, effectively, 98% cross-party agreement and, although there may be legitimate debates on how we progress, we have worked on that basis. The hon. Member for Birmingham, Erdington (Jack Dromey) and I have worked together on a tremendous cross-party basis. My wife often comments that I text him way too much. The practical reality is that I have also engaged repeatedly with the hon. Member for Airdrie and Shotts, who represents the Scottish National party. We have exchanged emails, trying to work out where we disagreed and where we agreed, and there is a great deal of common ground. Both SNP spokesmen made that clear on Second Reading, though there is legitimate debate regarding the best way forward on other matters. I look forward to those debates.
Neil Gray (Airdrie and Shotts) (SNP)
I concur with the Minister’s remarks on cross-party working. He said that CDC schemes, which we support, would become a third way, but can he clarify whether he sees CDC schemes as replacing good DB schemes? Clearly, we would not see them as an alternative but as a fall-back for when schemes run into trouble in other areas.
Guy Opperman
We will debate DB schemes, which I think have a great future. We have gone to great efforts to support the future of DB schemes. This is an alternative way forward that some organisations—Royal Mail is the classic example, but there are others who are looking at this—will welcome. Under no circumstances should it be implied or in any way taken that the Government will do anything other than support DB schemes on an ongoing basis.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
It is a pleasure to serve under your chairship today, Mr Stringer. May I thank the Minister for the collegiate way in which he has undertaken debate during the progress of the Bill and, indeed, prior to that, on the issues and decisions we are making?
I thank my hon. Friend the Member for Wallasey for her comments on the importance of a continuing cross-party dialogue on the issue of pensions. I was involved in some of the Labour’s Government’s work on addressing pensions inequality for women and the Turner commission. I also pay tribute to the hon. Member for Airdrie and Shotts for his contribution to the collegiate way in which we have all been working together and for raising important issues for debate.
I speak on behalf of the Opposition, along with my hon. Friend the Member for Westminster North. We also speak on behalf of my hon. Friend the Member for Birmingham, Erdington (Jack Dromey), who is unable to be with us this week. Before I begin, I want to thank the Committee Clerks, who are ever helpful, professional and a true credit to the House.
As the Minister well knows, we have always been clear that we support the Bill, but, as hon. Members can see, we have identified some ways in which we believe it could be made better. We will discuss those areas in detail as we progress.
I turn to the general provisions in parts 1 and 2 of the Bill, on collective money purchase schemes, which is the legislative term for collective defined contribution or CDC schemes. The provisions mark a welcome innovation. I join colleagues in congratulating the CWU and the Royal Mail on their groundbreaking agreement to pursue the creation of a CDC scheme. They have forged an exciting pathway to a better pension for around 141,500 Royal Mail employees. Members will be aware that my hon. Friend the Member for Birmingham, Erdington was closely involved in that process.
CDC schemes offer many potential benefits, as the Select Committee on Work and Pensions concluded in a 2018 report:
“Through the pooling of risk between scheme members, CDC may well…provide more generous pensions on average than standard DC saving…To offer more good choices is entirely consistent with both pension freedoms and promoting retirement saving.”
There could hardly be a more important time to focus on reducing risks to people’s pension savings. As we have seen, the coronavirus crisis poses a serious and significant risk to pension funds. Sadly, many members of defined-contribution schemes have suffered pension reductions of around 8% to 10%, due to the financial market reaction to the pandemic. In many cases, that has led to individuals deferring their retirement.
In that context, it is massively encouraging that the modelling conducted by Willis Towers Watson shows that the Royal Mail CDC scheme would have provided better outcomes for savers through this crisis than traditional DC schemes. According to the modelling, even with the severe level of market shock experienced earlier this year, there would have been no effect on current pension levels for CDC schemes. Future pension increases would have been affected, but only by 0.25% a year. That is in stark contrast to the losses that I have outlined for DC pension savers and is to be welcomed in the light of the turbulent economic circumstances we face for the foreseeable future. It is welcome, too, that supporters of CDC schemes make a wide and varied coalition, including the CBI and the TUC.
In summary, Labour supports part 1 of the Bill and the move to create CDC schemes provided, of course, that they are not used as a means of downgrading good DB schemes, a point that has already been made.
Stephen Timms (East Ham) (Lab)
I am very pleased to be serving under your chairmanship, Mr Stringer. Like others, I very warmly welcome this proposed legislation for CDC pensions, and congratulate Royal Mail, the CWU and everyone involved on the success of their joint efforts to achieve the statutory framework that is needed to deliver them.
My hon. Friend the Member for Feltham and Heston referred to the previous Select Committee on Work and Pensions report on CDC schemes, published in July 2018. That report said that CDC schemes had the potential to “transform the pensions landscape”, and it also commended Royal Mail and the CWU on the “ground-breaking agreement” they reached at that time. It added:
“To offer more good choices is entirely consistent with both pension freedoms and promoting retirement saving.”
The Royal Society of Arts has long supported CDC provision, and I want to bring to bear on our discussion some of the points it has made in welcoming this proposed legislation. It points out, as my hon. Friend has just said, that CDC schemes are likely to provide a much higher income in retirement—at least 30% higher, it says—than the alternative of individual saving and then buying an annuity, and that that improvement is achieved by sharing longevity risk and targeting higher asset returns than an annuity provider. The RSA believes that the Bill provides a good framework for introducing CDC schemes, noting in particular that the regulator will act as a gatekeeper to ensure that only well-designed CDC schemes can open. It suggests that authorisation requirements for opening a CDC scheme and the process to verify continuing viability should not be unduly cumbersome, and that there should be a proper balance of prescription in scheme rules and trustee, actuarial and regulatory oversight.
Unlike DB schemes, a CDC scheme cannot go back to the employer and ask for more funding, so CDC pensions do need to vary if things prove better or worse than predicted. Those variations in other countries where CDC schemes are in place can generally be accommodated by raising pensions by more or less than inflation, but after the 2008 crisis the Dutch reduced their CDC pensions by 2% on average, and in one of the Dutch schemes the level of pensions being paid was reduced by 6%. Understandably, that caused a furore, so people in a CDC pension need to know what might have to be done depending on what happens in financial markets in the future.
Does the Minister agree that this places a premium on effective communications with members of CDC schemes? During stable times, CDC payments may seem pretty reliable, as had been the experience in the Netherlands, where they were uprated each year in the expected way. For many years, the Dutch system had experienced no problems with that, nor had the potential for reductions been clearly explained to pensioners, so when the reduction came—2% on average, 6% in one case—it caused a lot of anger, for understandable reasons.
My hon. Friend referred to the model put together by Willis Towers Watson, I think at the request of the RSA, to model how a CDC pension would respond to the drop in capital values over the first quarter of this year. As she said, that model showed that the Royal Mail scheme would have been pretty robust. The Bill will allow the Royal Mail proposal to proceed, and other private sector organisations to create similar arrangements, but it does not allow for unrelated companies to work together to create a single CDC pension plan. Since effective pensions require economies of scale, that in effect excludes smaller companies from the legislation’s provisions, and from the option of a CDC—at least for now.
The Chair
Before I call Neil Gray, let me make it clear that we are not discussing clauses 27 and 47 now. I allowed what the right hon. Member for East Ham said to pass, because he referred to earlier clauses, too.
Neil Gray (Airdrie and Shotts) (SNP)
It is a pleasure to take part in this Bill Committee with you in the Chair, Mr Stringer. Like the Labour spokesperson, I pay tribute to the Minister, and to the hon. Member for Birmingham, Erdington, for the cross-party work that brought the Bill to this point. We welcome the Bill as it has arrived from the Lords, though we have concerns about some of the amendments put forward. It is an important piece of legislation, and the part that brings about CDC schemes has arrived in a good state, which is why there are so few amendments to these clauses. The Minister has obviously done a good job on the drafting from that point of view.
I thank the Clerks for their time and patience in working with me, my hon. Friend the Member for Gordon and our staff in putting forward our amendments and priorities. We greatly appreciate all their help and support.
Following on neatly from where the Chair of the Select Committee left off, we very much support the creation of CDC schemes. We pay tribute to Royal Mail and the CWU for the work that they have done with the Government to get the Bill to this stage. As I intimated in my intervention on the Minister, and as the Chair of the Work and Pensions Committee, the right hon. Member for East Ham, also intimated, the CDC schemes cannot be seen as a panacea or the right solution for everybody. It is important—I think this will be a theme of our discussions—that people are given access to as much impartial information about their pensions as possible, giving them confidence to make informed decisions about their savings.
For the reasons that the right hon. Gentleman outlined, I wish to put on the record again that although the SNP feels that CDC schemes have major benefits—certainly for some scheme members in DC schemes—we would not wish them to be seen as a replacement for good DB schemes or for people to feel that they are necessary. I look forward to the rest of the debate, which I feel may well be rather more contentious than the issues that we are discussing at this early stage of the Committee.
Guy Opperman
I echo the support for the Clerks from this side of the Committee. We had a very helpful session yesterday, and they have been very helpful throughout. I will address the four or five points that have been raised.
On communications, I utterly endorse the point made by the Chair of the Select Committee. He will, I hope, appreciate that over the last three years, one of the major things that I have tried to drive forward in the Department is communications across the level. We are using simpler statements, by taking the 10 to 43-page pension statements that very few people read—putting them in a kitchen drawer and not necessarily taking them on board—and providing a simpler two-page statement and a written version. Our pensions dashboards create an amenable version of the online version, with great, ongoing communication.
On CDCs, I totally endorse the points that the right hon. Gentleman made: it is vital that we learn the lessons from the Netherlands, and that we ensure good communication. The possibility of fluctuations in benefits will be made clear and transparent in key member communications at points throughout their pension journey, including by providing details of fluctuation risks at the point of joining, by emphasising benefit changes in both active and deferred members’ annual benefit statements, and by making clear in retirement information packs that benefits can change during retirement.
Quite simply, that point was not made clear to members in the Dutch example. Some may not have taken it on board at the start, while others perhaps did not quite understand the situation as well as they would have had it been explained to them. We hope that we have learned that particular lesson and have very much taken that on board. I know that the two organisations that are looking at CDCs are very conscious of that and, to their great credit, have held multiple roadshows around the country, talking about this and engaging with people long before the legislation was introduced.
The reality of the situation for the CWU and Royal Mail was that their endorsement of the approach would not have been possible without member engagement from the very start. They have probably engaged more with a pension scheme than anyone has ever done before, prior even to the drafting of the legislation. They very much wanted that engagement to take place.
Ms Eagle
Clearly, the changes that the Bill would make allow for pioneering in the CDCs that Royal Mail and the CWU have introduced to be put into effect. Will the Minister say a little about how other organisations —smaller employers, perhaps—might try to get into the CDC space? Clearly, Royal Mail and the CWU are an unusual combination, both in the size of the industry and their buy-ins—very few employers are of the same size as the CWU, which represents its members, and Royal Mail, which wishes to offer this particular CDC.
Guy Opperman
I agree that large employers, such as Royal Mail, which employ nearly one out of every 200 full-time working employees in this country, will look at that and say it is a potential way forward.
Before I come to the hon. Lady’s point, I want to address DB briefly and make it clear that CDC is intended to offer a further pension-saving option for employers and their workers, should they wish to make use of it: it is for the employers and the workers to decide the type of benefit they wish to have via their occupational pension scheme. That has always been the right of the employer fundamentally, but also engaging with the employee. We specifically amended the subsisting rights provisions via clause 24 to prevent existing DB benefits in the scheme from being converted into CDC benefits. I hope that I have addressed in full the DB issue, which was also raised separately by the right hon. Member for East Ham.
Stephen Timms
I am grateful for the Minister’s reassurance on communications. Will good communications be a consideration for the regulator in determining whether a proposed CDC scheme should go ahead?
Neil Gray
To build on that, does the Minister see the engagement, which he has rightly described as one of the most extensive from an employer and an employee-representative organisation in terms of changes to pension provisions, as being the gold standard going forward, if an employer seeks to switch from a DC to a CDC scheme in the future? Is that the bar that needs to be met?
Guy Opperman
I am now straying into industrial relations and how best to manage a company to take someone’s employees with them in a complex negotiation about future pension rights. All I can say is that I have worked and sat down regularly with the leading individuals in the Communication Workers Union and the individuals who have been running Royal Mail—that has changed slightly as it has gone along. I have seen the way in which they have engaged with their workforce and had a proper conversation up and down the country in a series of roadshows. With a large unionised workforce in the modern era, that is the right way in any event. I would certainly endorse that approach. It is clear that the company and the employees have been able to work together—working with the union, working with representatives—and it seems to me that, while I would not say the phrase is “gold standard”, it is an advisable way to proceed and it is good company relations to have a proper dialogue and engagement with individual employees.
The short answer I gave to the Chair of the Select Committee was yes, but the longer answer is that there is a whole supervisory regime, which we will discuss later, under clause 27 and thereafter, which must be submitted to the regulator in order to qualify to be accepted as a CDC. The practical reality of that is that I cannot see a way in which the regulator endorses and allows a company to go down the route of a CDC without all aspects of that communication being considered. Clearly, there are secondary regulations that follow. It is not in the specifics of the Bill, as I understand it. I make the point, when I am answering questions, that I am doing this utterly blind, so it has to be from my memory because I cannot take any notes from anybody. That is the fun of a covid Committee, as the right hon. Member for East Ham will know from chairing a Select Committee.
Guy Opperman
The practical reality is that there is a supervisory regime that must be embraced as part of the application to the regulator to become a CDC. I believe that that will be comprehensively addressed and it is my intention that that should be so in the relationships that we have.
The right hon. Member for East Ham asked about clause 47 in ballpark terms and the speed and expedition. I take the point that we are not debating those matters but yes, I accept that we need to press ahead with that. I wish to do so. I have been working on the Bill for the best part of two and a half years. It has not been for lack of trying. We started it prior to the general election and had to pause and start again afterwards, so it is not for the lack of trying to progress it. Both Royal Mail and the CWU are very keen to expedite it.
Stephen Timms
Can the Minister raise our hopes that perhaps in the next 12 months or so, there might be regulations that allow multi-employer CDCs to be set up?
The Chair
Could the Minster be brief, as that moves us into a debate on clause 47, which comes later in the agenda?
Guy Opperman
The final question that I was asked was about extensions on DCs, and the answer to that is yes.
Question put and agreed to.
Clause 1 accordingly ordered to stand part of the Bill.
Clauses 2 to 6 ordered to stand part of the Bill.
Schedule 1 agreed to.
Clauses 7 to 25 ordered to stand part of the Bill.
Clause 26
List of authorised schemes
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
Government amendment 6.
Clauses 27 to 44 stand part.
That schedule 2 be the Second schedule to the Bill.
Clause 45 stand part.
Amendment 25, in clause 46, page 36, line 41, at end insert—
“(e) require information to be made available to The Pensions Regulator relating to actions taken by the scheme to ensure diversity considerations are taken into account in the recruitment of the trustee board with regard to—
(i) age;
(ii) gender; and
(iii) ethnicity.”
This amendment is to require pension schemes to send information on the diversity of the trustee board to TPR.
Clauses 46 to 48 stand part.
That schedule 3 be the Third schedule to the Bill.
Clauses 49 to 51 stand part.
Guy Opperman
Clauses 26 to 51 complete the parts of the Bill that apply to Great Britain, but not to Northern Ireland. I will briefly address the two amendments. Government amendment 6 removes the provision put in primarily by Liberal Democrat peers in the House of Lords to incorporate a specific requirement of fairness. Unquestionably, as with much of the debate that we will have in Committee over the next two days, it is about the ways in which we proceed where the objective is agreed, and the objective is clearly one of fairness. The Government do not feel that clause 27(3) is appropriate, however, and we will seek to overturn it.
Requiring trustees to make such an assessment is likely to generate confusion unless further clarity is provided, and it may result in legal disputes. We have specifically and intentionally avoided referencing fairness in such a way in any of the CDC provisions, but I make clear to the Committee that we intend to use regulations to set out clear principles and processes that schemes must follow to ensure that different types of members are treated the same where justified.
Those requirements would form part of the authorisation process for the CDC schemes, overseen by the Pensions Regulator. Regulations under clause 18, for example, will require CDC schemes to ensure that there is no difference in treatment between different scheme member cohorts or age groups when calculating or adjusting benefits. That is a clearer, better and more effective approach to delivering fairness in practice, and it is supported by the Institute of Faculty of Actuaries.
I also pray in aid—as we have all cited our support for them—the note submitted by the Communication Workers Union and Royal Mail in written evidence to the Bill. They jointly addressed this specific point, saying:
“We welcome discussions on how to ensure the fairness of future CDC schemes. Royal Mail’s scheme is designed to address the possibility of intergenerational unfairness by not using capital buffers and explicitly preventing the trustees from favouring one group over another. The DWP acknowledged this in its 2019 consultation response. When it comes to Lord Sharkey’s amendment, we agree with Government that we should give careful consideration to how reporting on fairness might work in practice and share their concerns with the additional reporting requirements the amendment introduces. We therefore support the Government amendment which removes Lord Sharkey’s amendment from the Bill.”
I suggest that that statement is telling, and I invite the Committee to support the Government amendment.
Neil Gray
Before we decide what to do on this amendment, I am keen to hear from the Minister. He suggested that if the clause was allowed to stay as it is— as it was amended by the Lords—it could garner legal challenge. Could he clarify where he sees that legal challenge coming from and why he thinks that is a concern?
Guy Opperman
If clause 27(3) provides specifically for fairness, it may be open to interpretation and mean different things to different people. The legal advice we have received is that it would be inappropriate to include that in the Bill, and that it is far better to address the matter in detailed regulation rather than through a single word in the confines of the Bill.
Ms Eagle
The Minister is trying to achieve fairness across cohorts, and different people will have different interpretations of that. Such schemes are reliant on the general performance of the stock market, investment and what is going on in the world economy. Does he agree that fairness is subject to all those swings and roundabouts?
Will the Minister give the Committee some idea of what he would regard as fair, given that annuities were grossly unfair for those who happened to retire at a time when the market was taking a dip? What would he regard as “fairness” in the requirement that he will put in regulations?
Guy Opperman
Having been a 20-year lawyer, whose last client was a very famous Mr Ed Balls—I had to represent him when he was Secretary of State for Children, Schools and Families, five weeks before the 2010 general election—I am loth to start defining fairness, as a Government Minister, specifically because of the problem that has been identified.
I can say that we are attempting to ensure that members are treated fairly, and that has been part of the central thrust of our work on CDCs from the outset. We have learned from the problems experienced by the Dutch model, which allows schemes to make different benefit adjustments to different groups of members. That transferred contributions from savers to pensioners. The UK system will not work in that way. We intend that regulations under clause 18 will require CDC schemes rules to contain provisions so that there is no difference in treatment between different cohorts or age groups of scheme members when calculating and adjusting benefits. If the scheme design does not do that, it will not be authorised. That goes to the whole proposal under the supervisory regime and the submission.
Further—we will come to the word “bespoke” later in our consideration of the Bill—this is an opportunity for individual schemes. The examples have been given of a small care home scheme coming together, and of the vast might of Royal Mail. Clearly, those are very different organisations. I hope that the regulator will look at them in slightly different ways with an overarching code of principles that allows it to permit such a scheme to go ahead. I will resist the hon. Lady’s kind invitation to provide the exact definition that, we submit, would be one of the problems with clause 27(3).
Ms Eagle
We are here to tease out what the Government mean in the Bill, ahead of the unamendable regulations that have not yet been written. I hope that the Minister will indulge our temerity in using the Bill Committee to ask some relevant questions.
What the Minister said earlier about the Dutch schemes is correct. By reducing the available pensions, some choices were made between existing pensioners and those who were saving. His tone suggested that he judged that to be unfair. He states that he wants to achieve fairness between cohorts in CDCs, but how will that be done in reality?
Guy Opperman
I am invited to give a view on the future consultations on the points that the hon. Lady raises. The term “fairness” can be open to interpretation and can mean different things to different people. We envisage that regulations will clearly set out the principles and processes that schemes should follow to ensure that all types of members in CDC schemes are treated the same, where appropriate. Setting the requirement in regulations will give us the opportunity to consult on the approach that is to be taken. I respectfully suggest that rather than defining that in the Bill, the appropriate way forward is to consult, and to use all the opportunities that consultation entails for submissions on what that should look like, so that detailed regulations can then be taken forward.
Guy Opperman
I will give way once more, but I am not sure I can improve on the answer I have already given.
Guy Opperman
No; I can merely repeat the answer I have just given, which is that the regulations under clause 18 will require schemes to contain provisions so that there is no difference in treatment between different cohorts or age groups of scheme members when calculating and adjusting benefits. If the scheme design does not do that, it will not be authorised.
I will try to expand on that and give a better answer. There is a two-phase process. In the first phase, a company must come forward to the regulator and seek permission to go down the CDC route; that goes back to the way in which the company and the employees work. A separate set of regulations will then be the framework on which that is judged. I suggest that this is specific to individual companies, because fairness will be different for different organisations and they will be treated in different ways. There is a supervisory regime that must be gone through, and there will be a consultation on regulations regarding how it will be administered. For the present purposes, that is the best I can give to the hon. Lady.
I will now address amendment 25, which is about the actions of the regulator in relation to diversity considerations, taking into account the recruitment of the trustee board. This issue was raised in the other place as a point of debate. The Pensions Regulator is part of an ongoing discussion, and in February this year it launched an assessment of the appropriate way forward, looking at trustee board diversity across all schemes. It plans to set up an industry working group to bring together the wealth of available material and experience to help pension schemes to improve the diversity of scheme boards. I suggest it would be premature to pre-empt the outcome of the regulator’s work in this area. It has indicated to me, unofficially, that it will respond by Christmas. It is certainly the case that this Government has brought forward, on a cross-party supported basis, environmental, social and governance regulations in respect of investment. We would certainly hope that organisations that treat their investments with due account to social and governance matters would also take an appropriate way forward in that respect.
Seema Malhotra
It is a pleasure to respond to the Minister’s comments. I thank him for laying out the Government’s thinking on the clauses and amendments in this group. I will speak to Government amendment 6 and briefly to amendment 25, tabled by my right hon. Friend the Member for East Ham.
I thank the Minister again for his speech and the arguments that he has laid out for seeking to remove the amendment tabled by the noble Lord Sharkey and cross-party colleagues in the other place, which was agreed by peers in June. The Minister commented that, in his view, some of the concerns could be addressed by the implementation of clause 18. I want to come back to why I am concerned that may not go far enough; perhaps this will be an issue of ongoing debate as the Bill proceeds, and in regulations.
The amendment included by those in the other place was very considered. It spoke about
“the requirement that trustees make an assessment of the extent to which the scheme is operating in a manner fair to all members”.
I believe that is the additional wording in the Bill. It is a very considered amendment, which could only be useful in keeping on the agenda of trustees the important analysis that should take place in relation to decision-making—to be sure about the best possible input and considerations in relation to the performance of the scheme for all its members.
I alluded in my opening remarks to the considerable insecurity that we face as a nation, exacerbated by the impact of covid-19 and its disproportionate impact on different groups and different generations, in terms of the economy and levels of employment and therefore saving into pension schemes. People’s personal finances are likely to be under great strain in the coming years. Not only is there that insecurity, but it is increasingly difficult to encourage young people to save for retirement, with all the other cost pressures in life—paying off debts, for example, or the fact that, at the moment, the average age at which they will purchase their own home is around 34. There are considerable pressures on the personal finances of the next generations, as they plan ahead for their lives.
Thinking about our institutions and how we continue to consider and embed intergenerational fairness should be on Parliament’s radar in all our work. In that context, we see unprecedented public policy challenges in ensuring fairness between different groups in society—from those in hard-hit industries, such as aviation and hospitality, to those affected by the way education is being delivered in the times in which we are living, which could continue beyond the next few months into the next few years, with all that uncertainty. We have also seen that black, Asian and minority ethnic communities have been hit harder by the health and economic impacts of this terrible virus. We can look at income today, but we are really talking about income tomorrow, and the impact on tomorrow of savings today.
It is incumbent on the Government to think about fairness between generations, and how we can stop young people bearing the brunt of the uncertainty and hardship caused by the economic havoc that we are experiencing right now. The impact on them could go unchecked in the medium and longer term. Concern about intergenerational fairness was raised by many respondents to the Government’s consultation on the Bill’s provisions.
Clause 27, as amended in the other place, sought to deal with some of those concerns. It effectively acknowledges that there may be a divergence in interests between different cohorts or sets of members in CDC schemes. Importantly, it does not compel any particular kind of action, but requires trustees to consider fairness and assess the extent to which the scheme is fair to all members. To Opposition Members, that is a very sensible suggestion, and we struggle to understand why it should be controversial for the Government.
I appreciate that the Minister outlined some comments from the CWU and others about the interpretation. He also mentioned treating people in the same way and his interpretation of the current wording of clause 18, which I was just reviewing. If there are different considerations in relation to levels of savings, other ways of joining a scheme or different circumstances, it may be necessary to look differently at different cohorts. Treating people fairly may not always mean thinking of them as the same. When we are thinking about fairness, we may need to be a bit more nuanced in our consideration of different needs and circumstances, and the potential impact of a decision on all cohorts.
Perhaps a different way of interpreting the amendment that was made in the other place would be to see it as enhancing the intention behind clause 18. I repeat that the amendment did not compel any particular kind of action, but made it more explicit what trustees should consider. Baroness Stedman-Scott, the Parliamentary Under-Secretary, said in the other place:
“I welcome the sentiment behind the proposed amendment; it is something to which we want to give further consideration. We need to give careful thought to how such reporting might work in practice and would want to work with trustees, administrators and the regulator to ensure that any such requirement is proportionate, appropriate and clear. We would also want to consult on any such approach to make sure that it is effective. I reassure all noble Lords that we will give this matter careful consideration. Should we need to bring forward such a requirement in regulations, we already have sufficient powers in existing legislation to require schemes to report on fairness in CDC schemes if warranted.”—[Official Report, House of Lords, 30 June 2020; Vol. 804, c. 605.]
I hope that the Minister will continue to keep this issue under review, because we think it is very important for the sustainability of fairness and confidence in schemes. The very considered wording that was proposed and passed in the other place could help the Government in securing the intended outcomes that he described as being behind clause 18. Perhaps he can provide more detail on his plans to incentivise trustees to assess and report on the extent to which CDC schemes are operating in a manner that is fair to all.
My right hon. Friend the Member for East Ham may make a few comments on amendment 25, which is intended to require pension schemes to send information on the diversity of the trustee board to the pensions regulator. We believe in the value of this amendment, which is also supported by other colleagues—the SNP in particular. It is important to ensure that there is a diversity of voices in decision making. The debate about diversity on public and private boards comes in cycles. Diversity on public boards was considered under the last Labour Government, with quotas for diversity in recruitment. This is not a party political matter; a lot of research shows that diversity in decision making leads to better and safer sustained outcomes.
When looking at public funds, for example, the diversity of needs should be understood at the decision-making table. We do not need to rehearse the arguments for ensuring that different voices are represented at decision-making tables, whether that relates to gender, those with disabilities or those from particular minority communities.
The same is true of boards in the private sector. Research undertaken by business schools shows that diversity on decision-making boards has often led to considerably better returns on investment, and indeed shareholder returns. There is no sustained, credible argument that not having diversity on boards leads to better business outcomes.
I do not understand why this would not be an important consideration. Amendment 25 simply says that pension schemes should send information on the diversity of the trustee board to the Pensions Regulator. I am sure my right hon. Friend the Member for East Ham will share more information about how trustee boards are less diverse than other boards. That cannot be right for boards that have an increasingly important role in decisions about funds and investments, and about inclusivity and fairness.
This is not only an important consideration in terms of social justice; it is about the performance of the schemes. It is about recognising the importance of having diverse voices and voices that are representative of those within the schemes and those who may benefit from the schemes in the future. This is a matter of obvious importance that should not raise concerns, and it should be included in the Bill.
Stephen Timms
I apologise for raising clause 47 in the previous debate; I probably should have waited until now. I am glad we had that debate and I welcome the Minister’s assurance that regulations to enable multi-employer CDCs will come forward within the next year.
I will confine myself in this debate to clause 46 and amendment 25, which stands in my name on the amendment paper. I am grateful to the hon. Members for Airdrie and Shotts and for Gordon for adding their names to it, and to my hon. Friend the Member for Feltham and Heston for the important points she has just made in favour of it. I thank ShareAction for its work on this topic and for the briefing it has provided.
We are all familiar, as my hon. Friend has just reminded us, with the criticism that there is insufficient diversity among directors of FTSE 100 companies. There has been progress, but the Government targets are going to be missed and there is still a long way to go among major company boards. Some 68% of board members are male and only 7.4% are from black, Asian or minority ethnic backgrounds. That proportion falls to 3.3% in the most senior board positions: chair, chief executive and finance director. Only just over half of boards have any ethnic minority members at all.
Ms Karen Buck (Westminster North) (Lab)
I ask my right hon. Friend to confirm my understanding, which is that when we talk about diversity, we are not simply talking about it being a good thing to have a range of different experiences and backgrounds; all the evidence from across the commercial sector is that diversity increases performance because of the range of perspectives that it brings to bear.
Stephen Timms
My hon. Friend is absolutely right. She and I took part in a debate on a similar issue around 10 years ago, on the Welfare Reform Bill. She is right on this point, and that is an argument that I want to come to in a moment.
I hope the approach that I am advocating will be applied to other pension trustee boards in the UK in due course, because according to a report on diversity published in March by the Pensions and Lifetime Savings Association, which we used to call the National Association of Pension Funds, 83% of pension scheme trustees are male; 50% of chairs of trustee boards are over 60; a third of all trustees are over 60, while only 2.5% are under 30; 25% of pension schemes have trustee boards that are entirely male; and only 5% of schemes have a majority of female trustees. This is a particularly stark picture if we look at the make-up of pension scheme trustee boards at the moment.
As the Pensions and Lifetime Savings Association comments:
“It seems clear that occupational pension scheme trustee boards have generally not implemented robust diversity policies as effectively as FTSE 100 boards”.
Stephen Timms
My hon. Friend makes an important and interesting point. If we are to be confident that these new scheme trustees will make decisions that are fair to both the working members of the schemes and to pensioners, it is important that the voices of working age members should be taken fully into account in the trustee board’s decisions. She makes a good argument about why diversity, specifically in respect of age, is important in this context.
It is not as though there is no evidence that diverse trustee boards do a better job. My hon. Friend the Member for Westminster North has just reminded the Committee that there is a substantial, growing body of evidence that diverse company boards make more effective decisions than homogeneous boards. We have talked about age, but we should not forget that the gender pensions gap, which is nearly 40%, is almost twice the size of the gender pay gap. The issues here are stark.
The Pensions Regulator commented on diversity in trustee boards for the first time last year:
“Our view is that pension boards benefit from having access to a range of diverse skills, points of view and expertise as it helps to mitigate against the risk of significant knowledge gaps or the board becoming over-reliant on a particular trustee or adviser. It also supports robust discussion and effective decision making.”
Amendment 25 would require those who put boards together to report to the Pensions Regulator on steps to ensure diversity considerations are taken into account in the recruitment of the trustee board, with regard to age, gender and ethnicity. I know that the Pensions Regulator has set up an industry working group to consider this issue, as part of the consultation that the Minister referred to, and to raise the profile of it. However, to be effective, that group needs data, and this amendment would help to provide it. I think the result of the amendment would be not only greater fairness but better trustee decisions. I commend the amendment to the Committee.
Richard Thomson (Gordon) (SNP)
It is a pleasure to serve under your chairmanship, Mr Stringer.
I will confine my brief remarks to amendments 6 and 25. I listened carefully and with interest to what the Minister said about the rationale for trying to withdraw clause 27 from the Bill. I agree that with him that in trying to come up with a legal definition of fairness, it will always be nebulous. There are clear difficulties around that, which is why I do not think the initial intention behind the clause was to provide absolute legal clarity.
I was reassured to a large extent by what the Minister said about the steps that would be taken to set up CDC schemes—by definition, schemes that are obviously unfair will not pass approval. The difficulty I have with that argument is that all that is being asked in clause 27 is that there is a requirement for trustees to make an assessment and nothing further. It is useful to have a process of self-challenge and continuous improvement, looking at aspects of the schemes that are directly under their control and that they can directly influence and alter. It is good to always have that consideration of whether the scheme is operating as fairly as possible for all present and future members and those taking benefits from it. My question to the Minister is, very simply, where is the harm? Even after taking on board all that he says, I still do not see the harm that lies in the Bill as it stands.
Moving on to amendment 25, I hear exactly what the Minister says about the requirement that already exists on trustees to be fit and proper people. My observation is that there are many potentially very fit and proper people who do not currently find themselves on boards, advisory committees or any of the governance structures around pensions, and who could nevertheless make a very good contribution to the running of those schemes.
Speaking from personal experience, prior to being elected as the Member for Gordon, I was a councillor in Aberdeenshire. Through that role, I was one of the Convention of Scottish Local Authorities nominees to the Scottish local government pension scheme advisory board, whose representation was equally split between employers’ representatives, of which I was one, and trade union representatives. The trade union representatives were all extraordinarily capable and represented quite accurately the diversity of the scheme members whose interests they were there to represent. In all honesty, the employers’ representatives perhaps did not represent that quite so well. I played my own part in skewing that representation.
The requirement to report back on the membership characteristics is a very useful tool in trying to understand whether all that is reasonable is being done to ensure that trustees and those in positions of governance on pension schemes are as representative as possible not just of the membership, but of the interests of the membership, and that we are giving as many people as possible the opportunity to fully skill up, participate and play the role that they can do. As things stand, we are missing out on the talents of many fit and proper people. Again, I do not see the difficulty in simply recording and reporting that information as part of the cycle of continuous improvement and self-reflection on whether we are achieving all that we seek to do.
Ms Eagle
I want to support, or enhance, the comments that have just been made by Opposition Members about the two issues that we are discussing in this group of amendments: amendment 25 on diversity, which was tabled my right hon. Friend the Member for East Ham, and the issue of intergenerational fairness and how it can be properly guaranteed in CDC schemes.
I hope the Minister will reaffirm on the record, in no uncertain terms, his agreement with the principles behind the amendment on intergenerational fairness that was made in the other place, even if he has issues with how one defines fairness in law. I have to say that, in social justice terms, we would have made very little progress in the whole of our society if we quibbled about the meaning of fairness in law. Just because it is difficult to define, it does not mean that we should not assert it or seek to bring it about.
The Minister’s response is a rather a technical answer to the principle that has been asserted by the change that their lordships made to this part of the Bill. His responses to my questions earlier did not fill me with confidence that he knew how the principle would be brought about if the amendment that their lordships put in the Bill was taken out. He simply seemed to say that it was a good thing to assert, and that it would be brought about by regulations that have not yet been written. He could not really give us any thoughts about how it might be guaranteed in the future, although he is asking us to take out an amendment that has actually been made to the Bill. He is asking us to exchange something that is really quite good and not damaging for something that is very nebulous and does not exist yet—it might do at some point in the future—in regulations that will be unamendable. We will have to take them or leave them when they come to the House, so I am slightly worried about that.
As is his wont, my right hon. Friend the Member for East Ham has zeroed in on the issue of diversity on boards and given us some shocking figures about what is happening on pension trustee boards. That ought to raise many alarm bells about potential group-think and about how the decisions made by trustee boards are not representing the interests of the many people who have pension savings in a way that we would find modern or appropriate.
Amendment 25 is a modest amendment. My right hon. Friend is asking only for the publication of information. He is not doing what I might do, which would be much more radical and would probably include all sorts of things, such as quotas and positive action, in order to make a real difference quite quickly. It is a modest amendment. If the Minister cannot accept that it is and does not have the good grace to support it, I will be rather disappointed.
Guy Opperman
I will try to address some of the issues raised. In respect of the approach of the regulator, the regulations for CDC schemes will require schemes to provide information to enable members to understand the unique risk-sharing features of CDC schemes. That will be underpinned by clause 15, which we have already debated. It requires the regulator to be satisfied that a CDC scheme has adequate systems and processes for communicating with members and others. Regulations will also require that scheme information is made available more widely to other interested parties, including employers, on a publicly available website. The practical reality is that we have learned from the Dutch model, which some argue had intergenerational fairness issues, and are producing a considerably fairer approach.
The Chair
Before I ask the Committee to reach a decision on clause 46, does the right hon. Member for East Ham wish to press amendment 25 to a vote?
Stephen Timms
I am very grateful for the support that has been expressed and for the points that the Minister has made. I take his point that there is a consultation under way. I very much hope that the regulator will decide to require information on diversity from the schemes that are set up, and that it will continue to do so as the trustee board develops. However, at this stage I will not press the amendment to a vote.
Clause 46 ordered to stand part of the Bill.
Clauses 47 and 48 ordered to stand part of the Bill.
Schedule 3 agreed to.
Clauses 49 to 51 ordered to stand part of the Bill
Clause 52
Collective money purchase benefits and schemes
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
Clauses 53 to 57 stand part.
That schedule 4 be the Fourth schedule to the Bill.
Clauses 58 to 95 stand part.
That schedule 5 be the Fifth schedule to the Bill.
Clauses 96 to 99 stand part.
That schedule 6 be the Sixth schedule to the Bill.
Clauses 100 to 102 stand part.
Guy Opperman
With respect, Mr Stringer, I propose to address all these matters together. Clauses 52 to 102 replicate the measures outlined in clauses 1 to 51 and apply them to Northern Ireland, which has a different system. This required us to replicate the measures in their entirety. In discussing clauses 1 to 51, I outlined why CDCs are the appropriate measure, and I ask the Committee to imagine that I made the same speech, at great length, in respect of clauses 52 to 102.
Seema Malhotra
I will not make any further comments. I agree with the Minister.
Question put and agreed to.
Clause 52 accordingly ordered to stand part of the Bill.
The Chair
I propose to put as a single question that clauses 53 to 57 stand part, that schedule 4 be the Fourth schedule to the Bill, that clauses 58 to 95 stand part, that schedule 5 be the Fifth schedule to the Bill, that clauses 96 to 99 stand part, that schedule 6 be the Sixth schedule to the Bill, and that clauses 100 to 102 stand part.
Stephen Timms
Would it be in order, Mr Stringer, for me to ask about clause 98 in this part of our discussion? It is the counterpart to an earlier clause and will introduce regulations to enable CDC schemes in Northern Ireland to be extended to include multi-employer schemes. Can the Minister reassure us that in Northern Ireland, as in the UK, the plan will be to introduce regulations to enable that within the coming year?
Guy Opperman
It is very hard to turn down such a great man as the right hon. Member for East Ham, and I fully understand why you have given him some latitude, Mr Stringer. The answer is that I cannot be precise. Clearly, it is a matter for the Northern Ireland Government and the various civil servants who will take the legislation forward, but we expect them to take a similar approach. If I am wrong, I will write to the right hon. Gentleman to correct the record, but that is my expectation.
Clauses 53 to 57 ordered to stand part of the Bill.
Schedule 4 agreed to.
Clauses 58 to 95 ordered to stand part of the Bill.
Schedule 5 agreed to.
Clauses 96 to 99 ordered to stand part of the Bill.
Schedule 6 agreed to.
Clauses 100 to 102 ordered to stand part of the Bill.
Clause 103
Grounds for issuing a section 38 contribution notice
Question proposed, That the clause stand part of the Bill.
Guy Opperman
I am grateful to you, Mr Stringer, and to colleagues for the progress we have made in respect of collective defined contributions. We now turn to part three of the Bill, on regulatory powers. The powers are, in broad terms, agreed, as I understand it, subject to debate on clause 107. It is entirely right that we have set those out in defined benefit and regulator consultations over many years and in the preparations for White Papers and Green Papers, and that enhanced powers will be given to the regulator on an ongoing basis. I recommend the regulations to the Committee.
Seema Malhotra
We will not be making any further comments. We support the Minister on these clauses.
Stephen Timms
This part of the Bill gives new powers to the regulator, so it is worth recapping the problems that gave rise to the need for them. Most of the thinking here came from the joint work of the former Work and Pensions Committee—I pay tribute to my predecessor as its Chair, Frank Field—and the Select Committee on Business, Innovation and Skills, after the awful problems at two firms: BHS and Carillion.
BHS had two defined-benefit pension schemes. They were in a combined surplus of £43 million when Sir Philip Green bought the company in 2000. The surplus gradually declined and the schemes fell into a combined deficit in 2006, following the period when large dividends had been paid to members of the Green family. By the time of the sale of BHS in 2015, the value of the schemes’ assets was almost £350 million short of their liabilities. As the schemes fell into deficit, the BHS board repeatedly resisted requests from the scheme trustees for increased contributions.
In 2012-13, there were negotiations over a deficit recovery plan and they concluded with a 23-year recovery plan. At the time, eight years was the median rate for a recovery plan and 95% of comparable schemes had a recovery plan of less than 17 years. The plan we got in the case of BHS was for 23 years. The payments under that plan barely covered the interest on the scheme’s deficit and so the deficit continued to grow even while that plan was being followed.
The two Select Committees concluded that the Pensions Regulator had acted too slowly. Having received the 23-year plan in September 2013, it did not send the first information request to the trustees until January 2014. The Committee added, however, that the onus for resolving problems was on Sir Philip Green.
In the case of Carillion, it left a pension liability of around £2.6 billion. The 27,000 members of Carillion’s defined-benefit pension schemes will now be paid reduced pensions by the Pension Protection Fund—one of the biggest calls ever on that fund. I agree with what the Minister said earlier about the success of the fund, which was introduced by the previous Labour Government.
Ms Eagle
I support my right hon. Friend the Member for East Ham, who has crystallised some of the dangers in private sector schemes. I do not want to add to the excoriating verdict of his predecessor Committee in the two cases mentioned, except to say that this does have an effect on the willingness of individuals to save into pension schemes. Although people might not know the detail of this behaviour and the losses it has caused to retirement income, some out there in the ether will use the lack of effective protection that has resulted from the failure both of regulation and in pursuing effectively those who engage in this kind of larceny. Individuals who may otherwise be pension savers choose not to save into a pension and regard it as a bit of a mug’s game because their money is not properly protected. They know that there are scams and that a range of people out there—from the great killer sharks who loot pension schemes, to those who do dodgy things at the margins—are causing people who were saving into pension schemes, in good faith, to lose benefits in retirement.
How will the Minister drive the Pensions Regulator to be far more proactive and effective? Later, we will come to the Bill’s measures on scamming and the even worse end of bad behaviour, but that is for a future part of the Bill. I hope the Minister can reassure us that he will insist that the regulator transforms its passive attitude into a much more aggressive one that not only actively deters but drives this appalling behaviour out of the whole of the pension scene.
Guy Opperman
I utterly endorse the speech of the right hon. Member for East Ham. I did not disagree with a single word of it. I could wax lyrical about why the Government, with the support of the Work and Pensions Committee and the special joint inquiry it set up with the Business, Innovation and Skills Committee to address BHS, have introduced this overdue legislation, which is linked to a much-enhanced regulator with a strong direction from Select Committees and the Government that there should be a much more robust approach. The new chief executive of the Pensions Regulator was appointed by the Secretary of State and me with a specific exhortation that they take a different approach.
The actions of Philip Green at BHS and the Carillion case, with which the right hon. Gentleman is extraordinarily familiar, scarred all Members of Parliament. No matter what our political party, we have all seen the impact that those cases have had on individual members of our communities. I take the point that the hon. Member for Wallasey made: these scandals involving organisations and companies that have not been sufficiently regulated, and for which the regulator has not, to be blunt, had the power, to intervene and take a different approach, have affected people’s perceptions of the sanctity and safety of their pension.
We have gone to great effort to ensure, on a cross-party basis and taking on board the various Select Committee recommendations, that we give the regulator enhanced powers. We will come to the significant reality of the criminal sanctions that clause 107 outlines. Without a shadow of a doubt, we are in the business of ensuring that callous crooks who put a pension scheme at risk are not able to function as they did in the past. I most definitely endorse every comment that was made.
Question put and agreed to.
Clause 103 accordingly ordered to stand part of the Bill.
Clauses 104 to 106 ordered to stand part of the Bill.
Clause 107
Sanctions for avoidance of employer debt etc
Neil Gray
I beg to move amendment 19, in clause 107, page 90, leave out lines 5 and 6 and insert—
“(c) The person neglected to act in accordance with their duties and responsibilities.”
This amendment and amendment 20 are intended to avoid the risk that routine behaviour by parties involved with pension schemes and others would be judged criminal, and thereby to protect professional advisers from criminal liability for carrying out their role.
The Chair
With this it will be convenient to discuss the following:
Amendment 20, in clause 107, page 91, leave out lines 3 and 4 and insert—
“(c) The person neglected to act in accordance with their duties and responsibilities.”
This amendment and amendment 19 are intended to avoid the risk that routine behaviour by parties involved with pension schemes and others would be judged criminal, and thereby to protect professional advisers from criminal liability for carrying out their role.
Clause stand part.
Clauses 108 to 116 stand part.
That schedule 7 be the Seventh schedule to the Bill.
Clause 117 stand part.
That schedule 8 be the Eighth schedule to the Bill.
Neil Gray
Amendments 19 and 20 are in my name and that of my hon. Friend the Member for Gordon, and for the reasons that other members of the Committee have outlined we support part 3 of the Bill. We are also incredibly supportive of the principles of clause 107, which introduces new criminal offences aimed at deterring occupational pension schemes, sponsoring employers or scheme trustees from engaging in wrongdoing in relation to their pension scheme. We would not table the amendments if we were not concerned, and if serious concerns had not been raised about the clause.
We think the clause will act as a strong deterrent against those who would wilfully run a scheme down, as we have seen happen in the not too distant past, and as was outlined earlier by the Chair of the Work and Pensions Committee, the right hon. Member for East Ham. However, the new criminal powers are wide-ranging and have the potential—I am sure it is unintentional—to criminalise routine behaviour by parties involved with pension schemes and those who are not directly involved at all, such as lenders and those doing business with a pension scheme’s employers. That could have damaging knock-on effects for the viability of the pension scheme, if those who dealt with it, or employers, deemed that that legal risk was intolerable.
We have been working with the Institute and Faculty of Actuaries, which the Minister previously quoted in his favour in relation to part 3 of the Bill, as it has serious misgivings about the impact that the clause could have. It suggests that a wide range of conduct has the potential to have a detrimental effect on the likelihood of scheme benefits being met, in which case schemes might fall foul of the proposed current wording of clause 107.
The Institute and Faculty of Actuaries says, for example, that such conduct might include a Government entity terminating an outsourcing contract, where the contractor has a pension scheme; an employer giving employees a pay increase; a Government increasing corporation tax or business rates; a landlord increasing rents, where the tenant has a pension scheme; trustees or a scheme actuary granting an augmentation or increase to members without additional employer contributions; or a bank refusing to lend to an employer. That view is also supported by the Pensions and Lifetime Savings Association.
Our amendments would protect professional advisers from criminal liability for carrying out their role. That could be achieved in the Bill if the duties and responsibilities of an individual were considered when determining whether a person intended to commit an offence. The amendments would clarify matters in adding the question of negligence, which we feel is the intention behind the clause, but which is not explicit. They would also make it clear that a person’s role and responsibility should be considered.
The intended effect is not to change the policy aims of the legislation—far from it—but to clarify the extent of the powers and, in doing so, protect professional advisers from criminal liability for legitimately carrying out their roles. We therefore hope that the Government will accept the amendments.
Stephen Timms
I have listened with great interest to the case that the hon. Member for Airdrie and Shotts has been making. I have also been contacted by a reputable industry body, the Pensions Management Institute, as well as the Institute and Faculty of Actuaries, which has been mentioned. They expressed alarm about the consequences of clause 107, which the hon. Gentleman has raised concerns about.
I have seen, for example, letters to the Minister from the Joint Industry Forum, which is a genuinely cross-industry group. One is dated 11 December last year, and the other is dated 9 September this year. They suggest possible changes and discussions with officials about how the difficulties could be overcome. I hope the Minister will tell us what discussions there have been since those letters, to try to resolve the problem, and what his conclusion was.
Guy Opperman
I would like to provide some reassurance on that particular point. I am acutely aware of it and have engaged at length with many different organisations. It is certainly not the intention to frustrate legitimate business activities where they are conducted in good faith. It is important, however, that where the elements of offences are met, no matter who has committed it, the Pensions Regulator should be able to respond appropriately. Any restriction of the persons would create a loophole for these people to potentially act in such a way.
The new criminal offences proposed in the Bill make it clear that an offence is committed only if the person did not have a reasonable excuse for doing the act or engaging in the course of conduct. Crucially, what is reasonable will depend, obviously, on the particular circumstances of the act, but the burden will be on the regulator to prove that the excuse was not reasonable. The regulator will be publishing specific guidance on these powers after consulting industry, but ultimately it is for the courts to decide that an offence has taken place, and, if so, the appropriate punishment.
The amendments also seek to remove the reasonable excuse defence—as set out in sections 58A and 58B—and replace it with a narrower concept of negligence. The existing defence of reasonable excuse is wider in definition than that proposed by the amendments. Therefore, the current defence provides more protection and a greater safeguard to potential targets. What is considered negligent is, in fact, specific and relies on case law—the law of tort, as I am sure the hon. Member for Airdrie and Shotts is aware—therefore introducing the concept of negligence would not help individuals to determine if what they were doing would be deemed negligent.
Stephen Timms
I have a real worry about this. Is the Minster saying that, for example, if a trade union successfully called for a higher pay rise than was initially offered, the company subsequently failed and there was a problem with the pension scheme, that the trade union would have to say that it had a reasonable excuse for pressing its pay demand? That seems a strange arrangement for us to be entering into.
Guy Opperman
It is for the regulator to show that that was not a reasonable approach. The burden is on the regulator to bring the offence and to prove it. I will choose my words carefully because this is subject to further regulation and consultation by the regulator, but it is certainly not the case that this is to catch everybody in how they conduct their normal business. However, there has to be a capability to identify and then prosecute and bring action against all persons, if they are found to have committed an offence without reasonable excuse. The ask is to narrow down the scope of the offence. We have just had a debate about circumstances where people have potentially committed things in the past.
Neil Gray
I understand the Minister’s riposte, but there are two points here. First, the amendment covers reasonable excuse by allowing consideration to be given to the person’s role in the trust. For instance, in a trade union, to take the argument of the Chair of the Select Committee, consideration would be given to the person’s role.
Secondly, the Minister is asking us to wait until the Pensions Regulator has consulted and says how it thinks it should deal with the matter, but by that point it will be too late to ensure that we have got this measure right. I hope that the Minister looks again at this point and provides better comfort to the likes of the Institute and Faculty of Actuaries, which has a very broad base of professional expertise, and which suggested the amendments. I hope for a more favourable response from the Minister.
Guy Opperman
I am happy to write to the hon. Gentleman and set out the position in more detail. I come back to the simple point. If a trade union has a reasonable excuse for asking for a pay rise for its members, given their circumstances in an organisation, there is no reason why it should have any concern whatsoever. The starting point is whether someone has a reasonable excuse to progress a particular thing. If it is clearly part of normal business activities, I would not anticipate a problem.
Stephen Timms
I wonder whether the Minister would agree that it does seem very odd that a trade union making a legitimate pay claim might have to worry about whether it is committing a criminal offence because of some future damage to the pension scheme. I am very surprised that the Minister is putting in place measures that would have that effect.
Guy Opperman
This is in the context of the offence of avoidance of employer debt. We start with the very eloquent exposition that the hon. Member for Airdrie and Shotts gave on where employer debt arises and contributions are not made to pension schemes. One has to then look at the individuals and their approach. I do not believe that including a reasonable excuse defence will in any way hold back normal, traditional business activity. I can give that reassurance: traditional business activity would clearly include union work. This is clearly an issue that the regulator is very conscious of. On the one hand, we want a more robust approach. On the other hand, we want to ensure that normal business activity goes ahead. I believe that this is the appropriate way forward.
Neil Gray
I cannot say that I am wholly satisfied with the Minister’s explanation. The two amendments would narrow and focus the intention of the clause and ensure that protection is given to people who are legitimately carrying out their duties to the pension scheme and who have related business or commercial interests, and, indeed, Government bodies that interact with employers or a scheme. I therefore intend to divide the Committee.
Question put, That the amendment be made.
Pension Schemes Bill [ Lords ] (Second sitting)
Tuesday 3rd November 2020
(3 years, 5 months ago)
Public Bill CommitteesRead Full debate Pension Schemes Act 2021 View all Pension Schemes Act 2021 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 3 November 2020 - (3 Nov 2020)
The Committee divided: - Ayes: 9 / Noes: 7 - Question accordingly agreed to.
The Committee divided: - Ayes: 2 / Noes: 9 - Question accordingly negatived.
The Committee divided: - Ayes: 7 / Noes: 9 - Question accordingly negatived.
The Committee divided: - Ayes: 7 / Noes: 9 - Question accordingly negatived.
The Committee divided: - Ayes: 7 / Noes: 9 - Question accordingly negatived.
The Committee divided: - Ayes: 7 / Noes: 9 - Question accordingly negatived.
The Committee divided: - Ayes: 9 / Noes: 7 - Question accordingly agreed to.
The Chair
Before we resume our scrutiny, I remind Members to maintain social distancing. Hansard colleagues would be grateful if Members could email their speaking notes to hansardnotes@parliament.uk.
I understand that there was some uncertainty about the effect of the grouping of amendments with clauses 107 to 117 stand part. I have therefore decided to exercise the Chair’s right to amend groupings, and I am grateful to the Minister for his flexibility. Once we have disposed of amendment 20, I will allow a debate on clause 107 stand part, with which it will be convenient to debate clauses 108 to 116, schedule 7, clause 117 and schedule 8. Mr Gray, do you wish to move amendment 20?
The Chair
The amendment is not moved.
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
Clauses 108 to 116 stand part.
That schedule 7 be the Seventh schedule to the Bill.
Clause 117 stand part.
That schedule 8 be the Eighth schedule to the Bill.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
I am grateful to be able to make some comments about clause 107. This morning’s debate gave us the opportunity to put on the record some of our thoughts and to acknowledge our support for part 3 of the Bill. There has been some debate, and I seek some further assurances from the Minister.
On the role of the Pensions Regulator, we support strengthening the existing sanctions regime with the introduction of new criminal offences and higher penalties for wrongdoing. The pensions landscape has been troubled in recent years by scandals, including the BHS and Carillion scandals, which have had catastrophic consequences for the scheme members involved. My right hon. Friend the Member for East Ham and my hon. Friend the Member for Wallasey also made that point. The Minister made the important remark that callous crooks who put at risk other people’s pensions cannot be allowed to get away with it.
It is right that those who intentionally or knowingly mishandle pension schemes or endanger workers’ pensions face severe penalties, which is why we wholeheartedly support the relevant provisions in the Bill. The only note of concern is the scope of the provisions, and I refer to the very helpful and instructive debates in the other place on that issue. We are firm in the view that the offence must apply to unscrupulous employers or directors of companies, but there is fear that it is so wide in scope that pretty much anyone involved in the management of a pension scheme could be exposed to sanctions, including third parties such as advisers, banks and even trade unions. Colleagues from the SNP have made some of those points effectively.
Government representatives have assured us that the courts will have the necessary discretion to ensure that only those who have genuinely been involved in wrongdoing will be caught by the new offences, but I note that pensions lawyers have realised similar concerns to those that we are raising today. It would be helpful to have further confirmation, following the Minister’s comments this morning, of whether there are further plans to review whether the offences work as intended or whether there are any other unforeseen consequences.
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
Welcome to the Committee, Mr Robertson. We hope that we will be well behaved under your chairmanship.
I take the hon. Lady’s points on board, and I will repeat, as if I said them all, the comments that I made in respect of amendment 20. I stress that subsection (2)(c) sets out a complete defence to any particular assertion of wrongdoing, namely the
“reasonable excuse for doing the act or engaging in the course of conduct”.
The hon. Lady talks about the future. The regulator, who has rightly been much talked about today, is very mindful of the debates in Parliament and of what is said in this place and the other place. I have discussed the ongoing regulation, and the fact that we are going to have to introduce further regulation on these particular clauses and set out the guidance in more detail. I hope that will reassure her that the comments have been taken onboard and that we are not using a sledgehammer to crack a nut.
We all accept that there are grave and serious incidents, such as those that happened with BHS, Carillion and others, but we also want to ensure that the pensions system functions in a fair way. The hon. Lady will also be aware that, as always, all powers are kept under review. It is certainly my hope that we will introduce another pensions Bill before too long. As with any matter, were there to be any disagreement about the implementation, we can always revisit that.
Neil Gray
Obviously we have missed out on the amendments tabled alongside the Institute and Faculty of Actuaries. Between now and Report, will the Minister commit to discussing with some of those stakeholders, such as the IFoA, and with us, to lay out how he can allay the fears of stakeholders, if he cannot allay ours?
Guy Opperman
As always, I am delighted to discuss with anybody. There is no doubt that we have done huge amounts of discussion and engagement already. My approach would normally be to set out in writing, as a preliminary, what I feel the position is and how we can provide the assurances, and discuss them off the back of that. At any stage, any parliamentarian is perfectly entitled to engage with the regulator and discuss their concerns, because it will be for the regulator to issue the guidance following Parliament passing the Act. I am sure that we can address the point being made.
Question put and agreed to.
Clause 107 accordingly ordered to stand part of the Bill.
Clauses 108 to 116 agreed to.
Schedule 7 agreed to.
Clause 117 ordered to stand part of the Bill.
Schedule 8 agreed to.
Clause 118
Qualifying pensions dashboard service
Guy Opperman
I beg to move amendment 7, in clause 118, page 104, leave out lines 20 to 22.
This amendment would remove a subsection which requires regulations under inserted section 238A of the Pensions Act 2004 to include a requirement excluding facilities for engaging in financial transaction activities from a qualifying pensions dashboard service.
Mr Robertson, may I address Opposition amendments 1, 2, 15, 14, 4 and 5 at the same time, on the strict understanding that, of course, individual votes will occur as and when needed?
The Chair
Is that agreed? Yes. Therefore, with this it will be convenient to discuss the following:
Amendment 1, in clause 118, page 104, line 41, at end insert—
“(5A) In subsection (5)(b), the “state pension information” to be prescribed must include—
(a) a forecast of the individual’s future state pension entitlement,
(b) information relating to the individual’s forecasted total income through the State Pension in the ten years following their 60th birthday,
(c) information relating to the individual’s estimated total income through the State Pension in the ten years following their 60th birthday, had the pensionable age for men and women not been amended under the Pensions Act 2011,
(d) a statement of the difference between the forecasts in (5A)(b) and (5A)(c).”
This amendment seeks to require the provision through the pensions dashboard service of information relating to the effect on the state pension income expected by those affected by changes to the timetable for equalisation of the state pension age made by the Pensions Act 2011.
Amendment 2, in clause 118, page 104, line 41, at end insert—
“(5A) In subsection (5)(b), the “state pension information” to be prescribed must include——
(a) a forecast of the individual’s future state pension entitlement,
(b) an estimate of what the individual’s future state pension entitlement would have been if the “triple lock” had not been implemented in 2011/2012 and that entitlement had instead increased in line with the minimum amount which could have been provided for each year in draft orders laid before Parliament under section 150A of the Social Security Administration Act 1992,
(c) a statement of the difference between the forecasts in (5A)(a) and (5A)(b).
(5B) In subsection (5A), “triple lock” means the policy of uprating the basic State Pension, the additional State Pension and the new State Pension by the highest of—
(a) the increase in average earnings,
(b) the Consumer Prices Index (CPI), or
(c) 2.5%.”
This amendment seeks to require the provision through the pensions dashboard service of information relating to the effect of the “triple lock” on state pension forecasts.
Amendment 15, in clause 118, page 104, line 41, at end insert—
“(5A) In subsection (5)(b), the “state pension information” to be prescribed must include the individual’s State Pension age and any changes to State Pension age affecting that person made under the Pension Act 1995 or any subsequent legislation.”
This amendment would ensure that an individual’s State Pension age (and any recent changes to that age) are clearly displayed on the dashboard.
Amendment 14, in clause 118, page 104, line 41, at end insert—
“(5A) Requirements prescribed under subsection (2) must include a requirement to provide information relating to the performance of pension schemes against environmental, social and corporate governance targets.”
This amendment would add information on environmental, social and corporate governance targets to the list of information displayed on the dashboard.
Amendment 4, in clause 118, page 105, line 20, at end insert—
“(6A) A requirement under subsection (6)(d) may require the provider of a pensions dashboard service to ensure that the needs of people in vulnerable circumstances, including but not exclusively—
(a) persons who suffer long-term sickness or disability,
(b) carers,
(c) persons on low incomes, and
(d) recipients of benefits,
are met and that resources are allocated in such a way as to allow specially trained advisers and guidance to be made available to them.”
This amendment would require that specially trained advisers and guidance are made available to people in vulnerable circumstances and would provide an indicative list of what vulnerable circumstances should include.
Amendment 5, in clause 118, page 105, line 20, at end insert—
“(6A) A requirement under subsection (6)(d) may require the provider of a pensions dashboard service to communicate to an individual using the dashboard the difference between—
(a) provision of information,
(b) provision of guidance, and
(c) provision of advice.”
This amendment would require the provider of a pensions dashboard service to ensure that users are made aware of the differences between “information”, “guidance” and “advice”.
Guy Opperman
I am delighted to speak to clause 118, which I accept is a matter for debate. It relates to the pensions dashboard, which has been the product of a huge amount of work thus far to get it to this stage. The clause gives the Secretary of State legislative powers in relation to England, Wales and Scotland to create a set of requirements that pensions dashboard providers must meet in order to be considered a qualifying pensions dashboard service.
Only qualifying pensions dashboard services will be allowed access the approved infrastructure, providing pensions information to consumers. These requirements may include what information is provided and the circumstances in which it must be provided. They may also include requirements relating to data security, identity verification and standards, ensuring that the information shown to the individual is accurate, secure and consistent across all dashboard providers. This information may cover state, occupational and personal pensions. The pensions dashboard will bring together an individual’s savings from multiple pensions, including their state pension, online and in one place. Clause 118 defines the service itself and provides powers to set the standards required of a qualifying dashboard service.
The provisions are complicated and extensive, but I will try to explain how data flows will be dealt with, because we have frequently been asked, particularly on Second Reading, how data will move through the pensions dashboard infrastructure and how an individual can access that data. The first step will be an individual logging on to their choice of dashboard. If that is the first time they have used the dashboard, the next step will be to verify their identity. Once their identity has been verified, information will pass from the pension finder service to connected pension schemes, asking them to match the individual’s information. If the pension scheme finds a match, it will confirm that to the pension finder service and then respond to the individual via their chosen dashboard that it holds some data for them. When the individual next logs on to their dashboard, the information from the pension scheme will be viewable by the individual.
The best analogy for how that information becomes viewable on a dashboard is probably the cashpoint idea. Whatever cashpoint individuals use, they can view the current balance of their account on the screen. However, the operator of the cashpoint is not able to see that information, as it is encrypted and only unlocked in combination with one’s cash card and a personal identification number. Dashboards will operate in a similar way. The information will be shown on screen but will not be viewable or collected by the organisation delivering the dashboard. The decryption of the data will happen only after an individual has logged in and asked to have the data presented. I should note that an individual can give delegated access to their information to an independent financial adviser or under Money and Pensions Service guidelines. This delegated access is time-limited and can be revoked at any point.
That is a broad outline of the provisions and what we are trying to do with the dashboard. Self-evidently, this project has been many years in the making. It is supported by industry and by consumer groups across the country. It is also a logistical challenge on an epic level, with nearly 40,000 schemes having to operate and provide data in a suitable format so that it can all be accessed. It is with regret that the Government are having to legislate to force providers to provide the data. I would have preferred the industry to have done this itself, but it is unquestionably the case that we now have to compel it to provide the data. It is quite clear that we also have to regulate this process.
Progress of this particular part of the legislation includes the amendment to clause 118, inserted by their lordships, in respect of financial transactions. The Government resist this amendment and will seek to overturn it. There are many reasons why this is not an appropriate way forward, but we strongly believe that the fundamental reason is that prescribing and preventing financial transactions both misunderstands what a dashboard is intended to be and would place undue restrictions on what it can do. While a dashboard will initially provide a simple find-and-view service, we expect dashboard functionality to evolve over time. We want to allow for innovations that could give members more control over their pension savings, which is why it is vital that we do not, at this stage, limit the future capabilities of the system. That applies to a number of different amendments that we will deal with.
New regulations on activity will ensure that dashboard providers will be subject to a robust regime, including Financial Conduct Authority authorisation and supervision. We want to make dashboards easily accessible for members of different ages and with different priorities and preferences for viewing their pension savings.
The practical reality is that if financial transactions were prevented, the idea of consolidation, for example, would be exceptionally hard to progress with. All aspects of greater understanding of a larger or lower contribution, and any aspect that required any financial aspect to it, would be prevented. It is certainly not something that we would support at this stage.
Harriett Baldwin (West Worcestershire) (Con)
The Minster is making a powerful case for rejecting the approach that was taken in the other place. Could he elaborate on the costs of this platform, and who ultimately will pay for building a pensions dashboard?
Guy Opperman
The costs are substantial. There are a variety of ways in which this is being paid for, but first and foremost, it will not be paid for by the individual. Our constituents will be able to access the dashboard, and the facility that we are creating, for free. My hon. Friend will have to forgive me for giving a generalised answer, because I cannot give the pounds, shillings and pence now, but I will be happy to do so in writing before Report.
The cost is fundamentally met in respect of the work on state pension; there was a budget announcement many years ago for the expensive work that is required by Her Majesty’s Revenue and Customs to provide the state pension provision as part of the dashboard, as it is our intention that state pensions will be part of this from day one. I believe that £5 million was set aside to pay for that part.
There is ongoing payment for the Money and Pensions Service, which is through a variety of means. Some is from Treasury funding, but it is paid for primarily through the pension levy, which pays for a variety of things in the usual way, from the regulator to the Pension Protection Fund and the Money and Pensions Service. Ultimately, the cost is borne by individual schemes and members, but not by the individual constituent accessing the dashboard—it is not expected in any way that there should be a cost for doing that.
It is clearly our intention and desire that a commercial dashboard should be available. That leads me to a point that I will come back to in more detail: do we go to where the customer is, or do we make the customer come to us? In this particular example, we strongly believe that we should go to where the customer is.
It is entirely right that we design a system with a data portal that could in no way be utilised for bad purposes, but that could be accessed by an individual, whether they are presently with Aviva, PensionBee or another organisation. They can then work with a particular independent financial advisor—whether my hon. Friend the Member for Delyn in a former life or other independent financial advisors—who would have to be specifically approved to do this work. They already have a relationship with those people and they are already in the position of having an understanding. If we do not have that commercial capability, we will lose out on a significant chunk of the market and there will be a significant deficit in the ability of what we all believe is a great idea to have a practical effect. That is the fundamental point in respect of costs. I am happy to give my hon. Friend the Member for West Worcestershire a detailed breakdown before Report and Third Reading.
I may return to Government amendment 7 but I shall first try to address amendments 1, 2 and 15 on the state pension. I am certain that I will be invited to comment on a variety of matters relating to the women’s state pension increase, but my only comment at the outset is that it is not the Government’s intention to amend the Pensions Acts of 1995, 2007, 2008 or 2011. We intend that the state pension will be part of the original provision of the dashboard. We are working with HMRC, which is responsible for that information, so that we can identify the date of state pension age and the amount that people might be expected to receive at the present stage. We do not intend to take into account what their entitlement would have been with or without the amendments to the 2011Act, as proposed in amendment 1, or what it would have been with or without the benefit of the triple lock, as proposed in amendment 2, or in respect of the 1995 Act, as proposed in amendment 15. I am sure that I will be tempted to cast a view on the future of the triple lock, but I am delighted to say that that is a matter for the Chancellor. As we discussed in the Social Security (Up-rating of Benefits) Bill, the decision has been made in respect of the upcoming year of 2021-22, and that is the extent of the matter at present.
Amendment 14 concerns the extent to which the dashboard should add information on environmental, social and corporate governance matters. I am delighted to have been the Minister who brought ESG into part of this country’s pensions system and drove forward change in the pension and asset management systems, with due credit to Chris Woolard and the Financial Conduct Authority for changing their original views and coming on board with our timetable. I am utterly in support of the principle of ESG and of ensuring that individuals have as much information, on a long-term basis, about what their pension fund is being invested in. However, I shall resist the amendment for several reasons.
First, we intend that the dashboard should start with simple information. We want to ensure that the information available in the dashboard service is easily understood by consumers and that the impact on user behaviour is considered. Trustees must have a policy on ESG and must disclose it in any event, but we do not think that the provision of that information should be prescribed in the Bill, and nor do I want to prejudice the pensions dashboard programme consultation, which began earlier this year, about what information could be shown. The consultation specifically includes signposting users to schemes’ statements of investment principles and implementation documentation, including information on schemes’ ESG policies and work. The programme will publish an initial version of a proposal for data standards by the end of the year, and we will respond in respect of what specific information will flow from that at a later stage.
Amendments 4 and 5 in the name of the hon. Member for Airdrie and Shotts deal with people in vulnerable circumstances. Although I applaud the principles behind them, the matter is slightly more complicated than the amendments necessarily make it appear. I am happy to explain in more detail at a later stage, but it starts with the fundamental principle that the Money and Pensions Service, which oversees the dashboard programme, has a statutory objective to ensure that information and guidance is available to those most in need of it, bearing in mind in particular the needs of people in vulnerable circumstances. It must have regard to that in the development of pensions dashboards.
The pensions dashboard programme usability working group—a catchy title, I accept—will explore how best to help users to understand the information being presented to them and where they can get more help, including those who are most vulnerable. That could include making recommendations about mandatory signposting to guidance and/or advice. Money and Pensions Service guiders are trained to recognise that some customers may need additional or different types of help.
The Financial Conduct Authority will seek to introduce a new regulated activity and amend the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, consulting on rules relating to that activity. That may also include a requirement to signpost users to guidance and to provide information about how to find regulated financial advice. We believe that the best way to do that is through the FCA rules and not in the Bill.
I will make two other points on the vulnerability issue. The Department for Work and Pensions, the FCA and the Money and Pensions Service all have a duty to comply with the public sector equality duty in section 149 of the Equality Act 2010. Although dashboard providers will be regulated, there has also been a recent consultation on guidance on the fair treatment of vulnerable consumers, and that will be responded to in guidance published by the FCA either later this year or in early 2021.
My final comment on the proposals on vulnerable individuals would be on the potential difficulty where, as I explained a dashboard is merely a find-and-view service. Were the amendments taken to their ultimate conclusion, they would require a pension scheme to make further inquiry of the individual themselves before the release of the information. I fear that the practical reality of that in a find-and-view service of this nature is neither appropriate nor in the best interests of all parties. I entirely accept the principle behind the amendments, but I believe that we may be able to navigate the problem in an alternative way.
Seema Malhotra
I am grateful to have the opportunity to respond to the Minister, and I thank him for those detailed remarks. I wish to speak against amendment 7, and I will lay out my arguments, and to speak to our amendments 15 and 14 and the reasons why we tabled them. I do not intend to push them to a vote, but we will listen to what the Minister has to say.
It is disappointing to see the Government row back on the positive progress on commercial transactions that was made in the Lords. A serious concern of ours, which was raised in the other place, is that the introduction of commercial dashboards paired with the ability to engage in commercial transaction activities would make it easier for savers to be encouraged into detrimental pensions decisions and inappropriate products.
Guy Opperman
I am certain that the hon. Lady does not want to make an issue of this, but does she not accept that it was the Conservative Government who sat down over Christmas and amended the Bill specifically to address TCFD recommendations and to include climate change in the Bill? We added a new clause on climate change. I totally accept that Labour colleagues worked on a cross-party basis to do that, but it would be wrong to say anything other than that the Government started the process to ensure that climate change was in the Bill and that the TCFD was part of it, and we are doing a consultation on the implications of it. I am sure she does not want to mislead the Committee on that.
Seema Malhotra
Indeed, I acknowledged in my opening remarks the Minister’s commitment to this agenda. He has also acknowledged Labour’s working with the Government on this agenda, but also helping to secure the amendments that have led to the new subsections in the Bill. The amendments require trustees and managers to take into account the Paris agreement and domestic climate targets in the overall governance, and disclosure of climate change risk and opportunities. It is a credit to the way in which we have proceeded on this agenda that for the first time climate change has featured in domestic pensions legislation.
The amendment would build on the commitments by providing information relating to the scheme’s performance against environmental, social, and corporate governance targets, adding to the list of information on the dashboard and empowering individuals to better understand the role their savings play in tackling climate change and achieving other social and environmental goals. We are aware that the Government intend to keep the dashboard simple at first—indeed, the Minister commented on that in his opening remarks—but we note that Baroness Stedman-Scott said in the other place:
“We are very interested in how dashboards can support and increase engagement, including whether information on areas such as ESG, which trustees are required to cover as part of their disclosure obligations, may be incorporated into the dashboards. This is to be informed by user testing and may evolve over time.”—[Official Report, House of Lords, 26 February 2020; Vol. 802, c. GC163.]
I know that the Minister has had further conversations on this issue. He also referred to the ongoing consultation about what could be on the dashboard. However, I hope that he will be able to confirm that that is something he hopes to implement as the dashboard is developed further.
Neil Gray
It is a pleasure to serve under your chairmanship, Mr Robertson, during this important part of the Committee’s deliberations. Like the shadow Minister, Scottish National party Members are concerned about Government amendment 7. We strongly support the premise of a pensions dashboard and hope that allowing people greater access to information about their pensions will encourage informed choices that ensure long-term savings and investments that provide dignity in retirement. However, we are concerned that the Government amendments to this section of the Bill will mean that the creation of the MaPS dashboard could be a missed opportunity.
Amendment 7 is a case in point. It would allow commercial dashboards to facilitate financial transactions, which we feel is a mistake and is a big reason why we want a lead-in period before commercial dashboards become operational. We feel that the impartial information that we want the MaPS dashboard to provide should be entirely separate from transactions, at least to begin with. That position is supported by the Pensions and Lifetime Savings Association, for all the reasons outlined by the shadow Minister.
Providing digital platforms to bring together a person’s savings landscape is a huge step forward, but exposing that information to marketing and commercialisation will remove the power of the saver to access information that is presented impartially and without commercial motive and hand it to organisations that will encourage individuals to take big decisions about potentially their largest financial asset. As the shadow Minister said, it could also make people vulnerable to scammers.
The UK Government appear not to have learned from the oft-worn problems associated with pension freedoms. Customer satisfaction in Pension Wise is high, and its evaluation score published last month makes for good reading, yet only 14% of all pension pots accessed—not people who access their pots, but pots accessed—were accessed after receiving guidance from Pension Wise. The House of Commons Library report earlier this summer highlighted that, as a result of pension freedoms, more people were choosing to shift their savings from secure defined-benefit schemes to riskier defined-contribution schemes, and a large proportion of those drawing down their pension were doing so without seeking advice or guidance. That is likely to be exacerbated if commercial dashboards are allowed to contain financial transactions. We think that is really risky. Allowing financial transactions to take place on the dashboard without having first assessed and accounted for the risks is clearly a recipe for trouble, and I urge the Government to reconsider.
We want the dashboard to provide as much information as possible for savers, which is why we tabled amendments 1, 2, 4 and 5 and support amendments 14 and 15, tabled by the Labour Front Benchers. These amendments seek to add information relating to a person’s state pension to the dashboard, ensuring that the impact of policy changes can be tracked by savers. Amendment 1 would show the detriment suffered by 1950s-born women. The Bill’s scope to provide more meaningful help and support to women born in the 1950s, who have seen their state pension age increase with little or, in some cases, no notice, is extremely limited. We have been clear and consistent in our support for women born in the 1950s. We want the Government to carry out a full impact assessment of the detriment suffered by them from various changes, and to use that to inform payments to be made to them. However, these amendments are as far as the Bill’s scope allows us to go. They would give these women more information about how the state pension changes have affected them. They would also act as a strong deterrent against this type of mishandled policy change happening again.
Public dashboards should be as clever as possible, to account for complexity in individual circumstances and to more accurately project lifetime savings. That view is shared by some of those who have provided evidence to the Committee, including the Institute and Faculty of Actuaries and the Pensions and Lifetime Savings Association. Therefore, the SNP has tabled amendments to mandate specific information on the dashboard.
Rob Roberts (Delyn) (Con)
It is a pleasure to be able to speak to clause 118 and discuss the related amendments. I am delighted finally to be here. I am sure that my hon. Friend the Minister will not thank me for pointing out that it was the Budget speech in 2016 that said that we would have a fully functioning dashboard by 2019. We got there in the end, or we are getting there in the end. I am delighted that we are making progress.
It is very important for everyone to remember—I failed to do so and have caused a lot of hair pulling for the Minister and his team over the last few weeks—that the Bill seeks to lay out the foundation, the framework, for the data standards that will be adopted and is not necessarily about getting bogged down in the minutiae of what the dashboard will look like in the end and the final functionality of it. We live in an information age. The watchwords of both the Pensions Regulator and the Financial Conduct Authority for at least the last decade have been all about informed decisions. Pensions are a vital part of anyone’s life and they need to catch up with the rest of the world. We risk non-engagement from this and future generations if we cannot give them the information that they want in the manner in which they want it.
Auto-enrolment has been an amazing thing and has seen millions more people saving in pensions. We have a complacency risk coming down the line; people think that where we are with auto-enrolment is going to be sufficient to get them the retirement they dream of. We run the risk of that not necessarily always being the case, but that is another story for another day.
Auto-enrolment has led to multiple pots over many people’s working lives. How do we track those? How do we service them? How do we maximise their value? How difficult is it now for consumers to be able to look at all of those different pots and understand how they relate to each other and what that is going to mean for them at the end of the day?
I was delighted that about six weeks ago the Minister put in place a small pots working group, which will be very useful in understanding where to go in relation to small pots. There are currently 8 million or so in the UK, with the expectation that by 2035 that will have gone up to around 27 million. It is a huge issue that needs addressing. The biggest problem with small pots is their erosion over time due to the effect of charges. We definitely need to address that issue in some way.
On the amendments, I start with Government amendment 7. The ability to conduct transactions is not inherently bad and there are already safeguards in regulations. To rule out every type of transaction in primary legislation feels heavy-handed.
In Committee in the Lords, Earl Howe said:
“It is of course very important that individuals access advice and guidance before making decisions on undertaking significant pensions transactions.”—[Official Report, House of Lords, 2 March 2020; Vol. 802, c. GC207.]
I completely agree with the noble Earl. The regulations are in place around what is significant; it is the word “significant” that is key. There is no need to rule out everything in primary legislation. Why go to all the trouble of informing people about what they have got, if we do not give them any means of interacting with it?
Financial transactions could be to increase or decrease a contribution level or make a one-off lump sum payment. How empowering it would be for the consumer to be able to do that and look, in real time, at the impact of those changes on the end result. We must not restrict the ability to make any transactions; regulations around what transactions should be allowed are already there and will undoubtedly be strengthened in further regulations down the line.
Talk about people losing the safeguards around DB schemes or being moved into DC are wildly off the mark. That cannot be done now, so why on earth would anyone be able to do it just because we change from paper transactions to making transactions through the dashboard? We do not allow it now; why would we allow it in future? It is a ludicrous and scaremongering suggestion, and I do not like it.
Amendments 1, 2 and 15 are not relevant. The dashboard should show what people are going to get, not what they would have got if the rules were different or they had not changed or the Government had not changed this or that policy. It is supposed to be an accurate picture of what someone is actually going to get, at that time. Seeing multiple sets of figures, only one of which is correct and actually relevant to what they are going to get, would just cause confusion for the consumer.
Unfortunately, as many people have let out of the bag, the amendment on the state pension age and the WASPI women in particular was tabled specifically to highlight a campaign issue and the unfairness of a Government policy decision. It cannot be good law and it will create a horrible precedent, however well-meaning the amendment might be, to put such provisions in primary legislation. I hesitate to say it, but it feels a little like tabling amendments to incite dissatisfaction in previous Government policy, but I am sure that hon. Members would never seek to do that.
The Minister said in his opening remarks everything that I had written down on amendments 4 and 5. I found amendment 14 very interesting. People who are concerned with environmental, social and corporate governance targets will always seek them out, and always have done. We do not need to force that information on people who do not want it. Believe it or not, plenty of people think that their pension is something to provide them with an income in retirement, not necessarily a tool to solve the ills of society.
There are consumers who want that level of detail, and they will undoubtedly be able to select the dashboard provider that meets their needs and gives them all the information that they want, but there is no need to make that happen in primary legislation because the market will work itself out and the people who want that information will be able to access it via other providers.
Seema Malhotra
I understand that the hon. Member is concerned about the provision of information, but can he see a downside to it being there?
Rob Roberts
No, but I also do not see a downside to lots of other types of information being there, so why this type and not others? The purpose of primary legislation should not necessarily be to say all the things that should be there. Lots of things potentially should be there, but that does not mean that they have to be there, and prescribing that they must be there does not really fit in.
Seema Malhotra
I understand that, but the information is designed to assist in decision making, and may be helpful for those who are reviewing their pensions. In the context of much change across society and concern about such issues, does the hon. Member agree that that information may be helpful to those who want to base decisions on ESG information, and has no downside for those who do not?
Rob Roberts
That may be, but as I mentioned earlier, it muddies the waters. If people want to access that information, there is a slew of providers out there. If they want the one that provides the most ESG information, they will gravitate towards it. We do not need to override the general public’s ability to make an informed choice by legislating to make it happen. As I mentioned earlier, “informed choices” are the big words. The ability to go that way should be entirely left in the hands of the consumer.
As I said, the Minister mentioned everything that I wanted to on amendments 4 and 5, but I reiterate that I am very happy to see the pensions dashboard finally taking a few steps closer towards completion. Hopefully the clause will stand part of the Bill.
Ms Angela Eagle (Wallasey) (Lab)
It is a pleasure to see you in the Chair this afternoon, Mr Robertson, after the dynamic chairing from your colleague this morning; we made a lot of progress. I will make some observations about dashboards, and talk particularly about Government amendment 7, which, as colleagues know, removes the Drake amendment that was added in the other place. However, I will first comment on how potentially beneficial a good working pensions dashboard coming into existence would be for many millions of pensioners looking to plan for their retirement.
Many of us who have been involved in pensions policy making—in Opposition, in Government or both—know that the holy grails in this area are: first, to get people to think about pension saving in the first place; secondly, to get people, especially when they are younger, to think that they may ever reach retirement age, and to start planning for what their income might be when they get there; and thirdly, having established from a young age that interest in considering what their income will be when they are older and in setting money aside to ensure that they have a secure income, to ask them to navigate the current pensions landscape in the UK, which is asking an awful lot of most of our citizens, because it is extremely complicated and changes over time. We have the confluence of many different sorts of pension availability, from the much more effective DB schemes, which used to be more common but in which 10 million people still have savings, it has to be pointed out, to the evolving and developing DC and individual savings schemes.
Guy Opperman
It has been a while since I have been compared to a duck, but I know there was a compliment buried in the comments about the depth of the swimming I am doing to try to persuade the Committee. Let me be blunt about the Herculean nature of the task: there are 40,000-plus schemes to be created, with a common dataset to be agreed and then made capable, plus all of the information from state pensions. While I revere everything that the former Chancellor George Osborne did—clearly, there were many great qualities that the great man had— it was a little optimistic of him, by anybody’s interpretation, to say in 2016 that this would be produced by 2019. He also anticipated greater engagement by industry and that it would lead the way. I do not wish to have a dig at industry, but the only reason we are mandating this process is that, while we always have to add regulatory guidance, the industry did not take the opportunity it had to embrace it.
I repeat the point I have made on many occasions, both in this House and outside it, to various industry organisations: it is for the industry to prepare—this relates to the point raised by my hon. Friend the Member for West Worcestershire—its data appropriately, in such a way that it is dashboard compliant on an ongoing basis. I make the strong point that failure to do so will have consequences for the individual organisations, and will clearly have consequences for our constituents, who would not be able to access that particular data.
My hon. Friend the Member for Delyn made a fair point about the small pots problem, which the Chair of the Work and Pensions Committee and I have discussed in private and also debated in broad terms in public. Both of us remain concerned that there is a proliferation of pots, that costs and charges implications apply, as the hon. Member for Wallasey outlined, and that solutions need to be found. We are coming together—including the Work and Pensions Committee—to try to find those solutions. Clearly, one solution would involve consolidation, whether on the basis of ability to take small pots that have been eaten up by costs and charges, or on the basis that one is absolutely passionate about a particular ESG issue and wishes to consolidate around an ESG provider. All of those things would be prevented if I were to allow this amendment to continue. I have great respect for the guru of all pensions matters, Baroness Drake, who I have engaged with at length over the last couple of years. However, I believe she is mistaken in her approach to this, and I do not wish to rule out the capability for financial transactions.
If I have not been clear previously, I make it clear now—as the hon. Member for Wallasey invited me to do—that the original product of the pensions dashboard will be simple. It will be a simple find and view service that will then be built on and overlaid as time goes on, not least because not all particular providers will be on board from the word go. I could wait and wait, and then have a big bang moment whereby every single provider was ready and everything was done. Alternatively, the MaPS can start and other organisations slowly but surely come on board and the process is rolled out as it goes forward. I certainly do not believe that we should rule out the issue of financial transaction.
Guy Opperman
Let me finish the point and then I will give way. On the specific amendment inserted by their lordships, it is unclear what activities would be considered financial transactions. The advice I have been given is that the amendment is very widely drawn and would require new primary legislation before such activities could be commenced in the future. Obviously, while pension Bills are like buses—we wait for ages for one to come along and then do two in a month—I do not anticipate one coming along in a great hurry, though I hope there is another one before the close of this Parliament. However, we definitely assume that this would cover consolidation of pots, transfers between providers, and potentially the raising or lowering of one’s contributions to an individual pension. In those circumstances, it would be utterly illogical, given all the other comments that we are making about the desirability of such an approach, to rule out financial transactions.
Neil Gray
Even if I leave to one side what the Minister says about the need for amendment 7, why is he not dealing with this incrementally? Why take the risk not just of allowing commercial dashboards to happen straightaway but of allowing them to be transactional straightaway? Why not build confidence in the system among consumers with the MaPS dashboard, allow a bit of a buffer before commercial dashboards come onstream to ensure that consumers understand what they are entering into, and then, when the regulator and the Government can assess the risks of the transactional ability of the commercial dashboards, come to a point where that is allowed? Why all at the same time? It seems far too risky to me.
Guy Opperman
That is an outstanding point, which I am sure the hon. Gentleman will make in respect of clauses 119 and 122 on delay to the onset of the dashboard. Many of the points that the hon. Member for Wallasey made relate to costs and charges, which we will come to later, and to the one-year delay argument. I do not believe that it is appropriate for something that is allowable at present—any one of us could go to our individual provider—
Neil Gray
The Minister must understand the greater risk from digitisation when the full suite of people’s financial savings—their biggest financial assets—are sat there. For some people who are perhaps not as digitally savvy as others, and who might be taken in by scams, that is a huge risk. At the moment, the paper-based system is rather different.
Guy Opperman
We will come to scams and the work that the Work and Pensions Committee and the Government are trying to do to enhance the protections on an ongoing basis. It is clear that the Financial Conduct Authority regards this as a regulated activity. There will be an authorisation process for individual providers that wish to be able to do it. It will not be automatic by any stretch of the imagination. We are very mindful of this, as are the pensions dashboard working group, various other user groups and the consumer protection organisations that are part of it—from Citizens Advice, to Which? and others. They are utterly committed to ensuring that this will be a safe process. Going back to the fundamentals of the Lords amendment, I do not believe that it is in the consumer’s interests to rule out financial transactions. I certainly would not support that.
Gareth Davies (Grantham and Stamford) (Con)
Does the Minister agree that if we look around the world at where commercial transactions have been incorporated into dashboards—for example, in Israel and Denmark—we see that there have been no cases of mis-selling, so any risks spoken about in this debate are somewhat overblown, given that there is no precedent?
Guy Opperman
I am grateful to my hon. Friend for that point. That does not mean to say that we do not have a regulatory system that ensures that there are protections, but the nature of a dashboard and international examples definitely suggest that this is an empowerment and an assistance to individual consumers.
Guy Opperman
I will press on, because I am going to answer some of the points that the hon. Lady made. I am mindful that we have spent some time on this particular point and we have a lot to get through.
On matters related to the state pension and triple lock, I leave the triple lock to the Chancellor with good blessing and understanding. I will not get into a rehash of many arguments over the state pension changes made from 1995 and which continued over 13 years of Labour Government. The policy was supported by certain Labour Ministers, including in the DWP. Then, obviously, there was a change of Government and the policy was not necessarily supported. When the hon. Lady talks of the way that people have been treated by the Government, that means all Governments since 1995.
I have persistently defended the actions and the civil servants of the DWP throughout the period between 1997 and 2010. Interestingly enough, so have the courts, because we have recently had the Court of Appeal decision in the BackTo60 claim, which found comprehensively in favour of the Government—not just this Government, but previous Governments—in respect of all matters that apply, including notice.
Stephen Timms (East Ham) (Lab)
It is worth putting on the record that the worst problem was what happened with the Pensions Act 2011, as I think the then Pensions Minister, Steve Webb, has since recognised.
Guy Opperman
I am not going to comment on his capabilities. The bottom line is that that was a persistent level of policy making made by successive Governments from 1993 onwards and utterly continued by the Labour Government, who, to the best of my recollection, proceeded to raise the state pension age to 65 by 2020 in the 2007 or 2008 Act. It was then clearly increased in the 2011 Act. One can argue about why that was done. Perhaps it was a consequence of the great former Prime Minister Gordon Brown’s efforts at manhandling the economy, or perhaps there were other reasons for taking that approach. However, I make the point that I have consistently defended individual Ministers and the Department for their consistent approach to addressing something that all other western countries have done in respect of state pensions. They have all approached it in broadly the same way.
We want the dashboard, and I accept that there is a desire to have many other things on it. We want it to be a simple interface that is accessible to all and that is not overlaid by many different things. With user testing over time, it is possible that more information will be outlined, but the comparable example I give—namely, simpler statements—is appropriate and right.
Seema Malhotra
I seek clarification on the Minister’s position on ruling out and ruling in. He has said that he does not want to rule out financial transactions on the dashboard in the future, but did he also say that they would not be ruled in without primary legislation?
Secondly, the Minister said that some pension schemes may not participate. What will and what will not be compulsory? For those that might not share all the information, will there be an obligation to share some, so that somebody could look at the dashboard and have a complete scan, even if they do not have all the information, in order to know that they have pots out there?
Guy Opperman
I will deal with the first point about financial transactions. If we accepted the amendment as drafted by the House of Lords, we would not be able to proceed with financial transactions without future primary legislation. I passionately believe that, with the suitable guidance and protections that we all want, consolidation is appropriate, and that would be a financial transaction. It should definitely be permissible on an ongoing basis, arising out of information proceeded and obtained by a dashboard. It is absolutely that sort of empowerment that the dashboard will offer, and it is entirely the right thing.
Clearly, that is my view. There is a dashboard delivery organisation and the Money and Pensions Service, and a whole host of user groups are also involved. I have communicated my strong view. I certainly do not want to rule it out in the future, which is the desired effect of the amendment. The reality is that if I allow Baroness Drake’s amendment to go ahead, it would restrict the capability of the dashboard massively in the future. That is not something I am prepared to do.
I have addressed many different points. Given the time, I will pause there and let others reflect.
Question put, That the amendment be made.
Seema Malhotra
I beg to move amendment 11, in clause 119, page 108, line 20, after “scheme,” insert—
“(iva) the total cost of charges incurred for the administration of the scheme”
This amendment would add information about the total cost of charges incurred for the administration and management of occupational pension schemes to the list of information displayed on the dashboard.
The Chair
With this it will be convenient to discuss
Clause stand part.
Clause 120 stand part.
Amendment 13, in schedule 9, page 179, line 14, after “scheme,” insert—
“(iva) the total cost of charges incurred for the administration of the scheme”
This amendment would add information about the total cost of charges incurred for the administration and management of occupational pension schemes in Northern Ireland to the list of information displayed on the dashboard.
That schedule 9 be the Ninth schedule to the Bill.
Amendment 12, in clause 121, page 112, line 45, after “scheme,” insert—
“(iva) the total cost of charges incurred for the administration of the scheme”
This amendment would add information about the total cost of charges incurred for the administration and management of personal and stakeholder pension schemes to the list of information displayed on the dashboard.
Clause 121 stand part.
Seema Malhotra
I am grateful for the opportunity to speak to amendments 11, 12 and 13, all of which make the same point: that the total cost of charges incurred for the administration of the scheme should be displayed on the dashboard. We believe that this issue is important because the creation of a pensions dashboard creates a real opportunity to introduce much-needed transparency on pensions costs and charges.
Pensions charges can be very difficult to understand or to compare and the lack of transparency can lead to people paying excessive charges without realising it, eroding their hard-earned savings. Improving disclosure in this way is essential for consumers, who need to understand the risks attached to their investments. In a study by Which? carried out in 2019, 300 people were asked for their thoughts on a pensions dashboard. Some 77% said they would be likely to use one. State pension entitlement was the information that 74% of people most wanted to be included. That was followed by projections of total retirement income, 62%; current pension value, 55%; and charges, 54%. Clearly the inclusion of that type of information would be popular with dashboard users and would help people to use their pensions freedoms to protect their savings rather than fall victim to disproportionate charges.
Information about costs and charges is vital if consumers are to use dashboards to understand which pensions they could use to make additional contributions, whether any of their pensions have excessive charges and when making decisions about how to access their pensions using pensions freedoms. Research by PensionBee found that more than 70% of non-advised drawdown customers accessing their pensions paid more than 0.75% in charges, costing them £40 million to £50 million a year extra – more than £175 million since pensions freedoms were introduced. The long-term impact of high costs and charges for income drawdown can be significant and result in people being able to take less income out of their pensions or running out of money more quickly.
Transparency of charges is a particular concern because the DWP appears to have agreed with the arguments of some in the industry that putting costs and charges on the simpler annual statement would confuse people. The result is that instead of being provided with specific information about how they are paid, people would be signposted towards what could be pages and pages of information on charges. Which? has noted that an approach that believes that consumers are best served by not knowing how much they pay for pension scheme services is irreconcilable with the objectives of the pensions freedoms and the expectations placed on consumers in retirement.
It clearly may not be in the interests of commercial providers to make that information transparent, so I end with a question to the Minister. If the Government do not intend to support Labour’s amendment, which at this stage we plan to press to a vote, how will they ensure that people have the information that they need to avoid excessive charges and avoid making decisions that they may come to regret because they did not know about those charges in the first place?
Ms Eagle
I want to briefly add some emphasis to the points made by my hon. Friend the Member for Feltham and Heston from the Front Bench. This is really a battle between those who like to add horrendously high charges, in very small print, and transparency so that people can make decisions in possession of the right kind of information. Surely enabling that transparency is at the heart of what the pensions dashboard is all about. Financial services, particularly things like pensions, have always featured a uniquely complex, difficult and opaque pricing system, which can often eat away significantly at the money that people who are investing can expect to live on when they retire.
Thankfully, trail commission has now been abolished, at least to my knowledge, but it has been replaced with other opaque pricing systems that take people’s money away. The hon. Member for Delyn was right to say that pots that are very small are being eaten away by charges. Most people who put money into pots would have had no real knowledge or understanding of the price of keeping that money there, because it would not have been up front in the information; it would have been hidden away in hundreds or perhaps thousands of pages of tiny print.
The amendments, which I fully support, are all about getting price and cost transparency on the dashboard, which was clearly created to include such information. I will not understand it at all if the Minister has reasons for not doing so.
Rob Roberts
I rise to speak briefly to amendments 11, 12 and 13. I did not mention it earlier, but the general problem with small pots being eroded away by charges, especially in the auto-enrolment phase, is that many of them have set charges in pounds rather than percentage-based charges. If someone has 10 pots of £1,000 and they all have the same percentage charging structure, the charges will be exactly the same as one scheme with £10,000 in it; what causes the problem is that some schemes have a set charge in pounds per year.
Unfortunately, an awful lot of the time we focus too much on the cost of plans and the impact of charges: the principal-based tail is wagging the outcome-based dog. It is the outcome that is most important, because people cannot spend the principal; they spend the outcome. That is easily illustrated: if scheme A has a 0.5% charge and a return of 5% a year, and scheme B has a 1% charge and a return of 7% a year, scheme B is a better scheme despite having a higher charge. It is not the charging that is important.
The hon. Member for Wallasey mentioned people who will be put off from investing in schemes that are looted and abused in such ways. She was 100% correct; there were many nods on both sides of the Committee Room at the idea that that would put people off. Focusing too much on charges also potentially puts people off. It is worrying and scary, and potentially angers the consumer, who would not understand the figure for the total charges if it is expressed in a significant way. If we say, “Over the lifetime of your plan, you will incur £30,000-worth of charges,” without some kind of explanation or context showing what that relates to, people will see that as excessive and ridiculous.
Neil Gray
I do not think it is fair to characterise this as a focus just on charges. New clause 11 contains an idea for how small pots can be managed, in terms of the unintended consequences of automatic enrolment. I struggle to understand the rationale of the hon. Gentlemen’s argument about the lack of transparency being provided to consumers and enabling them to take informed decisions about the plans they enter into. I do not see the logic of suggesting that hiding that or allowing schemes to continue putting it in the small print is beneficial to consumers.
Rob Roberts
I am not necessarily advocating a lack of transparency; I am advocating a focus on the outcome, rather than on every element of the journey along the way. There are lots of things that we currently do not talk about, in terms of the costs and charges. We look at the costs and charges of the scheme in general, and it is not necessarily a requirement for the costs and charges of the individual funds that make up the scheme to be included in those calculations. There are lots of things that could be included in there, but it is the outcome that is important, not necessarily the minute detail of every element along the way.
Richard Thomson (Gordon) (SNP)
I do not think anyone would disagree that overall it is the outcome that is important, but historically the trouble is that consumers have often been encouraged to look at outcomes that may or may not have been realistic over an extended period of investment, and have not had the full awareness that they ought to have had of the charges. Surely as part of educating the consumer we should be drawing their attention to the charges and helping them to understand them in the context of everything that is important. If we want engaged, informed consumers, surely we should not be telling them not to worry their little heads about the charges; we should be making it transparent and open.
Rob Roberts
I understand the hon. Gentleman’s point, but it is for the regulator to determine how projections are shown and what information the individual requires to make an informed decision. It does not necessarily belong in primary legislation. It should come later, and the regulator should implement it. I understand that point, but amendments 11, 12 and 13 would all do exactly the same thing: they all focus on the wrong things, when I believe we should be focusing on the outcomes.
Guy Opperman
I hope to be able to bring some agreed consensus on this. Colleagues will be aware, because they have read the Bill in great detail, that subsection (2)(a)(iii) on page 108 sets out what pensions information should be provided. It includes
“the rights and obligations that arise or may arise under the scheme”.
It is very much the case that individual costs are already envisaged as being part of the clause and the scheme.
I will explain why I will resist this amendment. First, the context is that it is already in the Bill. Secondly, if I have not made it sufficiently clear in the past, I am happy to make it clear today that we anticipate that costs and charges should be a part of dashboards in the future, but the question is when and how? There is common ground that in the longer term, there should be an understanding of what individuals are being charged for the service they are being provided. There is a much wider debate, which we have tried to have to the best of our ability, about how it is that a pension is run and then the individual is burdened with individual costs, depending on the nature of the different schemes.
I am very clear that, first, I consider the provision otiose because it is already within the confines of the Bill. Secondly, it is the Government’s intention that costs and charges should be part of dashboards in the future. Thirdly, we value transparency. Lord knows I started this morning with the point that simpler statements are being introduced. Contrary to what the hon. Member for Wallasey said, simpler statements will include costs and charges.
Ms Eagle
I thank the Minister for his full explanation of some of the work that is ongoing, and I appreciate that it is a difficult issue. First, will he give the Committee some idea of the timescale for when we could get that important information into the dashboards? Could he be a bit more specific? Secondly, does he not accept that if standardisation is mandated by the Government, people will adjust and change in order to standardise and be in competition with other providers? It will bring some coherence to what is at the moment an extremely complex and confusing area.
Guy Opperman
To answer the second point first, there is already standardisation. There is already the charge cap, which allows a certain limit above which an individual cannot charge any more. That charge cap provides a certain percentage that can be incurred for the work provided. There is an ongoing discussion regarding automatic enrolment. If I have a tiny pot of £100 and that has been eaten away on an ongoing basis, then clearly the charges on an annual basis will slowly eat away into that small pot. If I have a much larger pot and I have a small standardised charged capped price that I am being charged, then it is clearly much easier for the pot to be preserved. How one approaches that going forward is extraordinarily difficult.
There is also the diversity of the products being provided—the point made by my hon. Friend the Member for Delyn—and ensuring that there is that diversity is appropriate. How does one try to balance those two things? That is what we are trying to do, with due respect. When will we do this? It seems to me that there are two answers. It is hoped—I use the word “hoped” given that we are now on 3 November—that by the end of this year, or the beginning of next year, these various pieces of work will come together and the Government will publish their views on them. I have been a little preoccupied with this and there are other things that are going on. The small pots review does not report back to the Department until 23 November.
In addition, the dashboard delivery group is at the same stage looking at this precise point about how it will provide this on an ongoing basis. It published its updated programme a week ago—I will have to do this off the top of my head, and if I have got it wrong I will correct it at a later stage—and its expectation is that it will provide more detail at the beginning of next year as part of what the dashboard will look like.
I come back to one final point. The original dashboard was proposed to be a simple find and view system; it is not proposed that this will have complex overlay at the start.
Neil Gray
That is all the more reason why allowing these amendments to be made is so important, to ensure that eventually it is mandatory to provide information and transparency about fees and charges. I do not think that anything the Minister has just said would preclude the amendments being accepted. It is a competitive market, there will be different elements within the market that will offer administrations and charges for different products, and that is their whim and their right. I go back to the point I made to the hon. Member for Delyn. I do not see how we are benefiting the consumer by denying them access to that information at that point of access, which is going to be crucial, and I am yet to hear from the Minister why that cannot happen.
Guy Opperman
I should have pointed out that we already have legislation within the occupational pension scheme regulations 2018, which already require trustees to publish detailed information on costs and charges on a publicly available website. Members are told where this information can be found on their annual benefit statements. Obviously, we are doing it on simpler statements as well.
On the specific point raised, the hon. Member for Airdrie and Shotts keeps coming back to different charging structures that exist across the pensions landscape, and information about costs and charges are not often directly comparable between schemes. There is a risk that we fail to engage people with their pensions by presenting too much information of a differing nature, or worse, that misunderstanding of costs and charges presented without proper explanations of value for money results in poor financial decisions. It seems to me that the way it is drafted as well, speaking specifically to the administration of the scheme, hides a much wider problem: how does one address the individual nature of differing schemes and the individual costs that apply? With respect, although I have great sympathy for the amendment, I invite the hon. Gentleman not to press it.
Ms Eagle
Before we leave this point, what the Minister has described is a pensions landscape that is so complex that he is saying it is almost impossible to make proper price comparisons across the piece. If a consumer wants to make a decision on where to invest their money, what the Minister is saying is that at the moment we have a system that is so complex, and where comparisons are so hard to make, that it is impossible. What does that say about the landscape we are presiding over, and what have we got wrong? I have some ideas of my own, but now is not the time to talk about them, Mr Robertson. I appreciate that. It is an astonishing admission from the Minister that that is the situation we are in.
Guy Opperman
I had ended my speech, but I do not think that is a fair characterisation. There is a charge cap that applies already. It is a standardised charge cap. The difficulty is that there are different types of schemes charging different things and that is perfectly permissible. The flip side of the argument made by the hon. Member for Wallasey would be to have only one type of pension scheme—which, by the way, is what the Labour Government introduced. Automatic enrolment is one type of pension scheme. Yet, within the one type of pension scheme, which we all adore and agree is the greatest thing, there are problems on the charging of the individual, which is exactly why we are trying to improve the matter by doing the small pots review.
I take the point that the hon. Lady is passionate to try to improve the situation. My door is always open to hear her views but, with great respect, this is a simplified system that can get better, which is why we are doing the dashboard and why we are doing simpler statements.
Question put, That the amendment be made.
Seema Malhotra
I beg to move amendment 16, in clause 122, page 116, line 37, at end insert—
“(2A) Before any other pension dashboard services can qualify under section 238A of the Pensions Act 2004 (qualifying pensions dashboard service) the Secretary of State must lay before Parliament a report on the operation and effectiveness of the pensions dashboard service, including the adequacy of consumer protections.”
This amendment would require the Secretary of State to report on the operation and effectiveness of the public dashboard service (including consumer protections) before allowing commercial dashboards to operate.
The Chair
With this it will be convenient to discuss the following:
Government amendment 8.
Amendment 3, in clause 122, page 116, line 42, leave out “one year” and insert “five years”.
This amendment would extend to five years the period for which the Money and Pensions Service dashboard would have to have been running before commercial operators could enter the market for the provision of pensions dashboards.
Seema Malhotra
We hugely regret that the Government are seeking to remove the amendment, introduced by Baroness Drake, that would have required the Money and Pensions Service dashboard to be up and running for a year before other commercial dashboards could be launched. It has always been Labour’s firm position that just one publicly run dashboard would be the best way to ensure that people receive trusted information about their pensions.
The Work and Pensions Committee produced a report on pension freedoms in 2018, in which it recommended a single public dashboard, to ensure that it would be free from commercial pressures and could provide individuals with a reliable source of information about their pensions. As that Committee noted, this would be in line with the examples of Australia, where a single dashboard is hosted by the Australian Taxation Office, and Sweden, where the only dashboard is run by a public-private partnership.
As the report stated, dashboards should first and foremost provide consumers with accurate and impartial information about all their pensions in one place. In a multiple dashboard system, providers would have incentives to use their dashboards to promote their own products or otherwise discourage switching away. There is also a danger that dashboard providers could use different underlying assumptions, producing rival income projections from the same raw data.
The pensions dashboard was conceived as a means of empowering consumers, to promote competition in the product market. There is a risk that in a multiple-dashboard system, providers could instead compete on the information provided. Which? and the Association of British Insurers have argued that regulation would be necessary to ensure that the dashboards were consistent. There is a simpler solution. By providing information on all pension entitlements in one place, the pensions dashboard would be a vital tool in informing and engaging customers, and empowering them to exercise pension freedoms in their own interest. A single, publicly hosted dashboard would be the best way of providing savers with simple, impartial and trustworthy information. However, the Government have said their intention is to progress plans for multiple dashboards.
Rather than preventing the introduction of commercial dashboards for a set period of time, our compromise amendment would merely compel the Government to review the operation of the public dashboard, including the adequacy of consumer protections, before allowing for commercial rivals to operate. If commercial dashboards are to be allowed, there must be strong and proactive regulation of all pensions dashboards and any other organisations involved in the storage, processing and presenting of pensions data. Organisations such as The People’s Pension and Which? have said that clear legal duties need to be placed on the operators of dashboards to act in the best interests of consumers.
The Government also envisage a role for what they call integrated service providers, which will store vast quantities of pensions data. It is not clear whether the Government intend for them to be regulated, or for the Money and Pensions Service, the TPR or the FCA to be able to authorise them and set regulatory standards. Unless the regulators have the ability to set standards and intervene in the operation of ISPs, any problems in the ISPs market will have to be tackled by contacting the individual pension schemes. That would be time-consuming and could lead to long periods of time when individuals’ pensions data is unavailable on pensions dashboards. Any scandals or data breaches that occurred in unregulated ISPs could also have a significant detrimental impact on the reputation of pensions dashboards and the overall framework for people to access their pensions data securely and safely.
The common-sense step proposed in the amendment would allow proper consideration to be given to the risks proposed by private providers. In many ways, the concerns underpinning the amendment are similar to those associated with Government amendment 7—that the introduction of commercial dashboards, paired with the ability to engage in commercial transaction activities, would impact on the reliability of the information presented to savers and open up the risk of people being persuaded into disadvantageous pensions positions.
I would be grateful for the Minister’s views on this matter, which I understand he is keen to share. If he still intends to progress with commercial dashboards, will he announce concrete steps and detail on how and when they will be regulated by the FCA? I am sure he will say a few words about integrated service providers. Will they store vast quantities of pensions data, and will they be subject to regulation and standards that are set by the TPR, MaPS and the FCA?
Neil Gray
To follow on from the shadow Minister’s comments about amendments 8, 16 and 3, this debate takes us to probably the greatest area of contention in the Bill, which is contentious because of the Government’s intention to remove the Lords amendments that require a year’s buffer before commercial dashboards can enter the market.
It is not just the SNP, Labour or other Oppositions parties that have concerns, but a great number of stakeholders. The Pensions and Lifetime Savings Association says that
“the Government should ensure the first pensions dashboard will be a single, non-commercial product hosted by the Money and Pensions Service (MAPS) and that no other dashboard should go live until a full consumer protection regime is in place.”
In addition, rushing to introduce transactional capabilities is likely to put savers at greater risk of scams and mis-selling. It would be better to wait a year or two, rather than undermine consumer protection.
The PLSA does not support Government amendments 7 and 8, which would allow dashboards to be used to provide transactional services and remove the requirement for the non-commercial pensions dashboard service run by MaPS to have been established for one year before other dashboards services can provide services. The PLSA supports amendment 16, which would require the Secretary of State to report on the operation of the public dashboard service, including consumer protections, before allowing commercial dashboards to operate. It also supports amendment 3, which would extend to five years the period for which the MaPS dashboard would have to have been running before commercial operators could enter the market for the provision of pensions dashboards.
Similarly, the Institute and Faculty of Actuaries says: “The first dashboard must be a single, non-commercial platform. We think it is important that the first dashboard be non-commercial and hosted by the Money and Pensions Service. Initial non-commercial dashboards will to provide greater clarity for consumers and build confidence and trust in the dashboard ecosystem. It will also make it easier for regulators to learn more about how savers use such platforms, and enable them to adjust consumer protection regulation accordingly. In the medium term, multiple commercial dashboards could be permitted to facilitate innovation and choice. However, these platforms and the communications with savers need to be properly regulated to ensure strong consumer protection. We do not support new Government amendments 7 and 8, which would allow the dashboards to be used to provide transactional services and remove the requirement that the non-commercial pensions dashboard service, run by MaPS, must have been established for one year, before other dashboard services can provide services.”
We are clear that commercial dashboards should not be opened to the market for at least a year and we strongly oppose UK Government attempts to undermine that. We feel that a year’s buffer was a compromise position, as there are many people concerned about having commercial dashboards at all, especially when the Government intend them to be transactional. We tabled amendment 3 to underline our opposition to any watering down of the Bill as it stands.
The Lords amendment was a compromise. The UK Government are now unilaterally forging their own path, breaking the cross-party consensus that otherwise would have existed. As the hon. Member for Wallasey rightly said, it is crucial for good governance and good pensions legislation. It seems the Government are looking to implement both commercial and financial transactions on dashboards, before assessing the risk, before assessing consumer behaviour and interaction with the MaPS dashboard, and before taking full cognisance of the risks of pension freedoms, which we are only just starting to understand. Time is the wisest counsellor of all, Mr Robertson.
We want to empower people to make informed choices about their lifetime savings. The public service pensions dashboard is a welcome step towards that and will transform consumer engagement with pensions over the long term, and reunite individuals with lost pension pots. Pensions dashboards run by commercial operators should not be opened to the market until the publicly run MaPS dashboard has been running for a least a year.
We have a long-standing additional commitment to the establishment of a standing independent pensions and savings commission. The scope of the Bill does not allow us to stretch to that on this occasion, but later in deliberations we will consider whether a commission looking at the terms of this Bill should be established. Such an organisation would first be tasked with looking at when commercial operators should be able to enter the market for the pension dashboards.
In our view, the MaPS dashboard, or public dashboard, is a wasted opportunity unless it is properly marketed and promoted by the Government as a safe, independent and impartial space for people seeking information about their pensions. We feel that it would get swamped by commercial operators seeking to promote their own dashboards and their own commercial interests.
We caution the Government to be canny, to take their time and to learn from the implementation, first of all, of the public dashboard, before they move too hastily and have to play catch-up in the regulatory format, because people fall foul by making poor decisions about what is their greatest financial asset.
Guy Opperman
I accept that the issue is complex. On the one hand the Government are being urged to proceed with the dashboard and it has been rightly pointed out that we have displayed slowness, in some respects. On the other hand, we are being urged to delay in respect of this particular matter. We do not believe that this is the appropriate way forward, as the Lords indicated, and there are a multitude of reasons why that is the case.
I start with the initial 2018 consultation. The principle behind that was that consumers should always have access to a publicly backed service, which we have legislated for, but should also have the freedom to choose to access the information in the way they feel most comfortable. I go back to the point I made to my hon. Friend the Member for West Worcestershire: do we build a service and make the consumer come to us, or do we build a service where the consumer is already comfortable, in circumstances where there are sufficient protections around that?
Consumers have clearly stated that they expect to be able to access a dashboard through a variety of channels. The pensions industry holds an in-depth knowledge of its customer base, and this represents an opportunity for consumer-focused innovation to create platforms that individuals can engage with. We believe that allowing multiple dashboards is the most effective way to drive consumer engagement and really begin to put people in control of their savings.
Seema Malhotra
The Minister is right that there will be no storage of data on the dashboard––in a sense, it is drawing in that data dynamically––but could he explain the role of the integrated service providers?
Guy Opperman
I explained this at great length earlier, but I will attempt to repeat what I said. I will jump through the verification hoops. The reality is that an individual gets verification and the information passes from the pension finder service to the connected pension schemes asking them to match the individual’s information. The pension scheme finds a match and confirms it to the pension finder service, which responds to the individual via their chosen dashboard saying that it holds the data. When the individual next logs on to their dashboard, the information from the pension scheme will be viewable by the individual. I drew the analogy of the cashpoint, which, I suggest, is the appropriate analogy, whereby if I bank with Barclays and I withdraw from an HSBC account, Barclays does not know what is in my account. That is the process by which we are trying to proceed.
Shaun Bailey (West Bromwich West) (Con)
On a slightly parallel point, with the advent of open banking, we had similar discussions on sharing data and the fears around how it might be used commercially. What we have seen is that, with a robust regime and buy-in from many of the stakeholders, it seems to have worked. Many of the fears that were advanced then and that have been articulated today have not really come to fruition. Does my hon. Friend agree that while we can talk about the legislation, it is the buy-in from stakeholders that will ensure that this succeeds?
Guy Opperman
There is no question: we are deliberately learning the lessons from open banking and the process whereby we took all our various bank accounts and made them accessible under a strict regulatory regime so that our rights were not infringed. There is now a massively enhanced consumer programme that empowers the consumer, drives down costs and does all the other things that we know open banking does. With great respect, I suggest that that is a very good example.
The big difference is that in open banking we are dealing with a relatively small number of banks in this country, unlike in, say, America, whereas with pensions we are dealing with 40,000 different schemes. But the principles are exactly the same. We have learned from the regulatory process and I have met the chief executive of Open Banking. My officials and the dashboard delivery team are engaging with them. No disrespect, but the problems that the Committee has rightly identified today are exactly the same sort of problems that were identified with open banking. These are the same consumer protection organisations, and I shall come to the approach of Which?, which is probably the No. 1 consumer protection organisation in the country. It is firmly on the side of the Government and disagrees with the amendment. My hon. Friend drew me to that.
Neil Gray
I draw the Minister back to points that he made earlier, when he said that the information provided on the dashboard will be taken sequentially so that it will be added to over time as we test and learn. Why then in this case are we not operating sequentially? Start with the MaPS, the public dashboard, and bed that in as the point of contact where people have the confidence to go for impartial information about what they are getting, without having to be exposed to marketisation. Learn from that, and then move to the position where commercial dashboards can operate. Learn from that experience, and then bring about transactionality through the dashboard in that process.
Guy Opperman
I will delay the introduction of the Which? elements for a moment. Amendment 16, for example, would delay the introduction of other dashboards, which would stifle innovation that could benefit consumers. We feel strongly that the potential exists for the production of a game-changing new system that would enable something that is not possible at the present stage, but that would suddenly be second-guessed and denied, and we will lose much momentum behind the project.
The Committee should not take just my word for it. I will briefly share the comments of Which?, from its submission on Second Reading on this proposal. It addressed this amendment, saying: “This amendment ensures that the publicly owned dashboard will have to be operational for at least a year before commercial dashboard services can operate if the Bill becomes legislation in its current form. Which? agrees with concerns that lessons will have to be learnt on the application of the dashboard, especially with regards to the use of data.
However, we do not believe that this amendment is the answer. It is a precautionary approach, and the risk is that by stymieing the development in this way, the industry will take away its innovation, drive and investment —all of which could benefit consumers. By enabling an individual to access their pensions data safely and securely via non-government providers, this can help to support take-up and engagement with dashboards by increasing the number of channels that individuals can access this information and increasing awareness. It can also help drive innovation to enable individuals to make the most of the information available via dashboards. This will only be possible if dashboard providers are permitted to provide tools and services using this data.
Furthermore, this amendment risks us being left with a dashboard that does not do as much as initially anticipated, resulting in consumers not being as engaged. This could represent a huge missed opportunity. It is crucial to ensure that dashboards are both safe and fully functional to give consumers the most choice and the most exposure to innovation.”
The hon. Member for Airdrie and Shotts will be aware that there is already the Pension Tracing Service and “Check your State Pension”, both existing organisations that address these particular points. There is no question but that the words expressed by Which? adequately address the point that it would be utterly wrong of us to promote and push forward the dashboard in circumstances where, upon its launch, even in its primitive format, we said, “You cannot access the dashboard through the provider or financial adviser you’ve been with for 30 years. You may only go through the Money and Pensions Service.” I therefore respectfully say that this is not the right approach and not something the Government support.
In respect of the delay and the parliamentary scrutiny, I would like to make two points. Parliamentary scrutiny is already taking place through the introduction of secondary legislation, which will be subject to the affirmative resolution procedure. The Money and Pensions Service is already legally required, according to the 2018 Act on this issue, to report annually to the Secretary of State on its objectives and functions. This includes the operation of the dashboard, and that report is laid before Parliament, which can debate it if it wishes.
The development of the pension dashboard does not end at the launch. The pension dashboard programme will continue user testing and research on an ongoing basis. That is the whole point of incremental delivery. The amendments, if passed, would no doubt have the consequence of delaying the production of commercial dashboards for some considerable time—the note on which escapes me, but I will try to remember—by requiring a report to the House of Commons and then a further consultation on user testing, which would effectively put back commercial dashboards, certainly by a year, and potentially by two years.
The five-year proposal that the hon. Member for Airdrie and Shotts has put forward would clearly sound the death knell for any commercial dashboard on a long-term basis. With no disrespect, I think that would be a massive missed opportunity.
Neil Gray
Amendment 3 is a probing amendment so that we can set out the fact that our feeling was that the Lords amendment was compromised. By quoting Which?, as the Minister rightly has, he seems to be suggesting that we are arguing against commercial dashboards altogether. We want a reasonable buffer in place, and we do not feel that that year would be lost for innovation or for developing a dashboard. Commercial organisations would be perfectly capable of catching up when the time came. That year would allow the Government to ensure that the MaPS dashboard is properly promoted and utilised by people and used for its intention, which is to inform good decision making for long-term savings and investments for a good return on income.
Guy Opperman
I am not sure that I can amplify or improve upon the comments that I have already made, save to make the point—again, I believe—that commercial dashboards will have to be part of the accessibility of this particular programme, and I genuinely believe it entirely right that they should be part of it from the word go, so that we can go forward together with those two particular products. Quite frankly, we keep coming back to the point that we should go to where the customer is already, rather than forcing the customer to go to some other place.
Guy Opperman
Other countries have done things in different ways—they do not necessarily have the pension system that we have. We have a very substantial private pension system; some other countries will not have such private pension systems—the hon. Lady will have to ask them. It is argued that the right way forward—having looked at what countries such as Israel and Denmark have done—is to have a parallel system and two systems, commercial and public, working together. We already have a public system, whether it is “Check your state pension” or the pension tracing service, that exists with commercial providers. What we do not have is the great capability of dashboard and I believe, with respect, that we are doing the appropriate thing to drive that forward.
Seema Malhotra
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendment proposed: 8, in clause 122, page 116, leave out lines 38 to 45.—(Guy Opperman.)
Question put, That the amendment be made.
Environment Bill (Ninth sitting)
Tuesday 3rd November 2020
(3 years, 5 months ago)
Public Bill CommitteesRead Full debate Environment Act 2021 View all Environment Act 2021 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 3 November 2020 - (3 Nov 2020)
The Committee divided: - Ayes: 5 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 5 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 5 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 4 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 1 / Noes: 8 - Question accordingly negatived.
The Chair
I remind the Committee that with this we are discussing amendment 92, in clause 18, page 11, line 13, leave out subsection (2).
This amendment removes the proportionality limitation on the requirement to consider the policy statement on environmental principles.
Dr Alan Whitehead (Southampton, Test) (Lab)
I was in the middle of a brief exposition of the word “proportionately”, as found in clause 16, which we were discussing this morning. As I mentioned, the clause requires that a policy statement on environmental principles must be prepared in accordance with clauses 16 and 17. Subsection (2) defines the policy statement on environmental principles as
“a statement explaining how the environmental principles should be interpreted and proportionately applied by Ministers of the Crown when making policy.”
The word “proportionately” very much concerns Opposition Members, because the clause not only deals with the statement itself and how the environmental principles should be interpreted, but adds that Ministers of the Crown will be assumed to be proportionately applying those principles. It goes beyond the environmental principles themselves and gives Ministers of the Crown the leeway to apply those principles “proportionately”.
“Proportionately” is a strange word. The Cambridge philosopher of ordinary language J. L. Austin defined it, among others, as a “trouser-word”—a word that does not function properly without a pair of trousers on.
Dr Whitehead
I think J. L. Austin is very interesting, but others disagree. Indeed, the dictionary definition of “proportionately”, which underlines his point, is:
“In a way that corresponds in size or amount to something else.”
It has no consequence in its own right, and that is the problem that we have with this particular formulation. If there are no trousers on “proportionately”, it can mean whatever anybody wants it to mean. In this instance, it appears to mean what Ministers of the Crown may want it to mean. It is possible—not in terms of the intentions or anything else of present company—that the definition of “proportionately” is entirely what Ministers of the Crown may want to make of it. A much more straightforward example of that particular action is Lewis Carroll’s Humpty Dumpty deciding that words mean exactly what he wanted them to mean.
We may come on to this later, but the Bill should define what “proportionately” might mean, what its limits are and what Ministers may do when deciding, proportionately, what environmental principles should be. I accept that it may well be the case that Ministers have a view on environmental principles and how that policy statement may be put into place. This is not an appropriate way to bring Ministers into that particular discussion. For the sake of clarity, we would like the to see the word removed from the clause, so that it reads, “a policy statement is a statement explaining how the environmental principles should be interpreted.” That offers enough leeway as far as policy statements are concerned. I welcome the Minister’s explanation as to why that additional line should be necessary in the clause, and what it adds rather than what it takes away, in terms of making quite meaningless some of the things that I have outlined in the first part of the clause with regard to Ministers.
The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Rebecca Pow)
I thank the hon. Gentleman for these amendments, and welcome the opportunity to clarify why the provisions are needed. The amendments would remove the need for the policy statement to set out how the environmental principles should be proportionately applied by Ministers when making policy. They also remove important proportionality considerations associated with the legal duty to have due regard to the policy statement on environmental principles. Proportionate application is a key aspect of use of the principles, and it ensures that Government policy is reasoned and based on sensible decision making. It is vital that this policy statement provides current and future Ministers with clarity on how the principles should be applied proportionately, so that they are used in a balanced and sensible way. Setting out how these principles need to be applied in a proportionate manner does not weaken their effect, nor does ensuring that action on the basis of the policy statement is only taken where there is an environmental benefit. It simply means that in the policy statement, we will be clear that Ministers need to think through environmental, social and economic considerations in the round, and ensure that the environment is properly factored into policy made across Government from the very start of the process.
When the policy statement is then used, Ministers of the Crown will take action when it is sensible to do so. This approach is consistent with the objective in relation to the policy statement of embedding sustainable development, aimed at ensuring environmental, social, and economic factors are all considered when making policy. Not balancing those factors could have consequences that halt progress. For example, a disproportionate application of the “polluter pays” principle could result in anyone being asked to pay for any negligible harm on the environment, when in reality, many actions taken by humans cause some environmental harm, such as going for a walk in the country. It is essential to ensure that the principles are applied in an appropriate and balanced way, and proportionality is absolutely key to this. Since this amendment removes vital proportionality considerations, I ask the hon. Member not to press amendments 91 and 92.
The Chair
Before I call Daniel Zeichner, who caught my eye, can I explain a small point about procedure? It would be helpful if anybody who wishes to speak while the person who has moved the amendment is speaking would catch my eye one way or another—standing up in their place is the clearest way to do so. Those people speak, and the Minister speaks afterwards. That means the Minister is replying to the points that are made. For now, it is fine, but in future, Members should catch my eye while the mover of the amendment is speaking. They can speak, and the Minister can reply to what hon. Members have to say.
Daniel Zeichner
Thank you, Mr Gray. My apologies for muddling up the procedure. I am grateful for the opportunity to make a few points on what seems to be one of the most important parts of the Bill. For many of us, the precautionary principle has been a key part of our environmental protections.
It is fair to say that there is a difference of view internationally about how one approaches these things. Without trying to trivialise it in any way, there is a difference between the American approach and the European approach. Of course, we have been part of the European approach for a long time, and the precautionary principle has been absolutely key. The introduction of proportionality will seriously weaken our environmental protections. Although we have reams of paper to go through, that is the key distinction. I fear that the application of proportionality will water down our environmental protections.
I found the explanatory notes very helpful, as I always do. Paragraph 173 says:
“Proportionate application means ensuring that action taken on the basis of the principles balances the potential for environmental benefit against other benefits and costs associated with the action.”
Of course, as soon as we introduce that balancing side, those essential precautionary environmental protection are at risk. I am afraid, despite the Minister’s optimism about the Bill, that this is the crunch issue. If this amendment is not carried, there is no doubt that our environmental protections will be weakened.
Dr Whitehead
My hon. Friend makes a key point about the importance of the amendment. It is not just that many things pivot on it; one could almost go so far as to say that the whole thrust of the Bill pivots on it.
The understanding has always been that the Bill really will put the environment on the map and will provide not only good environmental protection in the long term, but no regression and enhanced environmental protection in the future. If that word is at the heart of it, things could be traded off against considerations that are completely outwith the intentions and purposes of the Bill, and it could be subverted entirely at ministerial discretion. That is surely not something that we should easily countenance.
In a moment, we will come on to an amendment that attempts to get a definition of proportionality on to the statute book. Although we do not want to divide the Committee on this amendment, if we do not secure substantial progress with the next amendment, we may seek to divide the Committee at that point. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 16 ordered to stand part of the Bill.
Clause 17 ordered to stand part of the Bill.
Clause 18
Policy statement on environmental principles: effect
Deidre Brock (Edinburgh North and Leith) (SNP)
I beg to move amendment 114, in clause 18, page 11, line 19, leave out paragraph (a).
This amendment removes the exceptions for armed forces, defence and national security policy from the requirement to have due regard to the policy statement on environmental principles.
The Chair
With this it will be convenient to discuss amendment 93, in clause 18, page 11, line 19, leave out
“the armed forces, defence or”.
This amendment removes the exceptions for armed forces and defence policy from the requirement to have due regard to the policy statement on environmental principles.
Deidre Brock
It is important to establish a principle that no area of Government should be exempted from its responsibilities to the environment. The amendment brings the activities of the Ministry of Defence, the armed forces, defence and national security into the scope of the Bill. I have been talking at length on this subject for some time now, and have submitted numerous parliamentary questions on it. Some of those questions actually received answers, but sadly I am still awaiting a letter from the Minister for Defence People and Veterans outlining the environmental impact assessment of the MOD’s operations at Cape Wrath, which he promised me in February of this year. Perhaps mentioning that today will jog his memory a little.
We have swathes of munitions dumps up and down the UK coast, still imperilling our fishers and others on our waters. There are also large chunks of land in the UK currently outside the scope of the Bill. Yes, hundreds of nuclear safety incidents on the Clyde were acknowledged by the MOD, but only because of written questions I had submitted. We have no idea what impact military fuels are having. Scientists for Global Responsibility estimates that 6% of global greenhouse gas emissions result from military-related activities.
I understand that the percentage share of the UK’s emissions total is lower for defence here, but our omissions from the military are still higher than those of some entire countries. By taking this action, the UK really could act as a world leader and role model. We have no idea what impact weapons testing or training efforts have. I know because of my parliamentary questions that assessments are made, but they are not published. It must be possible to make such assessments transparent without compromising the safety of our forces and their interests.
A number of witnesses to the Committee, when I asked them about the issue, seemed to agree that it was something of an anomaly. Lloyd Austin of Scottish Environment LINK, while accepting that exceptions will exist, said that they
“should be based…on a degree of justification for why…the environmental issue has to be overwritten. Nobody thinks the environment will always trump everything but, on the other hand, where the environment is trumped, there should be a good reason, and that reason should be transparent to citizens.”
John Bynorth of Environmental Protection Scotland said:
“It is a bit arbitrary and unjustified that the military…should not be subject to the same conditions as everyone else.”––[Official Report, Environment Public Bill Committee, 12 March 2020; c. 143, Q202.]
Ruth Chambers, from Greener UK, speaking about the fact that this duty will not apply to the Ministry of Defence, said:
“Already, we seem to be absolving quite a large part of Government from the principles.”––[Official Report, Environment Public Bill Committee, 10 March 2020; c. 71, Q112.]
The environmental principles, that is.
I am not going to speak for long—we have many amendments to get through—but I have been raising this issue for a long time. I was delighted to see Labour come on board too, although disappointed to see that they still want to keep the exemption for national security. We have to ask what kind of national security will be left to us if the environment goes belly up.
From answers received from the House of Commons Library, I know that there are so many pieces of primary legislation containing exemptions relating to the armed forces that it is not possible to list them all. If we are going to start stopping these exemptions for the military, the place to start should be in the Environment Bill. I am interested to hear the Minister’s response, but I am going to press the amendment to a vote.
Fleur Anderson (Putney) (Lab)
Clause 18 makes the armed forces, defence or national security exempt from due regard to the policy statement on environmental principles. It is detrimental to leave this whole section of Government out of the Bill’s provisions. If we want this Bill to be a legal framework for environmental governance and to have all the correct people in one room, why leave out one of the biggest polluters, the biggest spenders and the biggest landowners? It just does not make sense in terms of achieving ambitious net zero targets.
Were the exemption to be confined and constricted to decisions relating to urgent military matters and those of national security, it is of course entirely reasonable. I fully accept that there will be occasions when national security has to take precedence over environmental concerns. We do not want to impede the work of our armed forces or compromise our safety and security in any way. However, the clause is not drafted as tightly, cleverly and smartly as that. Rather, it is a blanket exclusion for the Ministry of Defence, the Defence Infrastructure Organisation and the armed forces from complying with the environmental principles set out in the Bill.
The carbon footprint of UK military spending was approximately 11 million tonnes of CO2 in 2018—very significant. Some £38 billion was spent on defence last year alone—more than 2% of our GDP. Bringing how that is spent in line with our environmental aims is essential to achieving our overall national environmental targets. If it is not in the Bill, it is just going to be left to goodwill and to hoping that it will work.
I hope that the Minister will shortly argue that the principle is important and, if it is, the armed forces and defence must not be exempt—that is how we show it is important. The Ministry of Defence is one of the largest landowners in the country, with an estate that is nearly equal to 2% of the UK landmass. Last week I was on Salisbury plain, which is the size of the Isle of Wight. It is where significant military work is carried out, but it is also where a significant environmental advantage could be held.
The Defence Infrastructure Organisation manages 431,400 hectares of land within the UK. The sites are used for training, accommodation and large bases and the organisation has a remit to ensure the safety, sustainability and rationalisation of the estate. It states that:
“MOD has a major role to play in the conservation of the UK’s natural resources. Stewardship of the estate means that the MOD has responsibility for some of the most unspoilt and remote areas in Britain; with statutory obligations to protect the protected habitats and species that they support.”
I am not arguing that the Ministry of Defence does not care about the environment. I am saying that, if we all care about the environment, the MOD should come within the legal framework of guidance. We can have an amendment specifically tailored for the armed forces. Much of the land used by the MOD for training and operations is in highly sensitive environments and many parts are located in areas of outstanding natural beauty, including Dartmoor, Lulworth, Warcop and the Kent downs. They are subject to a number of associated policy processes, such as bylaw reviews, planning applications and so on, which means that they are subject to environmental protection. They should be joined up and come within the remit of the Bill as well.
A reason for adding this matter to the Bill is that the Ministry of Defence is already deeply committed to environmental protection and to tackling climate change, but a major rethink of defence policy is needed to achieve our ambitious environmental aims. New approaches to procurement are needed in particular. The Air Force, for example, is looking at different types of aircraft fuel. That should come within the Environment Bill, not without.
It prompts the question of why there is a blanket exemption, as it does not give credit to the armed forces and to the newly formed strategic command for all the work they are doing to achieve our environmental goals. The clause should be tightened up considerably. Rather than separating them, here is an opportunity to link the Bill’s environmental principles to the armed forces’ environmental objectives. We are in a climate emergency. There is no time to wait around for the goodwill of enormous Departments to get in line—certainly not one with such significant spending, carbon emissions and land ownership. I urge the Minister to support the amendment, or to come back with a smarter amendment that enshrines our national security at the same time as enforcing the speed of environmental action that we need and expect the armed forces to be able to deliver.
Dr Whitehead
What the Committee needs to understand is that the inclusion in the Bill of the application of policy as set out in subsection (1) does not apply to the armed forces. Subsection (1) states:
“A Minister of the Crown must, when making policy, have due regard to the policy statement on environmental principles currently in effect.”
The Minister must, therefore, have “due regard” to policies on environmental principles except where it relates to anything to do with the “armed forces”, as my hon. Friend the Member for Putney said. She mentioned that it is particularly important when the land that the MOD has under its control is considered, which we indeed know from the handy “National Statistics” publication which states what land is owned by the MOD. The issue, however, is not only the land owned by the MOD but also the further 207,400 hectares over which it has rights in addition to its freehold and leasehold-owned land. A reasonable interpretation of that is to consider what is controlled by the MOD and the armed forces. Is that a total of 431,000 hectares, as mentioned by my hon. Friend? That is the size of Essex plus half of Greater London, to put it into context. That is the amount of land that is under no jurisdiction at all as far as environmental principles are concerned.
There may be good reasons for that huge amount of national land resource being exempt from these environmental protections, but none are immediately apparent to me. Not only are they not apparent to me, what is apparent to me is that an organisation that undertakes actions that prejudice the environmental quality or environmental protection of UK land is often required to mitigate those actions elsewhere in any other sector. If a new port berth is being decided upon, then one of the first things to happen is that a consideration of environmental mitigation takes place for the land that has been despoiled by the new port, even if the berth is regarded as necessary. Even that principle does not appear to apply as far as the MOD is concerned.
As my hon. Friend said, I accept that when a person drives across Salisbury plain, for example, they occasionally see great big tracks on the plain where tanks have driven around it, and that on the Lulworth ranges there is weaponry practice that has environmental impacts. Of course, that is a part of MOD defence activity, and it may be necessary for that activity to be carried out. However, it does not seem beyond our imagination to consider that the MOD and defence should be in a different position as far as environmental mitigation is concerned. It would be quite reasonable to suggest that within the necessary undertakings that the MOD has to go about doing, environmental mitigation should be part of that process, if necessary. To just give the armed forces a blanket let-off as far as any environmental principles are concerned seems, to me, a bridge too far.
Daniel Zeichner
We just had a discussion about proportionality, and it strikes me as perfectly possible to say to the MOD that it could react proportionately to these kinds of judgments. In our previous discussion, we introduced a notion that I would say will be used to the detriment of the environment; why could we not ask the MOD to act proportionately when it comes to its environmental obligations?
Dr Whitehead
Indeed, my hon. Friend is absolutely right. It would not be difficult to draft something that would both protect the activities that I think we all agree the MOD and the Army need to do on occasions, and ask them to act proportionately in respect of their environmental obligations when undertaking those activities.
An amendment to this clause has been tabled by the hon. Member for Edinburgh North—[Hon. Members: “And Leith.”] And Leith as well, yes; I have been to both Edinburgh North and Leith, so I should remember the connection between the two. The Labour party has also put forward amendments, which take out two sections of this clause and, as it were, challenge their inclusion and these exemptions separately. We do not see any substantive difference between what we are saying through those two particular challenges and, as it were, the overall challenge that the hon. Lady has put forward through her amendment: it is essentially a big question about why these particular exemptions are in place. We do not just have exemptions for the MOD; we have exemptions as far as
“taxation, spending or the allocation of resources within government”.
I am not exactly sure what land that controls, as we cannot put that in place in the same way as we can with the MOD, but it is also not apparent to me why those areas should also be treated differently.
Dr Whitehead
I stand corrected. So we are discussing amendments 93 and 114 in this group and discussing amendment 94 in the next group. I will remove my remarks on amendment 94 and save them for the next group. I have to say that I do not think there is much between the formulation put forward by the hon. Member for Edinburgh North and Leith and the one put forward by us, as we will come to in the next amendment. Therefore, we support the hon. Lady in her endeavours to try and get some clarity as far as this section is concerned.
Rebecca Pow
I thank hon. Members for the amendments. Clearly, we have sparked some quite strong feelings here about this particular issue. I want to make it clear, Chair, that I am just going to focus on defence, to which the amendment relates.
While we recognise the intention behind these amendments, it is fundamental to the protection of our country that the exemptions for armed forces, defence and national security are maintained. The exemptions that would be removed by the amendments relate to highly sensitive matters that are vital for the protection of our realm, so it is appropriate for them to be omitted from the duty to have due regard to the environmental policy statement. A critical part of the role of Defence and Home Office Ministers is to make decisions about the use of UK forces to prevent harm, save lives, protect UK interests or deal with a threat. We have several colleagues in the Room who have strong armed forces links, and I think they will agree with that summary. It would not be appropriate for Ministers to have to go through the process of considering the set of environmental principles before implementing any vital and urgent policies related to the issues I have just mentioned.
Furthermore, the Ministry of Defence has its own environmental policies in place, as well as a commitment that its policies protect the environment, with a strong record on delivering on those commitments, which we had reference to from both sides, particularly from the hon. Members for Southampton, Test and for Cambridge. For example, the MOD require that all new infrastructure programmes, projects and activities have to include sustainability and environmental appraisals. Those appraisals cover a similar spectrum of analysis to the environmental principles.
I also want to highlight that the MOD takes the environment extremely seriously. It is adapting to mitigate defence’s impact on climate, which was touched on by the hon. Member for Putney, to build resilience and support the Government’s commitment to net-zero emissions and a review is underway to develop its response to net zero and climate change, with a new strategy planned to add to the existing sustainable development policy. That is a clear indication that the MOD means business where the environment is concerned.
As was touched on by a couple of Members, and particularly the hon. Member for Edinburgh North and Leith, the Ministry of Defence owns or otherwise controls approximately 1% of the UK’s landmass—
Rebecca Pow
My facts say 1%, but shall we agree, Chair, that it is nearly 2%?
Rebecca Pow
It is a significant amount. Actually, I think the shadow Minister is right and it is nearer 2%. More than a third—38%—of that area is designated as sites of special scientific interest. SSSIs have a statutory duty that they will be managed and protected and that duty is not removed—it is not exempted. As such, that work carries on. The MOD’s record on getting those sites into favourable condition is good, with 48% of the sites in that condition. The MOD works very hard with Natural England on those plans and projects; it has a dedicated environmental team, working on the environment through the MOD.
When I was a news reporter, I had a wonderful day with the MOD up on Salisbury Plain, looking at its tremendous stone curlew project. Even though the tanks rattle across, the stone curlews can still thrive. The Whip is looking at his phone, but I am sure that he lives near there; I would like someone to report back to me on how the stone curlews are doing now, because that is a fantastic project.
To go back to my point, because of the particular sensitivities of this policy area as well as existing environmental commitments, I hope that I am giving some clarity as to why the MOD is exempted. It might be helpful for the hon. Member for Edinburgh North and Leith to note that there are exemptions in the UK Withdrawal from the European Union (Continuity) (Scotland) Bill, and they are in categories that are quite similar to those in this Bill, if not a little bit wider. They are listed in clause 10(3) of that Bill as
“(a) national defence or civil emergency,
(b) finance or budgets.”
I thought that it might be interesting to put that on the record.
I hope that I have provided some clarity on this issue. I think we are covering a lot of the same ground here, so I ask the hon. Member to withdraw her amendment.
Deidre Brock
The Minister talks about the UK Withdrawal from the European Union (Continuity) (Scotland) Bill, but unfortunately defence is still reserved to Westminster, so I am afraid that the Scottish Government would not have any control over that issue anyway.
The issue for me here is transparency for our citizens, so that they know exactly what impact the armed forces are having on our environment. The Minister talks about the highly sensitive nature of the armed forces’ activities, but not all their activities are sensitive. For example, what are their recycling rates and what are their targets towards the reduction of emissions? Regarding the environmental impact of the armed forces, just today we heard on the radio from the actor Joanna Lumley about the impact of underwater explosions on marine mammals, and the hearing loss that results when munitions that have been on the seabed for many years are detonated. Such issues will become more and more important. I have pursued the question of munitions dumps for a while, as I mentioned; it is not going away. There is an increasing clamour about it from around the world, and it is important for the Minister to remember that because it will return as an issue in the near future.
It is simply no longer acceptable for the armed forces to be exempt from reporting their progress towards climate change targets, or their compliance with environmental targets or any of the other targets that other parts of Government are required to report on. I am disappointed that the Government cannot support this amendment. As I have said, the number of exemptions for the armed forces in primary legislation across Government is extraordinary; in fact, there are so many that the Commons Library felt that it could not list them in their entirety in its briefing.
It is important to hold to the principle that we all have a part to play in trying to save the planet. There should be no exemptions for any Government Department. I accept that there are sensitivities around national security, but I think there are ways of addressing them and taking them into account. I am delighted that Labour Members are with me on this issue, and I will press the matter to a vote.
Question put, That the amendment be made.
Dr Whitehead
I beg to move amendment 94, in clause 18, page 11, line 20, leave out paragraph (b).
This amendment removes the exceptions for tax, spending and resources from the requirement to have due regard to the policy statement on environmental principles.
Bearing in mind that we have had something of a debate on this subsection overall, I need not detain the Committee long on this amendment, other than to say that it is a mystery to me that taxation, spending or the allocation of resources should be exempted in the same way that the armed forces should be exempted. The Minister defined why the armed forces should be exempted: they are doing things in the national interest and pursuing our defence. But taxation, spending and the allocation of resources are not doing that. They are doing things that are important to the country but do not come under that definition at all. I cannot understand the justification for exempting them from the provisions on the policy statements on environmental principles or what the exemption’s effect will be. I look forward to hearing from the Minister what her justification for this particular exemption is. I presume that it does not relate to national security or defence manoeuvres or activities that we should be pleased happen but do not need to know too much about. It would seem that this falls outside all those categories. There must therefore be some other reason and I am sure that we are about to hear about it.
Deidre Brock
The amendment would bring tax and spend into the scope of the Bill. I am glad that Labour is also addressing this because when I mentioned this on Second Reading, few Members seemed to have grasped it. It is a really important point. If we are not considering the big issues of politics and the spending on them, we are not putting the environment high on the list of priorities. Likewise, if environmental considerations do not play a part in taxation decisions, we are missing a great chance to influence people’s behaviour and help save our planet.
Rebecca Pow
I thank hon. Members for tabling the amendment. While we recognise the intention behind it, it is important to maintain the exemption to ensure sound economic and fiscal decision making. It is important to be clear that this exemption only refers to central spending decisions, because at fiscal events and spending reviews such decisions must be taken with consideration to a wide range of public priorities. These include public spending on individual areas such as health, defence, education and the environment, as well as sustainable economic growth and development, financial stability and sustainable levels of debt.
There is no exemption for individual policy interventions simply because they require spending. Ministers should still have due regard to the policy statement when developing and implementing all policies to which the statement is applicable. This means that while the policy statement will not need to be used when the Treasury is allocating budgets to Departments, it will be used when Departments develop policies that draw upon that budget. This is the best place for the use of the policy statement to effectively deliver environmental protection.
With regard to the exemption for taxation, let me reassure hon. Members that the Government are committed to encouraging positive environmental outcomes through the tax system, as demonstrated already by our commitment to introducing a new tax on plastic packaging, to encourage greater use of recycled plastic. We also have examples such as the woodland carbon guarantee and commitments to biodiversity net gain, with the Treasury commissioning the Dasgupta report. A raft of measures demonstrate this. However, we need to ensure the Treasury Minister’s ability to alter the UK’s fiscal position is not undermined, since taxation raises the revenue that allows us to deliver essential public services, such as the NHS, police and schools.
Although I recognise the purpose of the amendment, it is beneficial for the country that the Treasury can make economic and financial decisions with regard to a wide range of considerations, which will, of course, include the environment and climate. I therefore ask the hon. Gentleman to withdraw this amendment.
Dr Whitehead
As I always am, I will be polite. The Minister, with great aplomb, read out words from a piece of paper that was placed in front of her to explain what the clause means, but she must realise, as we all do, that that is total nonsense. It makes no sense at all.
Let us look at actions in various other areas of Government. The imperatives on net zero and climate change that we just passed through the House effectively apply to decision making in all Departments. Departments are not supposed to make decisions about their activities and spending without reference to those imperatives. Yet what we have on this piece of paper—I am sure it was assiduously drafted by someone seeking to defend this particular exemption—appears to drive a coach and horses through that consideration, let alone other considerations. Apparently, in taking its decisions on larger matters, the Treasury does not have to be bound by considerations on environmental protection.
I think that is a shock to all of us, because it means that the Bill is completely useless. The Treasury considers a large number of things in its policies, covering every area of practical Government activity, one way or another. If the situation is as the Minister has described, where do environmental protections stand? With any environmental protection, if it is part of the consideration of Treasury policy development, there is a door for the Treasury to run out of. As I understand it, that is what it says on the piece of paper.
Richard Graham (Gloucester) (Con)
Just for clarification, is the hon. Gentleman effectively saying that the Bill should provide the Treasury with an opportunity to give a blank cheque for whatever the Office for Environmental Protection requires?
Dr Whitehead
The phrase “due regard” comes in here, importantly. The truth is that clause 18 is a blank cheque in the opposite direction—a blank cheque for Ministers to invoke if they decide under certain circumstances not to be bound by environmental protection, as the Bill appears to suggest that we all should be. That is unconscionable; it should not be in the Bill.
Cherilyn Mackrory (Truro and Falmouth) (Con)
Could the hon. Gentleman clarify what would happen in the situation that we have faced this year, in which the Treasury has had to make very fast decisions and give billions to businesses because of covid? Some of those businesses might not be of an environmental nature—in fact, some might be what we would regard as non-environmental or actually detrimental to the environment —but because of the social impact of that money, the Treasury has had to do it. It is my understanding that if the law were as the hon. Gentleman would like it, the Treasury would not have had that leeway. Could he clarify that?
Dr Whitehead
The Treasury would have had that leeway, because of the phrase “have due regard”. There are clearly circumstances in which emergencies or other issues mean that Ministers may at particular stages have to draw away from their environmental or climate change imperatives and responsibilities. However, the important thing about having due regard is that if they do so, they have to explain why and under what circumstances they are taking the decision. Clause 18 will do exactly the opposite: Ministers will not have to explain anything—they can just not do anything that they do not feel like doing. I hope that Conservative Members will join us in saying that that is not good enough and is not what the Bill should be doing.
There could be another formulation. The hon. Member for Truro and Falmouth has pointed the way; with the right formulation, we could encompass the sort of circumstances she mentions. Of course we would be happy to support that, because there are indeed considerations that need to be undertaken at certain stages of emergency and difficulty, and which may cause some difficulty with the imperatives. That is what due regard protects us from, to a considerable extent. However, the principle that someone who does something other than what we think the imperative should point towards should justify what they are doing and be accountable for it is a very important part of our processes, and that is not the case here.
Rebecca Pow
I just want to clarify a few points. As I am sure the shadow Minister knows, HMT takes environmental impact extremely seriously already; in fact, it is referred to in the Green Book, which guides policy making, that it has to be taken into account including consideration of natural capital. The environmental principles will be referred to in the Green Book, so we already have very strong measures that HMT is obviously being guided by.
Dr Whitehead
Forgive me, but I think the Minister has elided “is” and “ought”. Yes, the Treasury may do those things and put them in the Green Book, but under clause 18 it does not have to, just as the Ministry of Defence is doing things that we might say are laudable—we heard about curlews coexisting alongside tanks—but it does not have to, and if for any reason it did not do them, it would not have to say anything about it. It is entirely lucky that the Treasury and the Ministry of Defence are doing what they are doing, but that need not be the case. The Minister illustrated in what she read out a little while ago that that is not the case. They do not have to do those things under the Bill. In defence of the fact that they do not have do them, she has highlighted examples of where, despite that and because of their good nature and good will, they are doing them anyway. I would expect that to happen, but it does not mean that in legislation we should allow good luck to rule the things that we think are imperative as far as environmental protection is concerned.
Daniel Zeichner
This is a fascinating discussion. As the debate has unfolded, I have found myself looking at the clause and thinking, “What would have been in anyone’s mind when drafting that extra line?”. What do they think needs to be excluded, and for what purpose? If the clause existed without that line in the first place, then unless people are seeking something rather extraordinary, I would not have thought they would try to open a huge opportunity to drive a coach and horses through an environmental protection Bill. What was the thinking, I wonder?
Dr Whitehead
Indeed; my hon. Friend shines a light on it. If one were of a suspicious character, one might say, “Why is this line here anyway?”. As the Minister said, the Treasury and the MOD do quite a lot of work in this respect. One might say, “Good. They do quite a lot of work in this respect, and that needs to be encouraged, so let’s have a pretty strong starting point to bolster the work that they do already, and let’s have some limited exceptions, driven by absolute necessity, with accountability over what they consist of and how they are undertaken.” Instead, we have drafting that does the opposite. If hon. Members were suspicious, they might question why that drafting is in there, and not another form of drafting that is much closer to what we all want to see: environmental protections being respected as far as possible.
Frankly, the Minister has given us no explanation of why it is there. She has given us a very able and clear exposition of who does what through their good nature. I applaud her for that, because it is part of her Department’s remit to make sure other Departments do that. However, her Department’s remit would be strengthened if the clause was strengthened or if it was not there at all. On that basis, I am afraid that we will seek to divide the Committee on this amendment.
Question put, That the amendment be made.
Dr Whitehead
I beg to move amendment 195, in clause 20, page 12, line 16, at end insert—
“(1A) The Secretary of State must—
(a) consult on the criteria and thresholds to be applied in determining significance for the purposes of subsection (1), and
(b) publish guidance on those matters reflecting the results of the consultation.”
This amendment would require the Government to consult on what counts as “significant” for the purposes of this Clause.
The Chair
With this it will be convenient to discuss the following:
Amendment 196, in clause 20, page 12, line 19, at end insert—
“(2A) The report must include—
(a) the results of an independent assessment of developments in international environmental protection legislation, and
(b) the Government’s proposed response to those developments.”
This amendment would require the report to include an independent assessment and the Government’s response to it.
Amendment 197, in clause 20, page 12, line 32, at end insert—
“(7) The Secretary of State must make an oral statement to Parliament about the report as soon as reasonably practicable following the laying of the report.”
This amendment would require an oral statement to accompany the written report.
Dr Whitehead
I am afraid that we come to another discussion about the definition of a word in the Bill, which I know will cause some Members to groan. Nevertheless, as we saw in the last discussion, just a couple of words, or three, can have enormous significance in terms of a Bill’s wider consequences, so it is important that we look at them, what they mean, and their place in the Bill.
Amendment 195 seeks to define what is meant by “significant” where the clause states:
“The Secretary of State must report on developments in international environmental protection legislation which appear to the Secretary of State to be significant.”
The clause therefore provides for reports on what is happening around the world in terms of environmental protection legislation. What are the good and bad points, what can we learn from, and what things can we co-operate on? The clause kindly defines international environmental protection legislation as
“legislation of countries and territories outside the United Kingdom, and international organisations, that is mainly concerned with environmental protection.”
The clause also states:
“The Secretary of State must report under this section in relation to each reporting period.”
It then states what those reporting periods are to be. International environmental protection legislation is therefore defined, but the Secretary of State apparently has a completely free hand to decide which of those developments are significant, without any accompanying definition in the legislation of what that word means.
One might say that that is quite significant, because clearly there can be an enormous range of judgments on what, subjectively, a particular Secretary of State might think are significant international developments. For one Secretary of State, it might be that a particular state has adopted legislation similar to our own in their Parliament. Another might think it significant that another jurisdiction has decided that its army should be exempt from land holdings coming under its own environmental legislation, and that such an omission has produced riots and street clashes in that country as a result of the population deciding that it was a bad idea. A range of things might be regarded as significant or not.
Bim Afolami (Hitchin and Harpenden) (Con)
This point is fundamental. As drafted, the Bill has it as a subjective judgment by the Secretary of State. The hon. Gentleman’s amendment seeks to make it objective. In our system—this goes to the heart of the amendment, and many others—the Secretary of State and Ministers representing the Department are responsible to Parliament for their actions and whether any judgment they make is correct. The Bill deliberately leaves it in the hands of the Secretary of State to make that subjective judgment, and if the House disagrees at the time the debate will happen at the time.
Dr Whitehead
I thank the hon. Member for his intervention, but that is not quite right, really. The Secretary of State must report on developments and on international environmental protection legislation that appears to him or her to be significant, and after he or she has taken a judgment, he or she produces a report that must be laid before Parliament. What comes before Parliament is not what is before the Secretary of State. It is not a gazetteer of international environmental protection action. It is a report after the Secretary of State has decided what is significant and what is not significant. Those things that the Secretary of State defines as not significant are left out of the report.
Parliament could conceivably say, “Aha! We have done a great deal of separate assiduous research and we have decided that the Secretary of State has left this and this and this out—why has the Secretary of State left these things out?”, but that requires a separate series of actions from Parliament that are outwith the report, not about the report itself. The amendment seeks to define what the Secretary of State should reasonably put into a report for Parliament to look at. We have also tabled an amendment on what should be done in addition to the report being published, which we will come to in a moment.
The central point of the amendment is that the Secretary of State should
“consult on the criteria and thresholds to be applied in determining significance”
and then
“publish guidance on those matters”.
That still gives the Secretary of State some leeway in determining what is in the report, but it means that there is a body of guidance by which the Secretary of State should be guided in terms of what he or she puts in the report for the subsequent perusal of Parliament. At present, because there is no definition of “significant” in the Bill, that guidance is completely lacking.
I hope that now I have given that explanation, the hon. Member for Hitchin and Harpenden can support the amendment, as I think what he seeks to ensure is that Parliament gets a report and the chance to discuss what the Secretary of State has done. I would suggest that a much better way of doing that is by agreeing to the amendment, rather than the word standing unexplained, as it does at the moment.
Rebecca Pow
I thank the hon. Member for the amendment. I recognise the intention behind requiring further guidance on what counts as “significant”. However, this is a horizon-scanning provision. As such, it would be counterproductive for the Government to try to anticipate in advance the kinds of significant developments that might be identified.
There is no single overarching metric for the environment. Many of us touched on the complex landscape that is the environment earlier today. Creating an objective test is impossible. It is important that there is flexibility to take account of the full range of developments in the period, in order to produce a report that is useful in informing domestic legislation. The amendment would reduce the flexibility, potentially limiting the scope and use of the report.
The review will cover other countries’ legislation that aims to protect, maintain, restore or enhance the natural environment or that involves the monitoring, assessing, considering or reporting of anything in relation to the above that is significant. What is significant will depend on the period being assessed. Something significant today might not be significant next year and different things might be significant next year.
On the proposals for an independent assessment and an oral statement, I assure the hon. Member that there are already effective measures in place to allow Parliament to scrutinise the report. That point was ably raised by my hon. Friend the Member for Hitchin and Harpenden. When the report is laid before Parliament, Members can highlight any areas where they believe the Government have missed important developments. It is obviously really important that they do this, and it will ensure independent scrutiny. It is crucial that this is carried out and that we look at what is going on internationally. If we want to call ourselves global leaders, we have to be aware of what is being done elsewhere. If there are good examples, we need to copy them.
Daniel Zeichner
As I listen to the Minister, I think there is so much subjectivity involved in this. Just thinking back through the glorious array of Secretaries of State who we have had in the Conservative Government over the past decade—
Daniel Zeichner
There has been a glorious range of opinions, including those of one or two notorious climate change deniers, so there would have been a completely different view on things that were happening internationally, depending on which part of the spectrum of opinion was held by the office holder at the time. Clearly, there can be a change of Governments in the future when this legislation is in place. Surely having an objective set of criteria for how this is done is far better than just having a subjective view, with it depending on whether something is deemed to be significant by the office holder and Government at the time.
Rebecca Pow
I think the hon. Gentleman has stepped right into my trap, because that is why it is really important that the report goes before both Houses so that they can both comment. The whole purpose of it is that it will be well scrutinised, so that the right measures are introduced. There will be many measures, and we will not want all of them to be introduced, so we need to choose the very best ones. The whole idea of the Secretary of State’s report is that it will be open and transparent—I honestly hope that I have made that clear.
The clause is about ensuring that the Government take active steps to identify significant improvements and are accountable to Parliament for the actions that they will take in response. It is therefore right that the Government take full responsibility for producing the report. I do not think that requiring the Secretary of State to outsource the responsibility is the right approach. Additionally, independent consideration can already be provided by the Office for Environmental Protection—for example, clause 27 provides Ministers with the power to require the OEP to advise on any other matters relating to the natural environment, which could include developments in international environmental protection legislation that it sees as important, positive or progressive, so we have that extra layer there as well.
I hope that I have given some clarity, and I ask hon. Members not to press amendments 195 to 197.
The Chair
Amendments 195 to 197 are grouped together. We have debated them, but we will not be deciding on amendments 196 and 197.
The Chair
They are one group: amendments 195, 196 and 197. That is the group we are currently discussing.
The Chair
Well, it is too late. I asked you to discuss it in the first place, and you did not. You can now wind up on the group of amendments.
Dr Whitehead
Thank you, Chair. Following your advice, I will wind up on this group of amendments. In so doing, it is conceivable that I might refer to some of the amendments during the course of my discussion.
Dr Whitehead
We have the Minister’s explanation of how the word “significant” is to be defined: it is not to be defined, effectively. We also have what I would kindly say is a descriptive, rather than an objective, passage about what Secretaries of State do about significance. The point made by my hon. Friend the Member for Cambridge is really important, and it underlines what I said previously. We do not impugn the motives or the commitment of either the present Secretary of State or the present Minister in this respect. I am sure they will do everything they can to ensure that such reports are open and transparent, are put before the House and are properly discussed and that they include everything that most people would consider significant, as far as international environmental protection events are concerned.
However, that is not the point. The point is that different people could occupy those offices. They might have significantly different views and might produce virtually nothing for the House regarding environmental protection events. There would be nothing in the Bill to stop them doing that, except, possibly, if we were to pass amendment 197. That amendment would add to this part of the Bill by saying:
“The Secretary of State must make an oral statement to Parliament about the report as soon as reasonably practicable following the laying of the report.”
As the hon. Member for Hitchin and Harpenden envisaged, the Secretary of State would have to come before the House and make an oral statement, on which he or she could be questioned. There would therefore be a clear line of transparency at that time as far as whatever the Secretary of State decided to do concerning the report. If the Minister went as far as to accept amendment 197, that would make a difference concerning this test of significance. As matters stand, we feel that the protections are woefully inadequate in terms of the way in which the report must be compiled and presented. Therefore, we seek to divide the Committee.
Question put, That the amendment be made.
Dr Whitehead
I beg to move amendment 95, in clause 20, page 12, line 32, at end insert—
“(7) The Secretary of State must—
(a) keep under consideration whether there are any steps which they could take which would or might secure better or further effect full compliance with the Aarhus Convention, and
(b) if they consider it appropriate to do so, take any of the steps identified by that consideration.
(8) A report under this section must set out what steps have been taken during the reporting period to secure better or further effect full compliance with the Aarhus Convention and what steps the Secretary of State intends to take during the next reporting period to that effect.”
This amendment requires the Secretary of State to consider what steps may be taken to improve compliance with the UNECE Convention on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters and, if they consider it appropriate to do so, to take those steps.
The Chair
With this it will be convenient to discuss amendment 97, in clause 22, page 13, line 8, at end insert—
“(c) respect, protect and fulfil the rights contained in the UNECE Convention on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters.”
This amendment requires the OEP to oversee implementation of the UNECE Convention on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters.
Dr Whitehead
The explanatory statement for this particular amendment relates to the question of securing better or further effecting full compliance with the Aarhus convention, which is a wide-ranging convention relating to environmental protection and activities.
The amendment suggests that the Secretary of State should keep under consideration how the UK Government might secure better or further effect full compliance with the Aarhus convention. We are signatories to it, so one would have thought that we should try to fully comply with it, in general terms. The amendment is really asking the Secretary of State to do something that we ought to do anyway. If the Secretary of State considers it appropriate, the amendment also suggests that they take the steps identified in that consideration and produce a report setting out what steps are being taken to secure full compliance and what steps they intend to take over the next reporting period.
The Aarhus convention is important, but it has been, in some people’s eyes, somewhat overtaken by other events. Nevertheless, it remains important in international environmental considerations, and it important that it should be put into the Bill as one of the Secretary of State’s considerations to undertake.
Rebecca Pow
I thank the hon. Gentleman for drawing the Committee’s attention to the Aarhus convention, which is of course an international agreement. I do not deny its importance, so he and I agree on that.
The UK ratified the convention in 2005, and we remain a party to it in our own right. Our exit from the EU does not change our commitment to respect, protect and fulfil the rights contained in this important international agreement. Implementation of the Aarhus convention is overseen by the Aarhus convention compliance committee, and the Department for Environment, Food and Rural Affairs co-ordinates the UK’s ongoing engagement with the committee on our implementation and on findings pertaining to the UK on specific issues. The committee has welcomed the willingness of the United Kingdom to discuss compliance issues in a constructive manner.
Clause 20 requires the Government to review significant developments in international environmental protection legislation, as we discussed. The findings of that review will then be used to inform Government policy on environmental protections, enabling the UK to stay at the forefront of international best practice on environmental protection. The amendment would require that report to include material about existing obligations under the Aarhus convention, not new, innovative developments in environmental protection legislation. That would dilute the purpose of the clause. We independently meet our convention obligations, and there is no need to amend clause 20 to ensure that we continue to do so.
Amendment 97 is unnecessary, as the provisions of the Aarhus convention already fall within the remit of the OEP, where they have been given effect in UK law and meet the definition of environmental law. The OEP will improve access to justice: it will receive complaints free of charge to complainants and will have powers to investigate and enforce compliance with environmental law by public authorities. The OEP will be legally required to keep complainants informed about the handling of their complaints, and it will also have to produce public statements when it takes enforcement action, unless it would not be in the public interest to do so. In addition, public authorities that have been subject to legal proceedings by the OEP will be required to publish a statement setting out the steps they intend to take in the light of the outcome of the proceedings.
Given that we are already engaged with the convention committee on our obligations, the amendments are unnecessary. I ask the hon. Gentlemen not to press them.
Dr Whitehead
I appreciate that the Minister has already replied, but I wonder whether she could—
Dr Whitehead
Has the Minister thought about the extent to which the Aarhus convention is fully implemented in the UK, either via retained EU law or the existing domestic system? In terms of her response to this debate, was she saying that it is the case that the Aarhus convention is now fully implemented in UK law?
Rebecca Pow
I know I am not able to speak again, but perhaps the shadow Minister will allow me to intervene on him—I think I will have to put this in the form of a question, which makes it quite tricky, Mr Gray. Does the shadow Minister agree that the UK’s commitment to the Aarhus convention is unaffected by EU exit, because the UK is a party to the convention in its own right?
Dr Whitehead
That is true, but nevertheless there is the question of the extent to which that commitment itself is a freestanding commitment or additional, via EU retained law. I think the Minister will agree that there is EU retained law in respect of the Aarhus convention. While it is true that we are an individual signatory to it, we were also effectively a joint signatory to it through the EU joint law arrangement. Therefore, we were actually twofold signatories, as far as the Aarhus convention is concerned. Does the fact that we are now a onefold signatory to the Aarhus convention fully replace what it was that we were originally as a twofold signatory to the Aarhus convention? I think the Minister was saying yes, but I am not absolutely certain that that is the case.
Richard Graham
I am slightly confused that the shadow Minister appears to be suggesting that if we are a signatory to any convention in our own right, we are somehow a stronger signatory if we are also a signatory as part of the EU, which we have already left. Are we not straying into areas of semantics way beyond the Environment Bill today?
Dr Whitehead
I can understand the hon. Member indicating that this may be semantics, and indeed, it may be. I was attempting to elucidate the question of whether our being an original signatory to the Aarhus convention—when the convention took place—is identical to what has happened in terms of our being a joint signatory to the Aarhus convention, which took place through our EU membership. There are instances where something that the UK originally signed up for was signed up for jointly through the EU at a different stage. A lot of the conventions on atomic materials transfers and various similar things, which have gone through Euratom or the International Atomic Energy Agency are subject to that sort of progression, where what we signed with the IAEA and what the European Community signed up to subsequently, are a progression in terms of those original signatories. They therefore mean slightly different things, even though it appears that there are two signatories.
It may be the case that the hon. Member is right, and I am seeking to get the Minister to elucidate whether, indeed, the hon. Member is absolutely right. Is the fact that we are a signatory to the Aarhus convention exactly the same as what was the case when we were previously—in addition—a joint signatory with the European Union? Are there any particular matters relating to that signatory which should be converted into UK law to ensure that we are actually in the right place, as far as that signatory issue is concerned? The Minister may well stand up and say yes, that is the case—in which case, I will be a very happy Member of Parliament.
The Chair
That question must hang in the air, because the Minister has already spoken. Does the hon. Gentleman wish to withdraw the amendment?
Dr Whitehead
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 20 ordered to stand part of the Bill.
Clause 21 ordered to stand part of the Bill.
Schedule 1
The Office for Environmental Protection
Dr Whitehead
I beg to move amendment 179, page 121, line 16, at end insert
“with the consent of the Environmental Audit and Environment, Food and Rural Affairs Committees of the House of Commons”.
The amendment would require the appointment of the Chair and other non-executive members of the Office for Environmental Protection to be made with the consent of the relevant select committees.
We have now moved from chapter 1 of the Bill, which is about environmental governance and improving the natural environment, to the very important topic of the Office for Environmental Protection, which I think will detain the Committee for a little while, as we will discuss not only its formation and operation, but the amendments that the Government made while the Bill was not before us, changing what the Opposition think are substantial elements of the OEP’s operation.
Clause 21 states:
“A body corporate called the Office for Environmental Protection is established.”
So before anybody worries too much about where we have got to, that is all we have done so far. We have just established the Office for Environmental Protection. As with all good Bills, however, the meaning is often contained at the end, in the schedules. That is the next bit we are dealing with this afternoon—the schedule that sets up what the Office for Environmental Protection is about. I assume that we will get stuck into the substance of the Office for Environmental Protection’s objectives, independence and general function in our next sitting, but this afternoon we are concentrating on some details about the OEP’s membership, non-executive directors, interim chief executive and so on. Some people may say that those are not particularly central or important to the OEP, but they nevertheless have quite considerable repercussions in terms of its independence or otherwise.
Amendment 179 looks at the first appointment of the chair and non-executive members, and at how they are appointed and with what agreement. I am sure hon. Members will agree that, in addition to what the Office for Environmental Protection does, a key part of its independence lies in who its chair is, who the non-executive directors are, how they act in their role and the extent to which they ensure and guarantee that the office carries out an independent function in terms of that protection role. Paragraph 1(1) of schedule 1 defines what the OEP consists of: a chair, at least two but not more than five other non-executive members, a chief executive, and
“at least one, but not more than three, executive members.”
Paragraph 1(2) states:
“The members are to be appointed by the Secretary of State”.
Under paragraph 2, the non-executive members are also to be appointed by the Secretary of State, but
“The Secretary of State must consult the Chair before appointing any other non-executive member.”
The key is that a lot of the appointments effectively flow from the appointment of the chair. The Secretary of State must consult the chair on how other members are appointed having appointed the chair in the first place. The question then is whether it is right that the chair of the OEP is appointed simply because the Secretary of State decides that he or she should be appointed and has an untrammelled ability to do that. We think that that could create a cascading lack of independence in the whole OEP, depending on how the process is carried out. If it is carried out without any scrutiny or accountability, it is quite possible that the Secretary of State could appoint someone whom he/she particularly favours or thinks will give him or her an easy time with the appointment of other members of the office, and shape the office to be entirely subservient to what the Secretary of State wants to do.
Daniel Zeichner
My hon. Friend is making an important point. A theme runs through the debates today: an extraordinary concentration of power in the hands of the Secretary of State. In the discussion on the Aarhus convention, we saw the move away from supranational bodies. It is a basic principle that if power is spread, there is far more chance of it being exercised properly, particularly with something as important as environmental protection. Does he agree that this is just the latest example of a theme that has developed all the way through?
Dr Whitehead
That is indeed a concern. We have raised, and will repeatedly raise, the difference between the Bill’s aspirations and many of the practicalities. The difference between the Bill’s lofty aspirations and its often severely lacking practicalities is apparent throughout its construction. This is one instance where that is the case. The chair of the OEP is, in the first instance, to be a non-executive member of the office. I would be interested to hear whether the Minister shares my understanding, but it looks to be the case that the chair will be appointed from among the non-executive members whom the Secretary of State has appointed in the first place. The key at that point is who the non-executive members are and how they are appointed. In this instance, they appointed just by the Secretary of State. We suggest a procedure that grounds those appointments within parliamentary procedures.
Robbie Moore (Keighley) (Con)
Does the hon. Member recognise that the Environment, Food and Rural Affairs Committee and the Environmental Audit Committee have the opportunity in the appointment process to scrutinise the Secretary of State’s preferred candidate?
Dr Whitehead
The hon. Member has put his finger exactly on the problem, because according to this piece of legislation, in practice, they do not. There is no requirement to do that in the Bill. The amendment is designed to do exactly what he suggests should be done, which is that the appointment should take place with the scrutiny and consent of the Environmental Audit Committee and the Environment, Food and Rural Affairs Committee.
Rebecca Pow
I will keep my comments to what the amendment refers to, which is the involvement of the Environmental Audit Committee and the Environment, Food and Rural Affairs Committee. I agree with the hon. Gentleman that Parliament should have a role in the process of making significant public appointments. To scrutinise key appointments made by Ministers is a proper role for Parliament. The Environment, Food and Rural Affairs Committee and the Environmental Audit Committee—I am proud to have been a member of both, and many hon. Members here are members of those Committees—will jointly carry out a pre-appointment hearing with the Secretary of State’s preferred candidate for the OEP chair.
As the shadow Minister knows, there has already been a lot of discussion about this. This is a commitment. The Secretary of State will duly consider any recommendation made by the Committees.
Ruth Jones (Newport West) (Lab)
The Minister says that the preferred candidate can be scrutinised. Is that not a bit of a Hobson’s choice?
Rebecca Pow
This is an open and fair process, and other appointments are duly scrutinised in that way. The considerations and views of both Committees will be taken extremely seriously because the work they do is very pertinent to the work in this sphere of Government. The OEP chair is then consulted by the Secretary of State on the appointments of the non-executive members. We do not believe it necessary or desirable for Parliament to scrutinise all those individual appointments in the way that has been suggested.
Ministers are accountable and responsible to Parliament for public appointments, and they should therefore retain the ability to make the final determinations. Ultimately, Ministers are accountable to Parliament and the public for the overall performance of the public body and of public money. The OEP will be added to the schedule of the Public Appointments Order in Council and so will be independently regulated by the Commissioner for Public Appointments. The Secretary of State will be required to act in accordance with the governance code, including with the principles of public appointments, which would ensure that members are appointed through a fair and open process.
The chair of the OEP will be classed as a significant appointment, requiring a senior independent panel member, approved by the commissioner, to sit on the advisory assessment panel, which can report back to the commissioner on any breaches of process. We have also introduced, in paragraph 17, a duty on the Secretary of State to have regard to the need to the need to protect the OEP’s independence in exercising functions in respect of the OEP, including on public appointments.
Those arrangements, and the requirements in the Bill, provide the appropriate balance between parliamentary oversight and ministerial accountability, while ensuring that appointments to the OEP are made fairly and on merit. I therefore request that the hon. Member for Southampton, Test withdraw his amendment.
The Chair
Order. The Minister sat down before you asked, Mr Graham, but I dare say you may intervene on the shadow Minister. I call Dr Alan Whitehead.
Dr Whitehead
The Minister has yet again provided us with a description of things that happen, as opposed to what ought to happen as far as this House is concerned. On the second category of events, she appears to be saying that Select Committees may well take it upon themselves to interview and discuss candidates for posts—with the agreement of that candidate—and report back their thoughts, and that Ministers may then decide that they like or do not like what the Select Committee has said, but are pleased, in any event, that the Select Committee did that piece of work.
I do not think the Minister can show me anything in the Bill that requires that process to be cemented, so that the Secretary of State could not go ahead with an appointment without Select Committees having done that work. Let us say, for example, that the Select Committees decided that they did not want to do the work or were too busy with other matters, and the Secretary of State appointed the chair and the non-executive members of the board, there would be nothing that anyone could do about it, because nothing in the legislation says that that scrutiny has to happen. The Minister should be able to confirm that there is nothing in the legislation for that.
Richard Graham
I think I understand the position of the Opposition, which is to undermine slightly the independence of the new Office for Environmental Protection before it has even got under way by suggesting that the appointments process for the chair will somehow be rigged, with some crony of the Minister or the Secretary of State comfortably slotted into position. Shock, horror! That never happened under the Government of which he was a member.
In fact, what has taken place is rather remarkable. It is much closer to an American appointments hearing than almost anything that has ever happened in relation to senior appointments to new independent offices. The idea that two—not just one but two—Select Committees would be so disinterested in their unusual and new power to scrutinise and hold to account someone who is being put forward as the first chairman of a new independent body and would completely overlook their responsibilities is surely bizarre. The hon. Member is a reasonable man. Can he not agree that this is a very good process?
Dr Whitehead
A very good one, if I may say, but nevertheless a speech. You are right, Mr Gray.
The point the hon. Gentleman was making is that a process of scrutiny will, in this instance, be undertaken by the Select Committees in question. However, we need to look at the circumstances whereby that scrutiny comes about. The Committee and, indeed, members of the Select Committee, may say “Actually, this particular piece of formulation in the schedule relates to the appointment of the initial chair of the Office for Environmental Protection” but I think it probably applies to the appointment of chairs as they go forward.
Rebecca Pow
I remind the hon. Gentleman that the Select Committees pressed for that scrutiny and they have welcomed the fact that they will be able to scrutinise the potential chair. They did some prelegislative scrutiny of the Bill; that was one of their recommendations and we accepted it. It has gone down extremely well. I want to back up the comments from my hon. Friend the Member for Gloucester in terms of what is being put in place. I am sure the shadow Minister, when he fully understands the process, will agree with me that the purpose is that non-exec members in particular are appointed on a fair and open basis, regulated through our public appointments process.
Dr Whitehead
I am not suggesting that anything is other than that, and I am not suggesting that the Select Committees are anything other than pleased with what they have undertaken to do and the welcome their work has received from the Government. However, the Minister, in a sense, answered her own question by stating that the Select Committees pushed for that. That is what Select Committees do, and they have the power to summon all sorts of people. In this instance, as far as I understand—I may not have fully understood the process—the Select Committees in their power as Select Committees in general pushed for the hearing and Ministers thought that was a good idea and they went ahead with it. To that extent, yes, things have gone well, but it is still not in the Bill that that should ever happen. It is entirely down to the Select Committees. We should not do it that way round.
Rebecca Pow
Does the hon. Gentleman not agree with me that the very fact that that has happened demonstrates that Select Committees are taken seriously? As such, the measure in the Bill is sensible, serious and fair.
Dr Whitehead
As it happens, yes. However, again, we are in “as it happens” territory, which we seem to be in rather a lot this afternoon. As it happens, yes, that appears to be working quite well. I do not know, should there be a future reconstitution of the Office for Environmental Protection or future appointments of non-exec members and the chair, whether that procedure would necessarily be replicated. It might be; it might not. We are lucky we have Select Committees that are as strong as they are.
Cherilyn Mackrory
As a new Member, I am just understanding the mechanisms here. From what I am hearing, the process that has just taken place to ensure that we are where we are is due to good parliamentary mechanisms. It seems that the hon. Member is asking Ministers to put more parliamentary mechanisms in the Bill when those checks and balances are already in place and work very well.
Dr Whitehead
The hon. Member is quite right to draw attention to good parliamentary mechanisms. I do not want us to be diverted into a long discussion about the Executive and the unwritten UK constitution, but Parliament is not putting a provision on the Executive by passing this Bill—that does not exist. Instead, Parliament has used parliamentary procedures outside of that to have an effect on the Executive, and the Executive have agreed for that effect to be placed upon them. That is a good thing—I do not in any way want to undermine that. As the hon. Member says, that has worked well.
Cherilyn Mackrory
The hon. Gentleman is illustrating the point perfectly. Secretaries of State come and go at the mercy of the electorate, whereas the parliamentary checks and balances are always here. That is what should govern the procedure.
Dr Whitehead
Yes, indeed—Secretaries of State come and go, just as Presidents of the USA come and go. Nevertheless, while they are there, Presidents can appoint justices of the Supreme Court who are always there. Although the member of the Executive has gone, the effect of their actions remains—in this example, with the judiciary branch in the US. In principle, that is what could happen as far as this construction is concerned in the Bill. A Secretary of State who comes and goes could appoint, without involving the parliamentary process, somebody who will outlast the Secretary of State in that position.
Anthony Browne (South Cambridgeshire) (Con)
I am a member of the Treasury Committee. We do a lot of selection hearings and most of them are agreed through parliamentary processes. We find we end up doing an awful lot of selection hearings, and we have spent a huge amount of time doing them, on the board of the Bank of England, the Prudential Regulation Authority, the Financial Policy Committee and so on. We end up having discussions about whether we want to do all these hearings. Do we do them in this way or that way? Do we do reappointment hearings? We retain flexibility around that, because it is done through the parliamentary procedure.
It seems to me that the danger of setting down in legislation that all non-executive members should be appointed on the consent of the two Committees is that we bind their hands into the future. They may decide that they want to do it in some other way. We retain more flexibility for the Committees if they do it through parliamentary means.
Dr Whitehead
Well, yes is the answer. We are trying to bind those Committees to some extent to do the right thing, as far as those appointments are concerned. The hon. Gentleman who has experience on the Treasury Committee and other hon. Members who have experience on Committees will know that Committees take their responsibilities seriously. I have been party to that sort of discussion in Select Committees that I have served on in the past. They take their responsibilities very seriously. They take the issue seriously. They do it very carefully and make sure that the result of their deliberations is as good as it can be. That is something that I am absolutely fine with; I do not wish to fetter that in any way.
However, the hon. Gentleman and other Members also know that that has not always been the case with Select Committees. Indeed, in my time in Parliament, is has largely not been the case. The process of deciding upon the appointment of members of various organisations via a Select Committee hearing is a relatively recent innovation. That came about not as a result of legislation but as a result of Select Committees pushing their own authority within the parliamentary system.
In one sense, that is perfectly acceptable, but I am seeking to draw a distinction between that process, which has by and large resulted in a good outcome as far as these appointments are concerned, and the fact that it says in a piece of legislation, “That is what is supposed to be done.” There are other pieces of legislation in existence that specify what is supposed to be done, but this piece of legislation does not. I wonder to myself why those pieces of legislation specify those things whereas this piece of legislation does not.
It would not be difficult—on the contrary, it would be very straightforward—to specify in this piece of legislation what is to be done, while agreeing that that is largely what happens in practice in this Parliament. That is a good thing, and it is a sign of our changing unwritten constitution—I emphasise the word “unwritten”. That is why, in a piece of legislation, it is probably necessary to write down what our intentions are and how they are to be carried out in practice by the House in its interpretation of the unwritten constitution of this country.
Daniel Zeichner
I had the privilege of serving on the Transport Committee for a couple of years. Like the hon. Member for South Cambridgeshire—my near neighbour—I went to a number of hearings and found them very useful. It strikes me that there is a range of levels of significance. This appointment is hugely significant. It takes back from a supranational body, the European Union, responsibility for one of the most important oversights. We all agree that it would be good to go through this process, so I do not understand why the Government do not want to codify in law what will in fact happen. I do not quite see what they are frightened of. Does my hon. Friend agree?
Dr Whitehead
Yes, indeed, Mr Gray. I agree with my hon. Friend. It would be a good idea for the Government to put this in the Bill, notwithstanding the fact that, in practice, the creaking oak of the British constitution does things in sometimes surprising ways in order to develop itself. It is always useful to have something on the face of a piece of legislation to fix how the unwritten constitution works in respect of a particular function of Government. There is nothing to lose and everything to gain from putting this in the legislation.
Question put, That the amendment be made.
Dr Whitehead
I beg to move amendment 15, in schedule 1, page 122, line 5, leave out “may” and insert “must”.”
The amendment asks for “may” to be left out and “must” to be inserted. As I recall, we have had previous discussions about that in this Committee, so I do not think I need to add anything further.
Dr Whitehead
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Dr Whitehead
I beg to move amendment 154, in schedule 1, page 122, line 11, leave out sub-paragraph (3).
This amendment prevents the Government from giving directions to the interim chief executive of the OEP.
The amendment concerns the directions that the Secretary of State may give an interim chief executive of the Office for Environmental Protection. As hon. Members will see, paragraph 4(3) of schedule 1 refers to an interim chief executive
“exercising the power in sub-paragraph (2)”,
which states:
“Where the OEP has fewer members than are needed to hold a meeting that is quorate…an interim chief executive may incur expenditure and do other things in the name and on behalf of the OEP.”
The key point is that the interim chief executive may do “other things” in the name of and on behalf of the OEP, even though the OEP does not have sufficient members to be quorate and take a decision.
What appears to be envisaged is that in those circumstances,
“an interim chief executive must act in accordance with any directions given by the Secretary of State.”
Quite simply, if an interim chief executive is in post without those other members of the OEP being appointed—depending on the speed with which that is done, it could be quite a while—the independence of the OEP will not be compromised just a little bit; it will be compromised completely, in that the interim chief executive is completely the creature of the Secretary of State.
The Chair
Order. I think the hon. Gentleman is addressing himself to the wrong amendment, because this amendment requires that sub-paragraph (3) be deleted from paragraph 4. You are referring to sub-paragraph (2), I think.
Dr Whitehead
Mr Gray, if I gave that impression then I am sorry, but I thought I was speaking to sub-paragraph (3) of paragraph 4, which is that the chief executive
“must act in accordance with any directions given by the Secretary of State.”
As far as I can tell, amendment 154 leaves out sub-paragraph (3), which is the sub-paragraph to which I was referring.
That is, in essence, the case that we want to make this afternoon. As hon. Members have already asked, why is this particular provision in place? What is the problem here? If this is an interim chief executive of a body that is going to be independent, why the lack of independence when the OEP is still forming itself? Is it because the Secretary of State thinks that the interim chief executive might go rogue and do all sorts of odd things in the absence of other non-executive directors to hold them in place? In that case, the appointment process for the interim chief executive must be pretty lacking. Is it that the Secretary of State might be tempted to mould the OEP and its operations before it is fully functional as an independent office and can therefore, as it were, hit back?
I would not like to think that either of those are correct interpretations of this sub-paragraph, but as it is written, that is what it appears to say: that the interim chief executive does as the Secretary of State says. That seems to fly in the face of everything I have understood about the OEP and how it is supposed to work, how it is supposed to be set up and how it is supposed to start operating. As the amendment states, we would therefore like to see the sub-paragraph excised from this Bill, so that the interim chief executive has the beginnings of the independence in his or her actions in the OEP that we would expect the OEP to have when it is fully formed.
Anthony Browne
I have set up lots of organisations and it is completely standard to go through a process where there is a shadow or interim chief executive and an interim board. There is a critical difference between that position and a substantive chief executive, which is that they are setting up the way the whole system works—the operations, the modus operandi—and making significant decisions that will last for many years or decades. They are doing it in a position where there is not full governance around it, such as a fully established board, an established chair and everything else. It is right that there is some oversight of what an interim chief executive is doing in setting up the organisation, because the rest of the governance infrastructure will not be there yet.
Daniel Zeichner
There has not been any comment yet on the extraordinary situation we find ourselves in. We are just 55 days away from the end of the year and the new situation that we are about to embark upon, and there is nothing in place. That is part of the problem. It is a shambles, quite frankly, that we are leaving the European Union and entering a period where it is unclear how our environmental protections will work. I suggest much more will be said about that as we go through our debates.
As my hon. Friend the Member for Southampton, Test and the hon. Member for South Cambridgeshire have said, this is a key moment in setting the path ahead for this new organisation. This provision feeds into this general sense that, far from having a much more sophisticated and wider way of approaching these issues, it all comes down to centralising power in the hands of the Secretary of State to determine the way forward. That cannot be right and I think there is genuine outrage among many who are looking at how this process is unfolding.
We have gone from helping to establish strong environmental principles as a leading player in the European Union to the extraordinary position we find ourselves in. We have no idea how long this is going to take. Is it going to be in place? Perhaps the Minister could tell us. Perhaps things are in train and we are waiting for announcements. Perhaps it will happen next week or in January, or perhaps it will not happen for months and months. In the meantime, many of our own protections are in limbo, effectively.
The schedule gives us no confidence that the Government even have a plan for where we are going with this. I hope the Minister can give us some reassurances, because many of my constituents—and, I suspect, many constituents of other Members—are really worried about these issues. At a time of climate crisis and biodiversity emergency, how can we possibly be setting an example to the rest of the world as we approach COP26 when we are in this shambolic position, with the suggestion that this so-called independent agency should effectively be run by the Secretary of State?
Rebecca Pow
There have been some fiery comments about this particular amendment, Chair.
I welcome the support of the hon. Member for Southampton, Test for our inclusion in the Bill of a mechanism to appoint an interim chief executive of the OEP. I want to give some reassurances that establishing this independent body that can hold future Governments to account is of crucial importance. That remains very much in focus when considering this power for the Secretary of State to appoint an interim chief executive.
The initial role of the interim chief executive would be to take urgent administrative decisions to ensure that the OEP is up and running as soon as possible, which I know is a key concern of Members. I want to say a little about that role and why it is necessary. Such decisions would include staff recruitment and other matters related to setting up the new body. I welcome the comments of my hon. Friend the Member for South Cambridgeshire, who has a lot of experience in setting up these bodies. It is a fully practical step to help with the interim period. By way of background information for the hon. Member for Cambridge—he raised some pertinent points—we intend that the permanent chief executive will be in place no later than autumn 2021, and the proposed timeline then allows for the OEP chair to lead the appointment of that chief executive.
By way of more background, the Secretary of State has asked officials to assemble a team of staff within the Department for Environment, Food and Rural Affairs group, to be funded from the Department’s budget, to receive and validate any complaints against the criteria for complaining to the OEP; so there will be a team in place in the interim. A lot of work has gone on behind the scenes but we had a lull because of the coronavirus, so it is nobody’s fault that this has happened. Obviously, other structures and plans are being put in place, but that is why details of an interim chief executive have had to be considered. That power will be required for the interim chief executive only in the event that a quorate board is not in place in time to make the decisions. If the board is quorate in time, it will be able to make its own arrangements. During any period when they are making administrative decisions on behalf of the OEP before the board is quorate, the interim chief executive must be capable of being held to account. That is essential good governance and oversight of public funds. That is why we are giving the Secretary of State, as the accountable Minister, the power to direct the interim chief executive during that period.
The shadow Minister was, if I may say so, making some slightly malign intimations about what he potentially thought the Secretary of State had in mind in controlling the interim chief executive. I would like to set all those thoughts and views aside—that is not the purpose; it is a practical arrangement. I would like to give more reassurance on two point. First, the Bill provides for the interim chief executive to report to the OEP’s board, not the Secretary of State, as soon as the board is quorate. Secondly, the Government will not commence the OEP’s statutory functions before the OEP is quorate. Therefore, the interim chief executive will only be able to make decisions relating to the OEP’s statutory functions when they report to a quorate board, not to the Secretary of State. Therefore, the Secretary of State will not have any power of direction over the OEP’s statutory functions. It is important to make that clear. Amendment 154 is, consequently, unnecessary and I ask the hon. Member to withdraw it.
Dr Whitehead
I wonder whether the Minister has considered at what point the interim chief executive of the OEP must be in place, bearing in mind that the actual chief executive is not to be appointed until next August. The OEP, which is essential, should be operational from 1 January—indeed, we have had assurances on that—because of the differences in environmental protection that may result from our leaving the EU, and so not having areas of EU law available for environmental protection purposes, which are supposed to be replaced by, among other things, the independence of the OEP, to ensure that those areas of law are fully upheld.
The Minister appears to be telling us that there will be something like an OEP in existence from 1 January, and that it will have something like an interim chief executive to run it—indeed, I understand that a lot of work on that has already been done—but that during that entire period the OEP will not be independent, because effectively it will be run by the Secretary of State. That may be a function of the fact that the process is dragging on in a way that we did not anticipate, and that the Minister probably did not anticipate, overlapping the period when lots of work should have been under way to get this system going, to ensure a seamless change on 1 January. Instead we will have a raggedy process that is a very, very long way from any of the aspirations that were expressed for the OEP—the way it will operate, what it will do in terms of environmental protection, and its independence of the Secretary of State.
I accept that when a new organisation is set up—as the hon. Member for South Cambridgeshire said, and he has experience of these matters—there can be issues. If someone is setting up, say, a new subsidiary company, the board of the company that is setting up the new company will appoint a chief executive of that subsidiary company, and while that chief executive is getting in place it is quite reasonable for the board of the superior or parent company to expect that person to be responsible to the superior or parent company as the new company is being set up. Only if, for example, at a later date Chinese walls are inserted between the operation of the subsidiary and that of the superior or parent company does that reporting go adrift; but that is only when things are properly set up.
We are not in that situation here. We said from the word go that we would set up an independent body that would be responsible for all the environmental legislation that has come over to us from the EU, which is now bedding down in UK law, and that that responsibility needed to be exercised from day one of that transfer.
Rebecca Pow
Does the shadow Minister not agree that an unprecedented and unexpected incident has occurred? We have had the coronavirus pandemic. In the light of that, does he not agree that arrangements are well under way for setting up the OEP, and that the Government fully intend—I have given more details today—to introduce the OEP by 2021? Because of the pause in consideration of the Bill and because of the coronavirus, we cannot confirm the exact date, but we will implement—indeed, are implementing—bona fide transitional arrangements, with a secretariat that will support the OEP chair. The chair is currently being sought, through a public appointments campaign. The whole system is in process. We will have an interim chief executive and my hon. Friend the Member for South Cambridgeshire understands exactly the role of that person. There is nothing malignant about it, and the Secretary of State will certainly not control him. Does the hon. Member agree that I made that quite clear in my speech just now?
Dr Whitehead
Well, I hope the Secretary of State will not be controlling him. [Interruption.] Or her. I hope the Secretary of State will scrupulously keep his or her hands out of controlling that person. I am pleased to hear assurances from the Minister that that may well be the case—in terms of the Minister’s bona fides, I would expect nothing less. That is what the Minister should be saying, because that has always been her commitment on the OEP in the past; but that does not in any way excuse the fact that it says something opposite on the face of the Bill. That is the issue that, as legislators, we need to look at.
Dr Whitehead
I beg to move amendment 155, in schedule 1, page 122, line 15, after sub-paragraph (4) insert
“;but an appointment may be made in reliance on this sub-paragraph only with the approval of the Chair.”.
This amendment requires the Chair’s approval for civil servants or other external persons as interim chief executive of the OEP.
Although it is late afternoon and I do not want to go on the record as being excessively shirty for a long period, I am afraid that discussion of the amendment is part of that shirtiness process. Paragraph 4(4) of schedule 1, which was written as part of the Bill and was not part of the suite of amendments we saw when the Bill reconvened from the Government side, suggests that rules that the chief executive may not be an employee or a civil servant do not apply to the appointment and operation of an interim chief executive.
The constraints on the appointment of an interim chief executive are not there. They could be an employee of the Department, a civil servant, or someone placed by the Secretary of State in that position, when the requirement to underpin the independence of the OEP means that should not be the case for the chief executive proper. That underlines the theme of determined non-independence of the OEP in its early stages, and the Secretary of State’s ability to mould and shape how the OEP works, before it is properly formed.
Amendment 155
“requires the Chair’s approval for civil servants or other external persons as interim chief executive of the OEP.”
Having been appointed, the real chair—not the interim chair—would have the authority to act as a guardian of the independence of the OEP. We have already been through the process of appointing the chair, so at the point at which the interim chief executive might be appointed from within the civil service or the Department, or that might be proposed, the chair of the OEP would not necessarily say that was bad or impossible, but would at least have the authority to decide whether the Secretary of State was doing the right thing. That seems to me to be the least of the requirements that should be placed on this sub-paragraph.
We have discussed the independence of the OEP as it is set up. Having got to the position of having a reasonably independent chair in place, to then not involve the chair in the appointment of the interim chief executive seems perverse. The amendment does nothing except try to ensure that the OEP is visibly independent; Members from all parties can agree to that.
Anthony Browne
I used to be the chair of the Regulatory Policy Committee, a non-departmental public body linked to the Department for Business, Energy and Industrial Strategy; I appointed its entire new board. In a previous life, as I have mentioned, I was involved in setting up various other bodies, such as TheCityUK and the HomeOwners Alliance, and I have been involved tangentially in setting up independent bodies as part of the civil service.
I completely salute the support expressed by the hon. Member for Southampton, Test and the Opposition for the independence of the OEP. They are doggedly making sure that it is fully independent, and I totally support that; it will function properly only if it is fully independent. However, on the issue of the interim chief executive, I think—to follow the dogged analogy—that they are slightly barking up the wrong tree.
The whole point about the interim chief executive of any organisation is that they are setting it up. They are designing the org chart, saying “Right: this committee will do this, we need to hire these personnel to do that, these are the finances, this is the first draft budget,” and everything else—they are not actually fulfilling the substantive end function of the public body. The Opposition are worried about the timing, and I am worried about the timing too.
What normally, or very often, happens is that an organisation does not go through a recruitment process for an external interim chief executive. The chief executive is normally banned from being a civil servant, which is absolutely right, but we are talking about getting somebody to set the body up and get it going before the recruitment process for the end chief executive, the appointment of the entire board and everything else, which will take a long, long time—I think it took me about eight months to recruit a new board for the Regulatory Policy Committee.
The thing to do is get a civil servant who has experience of setting up bodies. Because of employment rules in the civil service, they can basically just be reassigned and put in place immediately. They can start setting up the organisation and doing all the stuff that needs doing, and in the meantime we can recruit the full, substantive, independent chief executive, which takes longer. When the independent chief executive is recruited, they will then have an organisation that they can work with and can retune and rejig if they want. That is a far better and more efficient way of setting up an organisation than taking the completely purist approach that the first chief executive has to be a fully independent person who is not a civil servant and will not take directions from the civil service.
Anthony Browne
I have finished, but the hon. Gentleman is welcome to succeed me.
Daniel Zeichner
I am grateful; I am sure that the hon. Gentleman can unfinish briefly.
This is not just about setting up another body; it is an extraordinarily delicate issue. The complaint out there is concern about independence. Because of the substantial shift away from a supranational body, surely it is much more important to make sure that everybody sees that that the new body is independent from the outset. This is exactly the wrong way of going about giving people that confidence.
Anthony Browne
I will just make one observation, speaking as somebody who has hired various chief executives for other organisations. On the boards that I have been on, the recruitment processes for external chief executives has taken at least three months just to identify the candidate. The sort of people we are looking for are often on notice periods of three or six months, so we are really talking about a minimum of six months, maybe nine months—quite probably a year—to hire the substantive chief executive.
Do we want to sit around doing nothing, with no organisation and no one doing anything for a year or nine months, while we hire the substantive chief executive? I agree with the principle, but what is more important is getting the machinery up and running, the cog wheels going and the pieces in place, and doing the recruitment of the substantive chief executive in the meantime. When we finally appoint them, which might well be six or nine months later, they will then have a skeletal organisation to run.
Rebecca Pow
I thank the hon. Member for Southampton, Test for his interest in the interim chief executive’s role and the Secretary of State’s power to appoint them. I reiterate what I mentioned in our debate on amendment 154: that the role of the interim chief executive is to take the urgent administrative decisions required to ensure that the OEP is up and running on time. That power will be required only in the event that a quorate board is not in place soon enough to make those decisions; that is the crucial point. If the Secretary of State is required to consult the chair on the appointment, the power may not be worth exercising, because we expect the board to become quorate soon after the chair starts in post.
Amendment 155 actually has the potential to delay the appointment of the interim chief executive, which I think is what my hon. Friend the Member for South Cambridgeshire was alluding to. That would actually defeat the point of appointing one. He or she might be there for just a couple of days.
Richard Graham
The only disappointing aspect of this debate has been a relatively determined approach by some Opposition hon. Members in trying to demonstrate that the independence of this new Office for Environmental Protection will be somehow compromised from the start. Does my hon. Friend agree that, actually, what is being put in place is a pragmatic approach to try to get something up and running as fast as possible, given the extraordinary circumstances of this year, and that to do anything else would only delay things and be counterproductive? We all want the same end; this is the best way to do it.
Rebecca Pow
I thank my hon. Friend for that intervention; I could not have put it better myself. I feel that I am under a certain amount of attack here. This is all being put into place so that we can get things up and running. As everyone knows, we are in an extraordinary time. I know the shadow Minister said that the provision was in there anyway as a failsafe, in case we needed this interim set-up. It could well have never been needed to be used, but it is there in case we need it.
We want the OEP to get off to a good start. When the chair is appointed—as I said, that process is well under way—we want them to be the person to appoint what I would call the first real chief executive. That is the right process. I think we would all agree with that. The requirement in the amendment would be disproportionate to how long the interim post might be there, because we expect this chief executive to be fully in place during 2021.
I must clarify another separate point. Although it would be a short-term role, the interim chief would be able to make decisions on behalf of the OEP, but they would be just set-up decisions. That is also why—I allude again to my hon. Friend the Member for South Cambridgeshire—we need to get the right person in place, because they have a lot of work to do to put the tools in place. Allowing for the successful candidate not to be an employee of the OEP, such as a civil servant on secondment, helps to widen the field of candidates. We need to ensure that the person has the right skills to swing into action very quickly and get this whole system set up.
I remind the shadow Minister that the Secretary of State is subject to parliamentary scrutiny—there is a long process by which that will happen—concerning all the decisions taken in respect of the OEP. I have a page I could read about how the OEP will be independent, but I am sure we will get into that in discussing other clauses. The Secretary of State would be legally required to have regard for the need to protect the OEP’s independence in making this appointment, as required by paragraph 17 of schedule 1 to the Bill. The amendment is unnecessary and I ask the hon. Member for Southampton, Test to withdraw it.
Dr Whitehead
The Minister spoke of the importance of getting things done now. After all the problems we have had, I cannot for the life of me see how that is in any way impacted by the idea that the chair of the OEP, who will shortly be in place, should have a say in deciding—guidance has properly been put in for the independence of the OEP—whether long-term recruits should not be from the civil service or any other external persons. Why should the chair not have that say in an appointment?
I assume that the chair of the OEP would be equally concerned to ensure that things are up and running as quickly as possible, that a proper and good appointment is made of an interim chief executive, and that, if a good case is put forward, that appointment might be of someone in the civil service or another person in the Department.
The amendment does not stop any of those things from happening; it merely says, as my hon. Friend the Member for Cambridge mentioned, that if it is the intention that the OEP will be truly independent it is the look of the thing from the beginning that will convince people of that.
I do not think that we can duck the issue. There are a lot of people out there who are profoundly suspicious and concerned that the OEP will not have its independence and will not be able to act as an environmental watchdog in the way that is claimed. Indeed, they will have suspicions, many of which we do not share, that a lot of what is being done is to undermine that independence, and—I would not go so far as to say to strangle the OEP at birth—to clutch the OEP much more closely to the bosom of Government than might have otherwise been the intention.
I hear what the Minister says about the fact that it was extremely fortunate that the provisions in the Bill were there anyway, which sort of came to the rescue when we were in the position of having to do these things very much at the last minute, rather than in a more considered way over a longer period. The fact that they have always been here, and always allowed that to happen, increases some of the suspicions out there. It is our duty, and would at least be good sense, for us to dispel those suspicions as early as we can in the life of the OEP.
Accepting the amendment would not, therefore, be a big deal. I do not intend to divide the Committee yet again, because we have made our point by dividing the Committee on other amendments, but this one is entirely on the same theme. I enjoin the Minister to think again about whether she wants to introduce something at a later date in proceedings that at least waves a flag in the direction of proper independence for the OEP as it gets under way, in addition to when it is fully under way. That would be very helpful for all of us who are concerned, in terms of what we will try to do to ensure that the OEP does its job properly.
Cherilyn Mackrory
Paragraph 17 of schedule 1 explicitly says:
“In exercising functions in respect of the OEP, the Secretary of State must have regard to the need to protect its independence.”
I notice that the Opposition have not tabled an amendment to that, because they are obviously happy with it.
Dr Whitehead
That is right, but that is the OEP as it is up and running; this is about the OEP as it is formed. Our point on a number of things this afternoon has been that if we undermine the independence of the OEP as it is being formed it is rather difficult to carry out paragraph 17 later on, when the OEP is fully functioning. I thank the hon. Member for drawing attention to that point, but it is not entirely what we are discussing this afternoon—although I fully agree that the Secretary of State should, of course, have regard to the independence of the OEP when it is up and running and functioning. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Deidre Brock
I beg to move amendment 188, in schedule 1, page 124, line 26, at end insert—
“10A Where the function is being exercised in relation to Scotland or in Scotland the OEP must—
(a) delegate the function to an environmental governance body designated by the Scottish Ministers, and
(b) provide the resources for that function to be exercised.”
This amendment aims to introduce the geographical imperative to ensure clear lines of reporting and response in Scotland and to clarify that the body acting in Scotland will be acting with consent of Scottish Ministers, thus respecting the devolution settlement.
Clearly, the Bill before us is applicable largely to this place because, as I have already referenced, environmental policy is, in the main, devolved. There are, however, still areas here and there within the Bill that require a little tidying to ensure that there is no danger of devolved regulatory powers being affected or even overridden inadvertently.
The amendment ensures that on the rare occasions when the OEP acts in Scotland, it will do so only with the consent of Scottish Ministers. In fact, amendments 190 and 191 also seek to respect the devolved Administration in Scotland.
Amendment 188 is about respecting the devolved Administration in Scotland, ensuring that the regulatory functions remain with the Scottish regulator, as is currently the case. It is about the Scottish Parliament and Government forging a different kind of future that will keep driving forward improvements in environmental policy. It means, too, that the Scottish regulator—currently the Scottish Environment Protection Agency—would maintain a holistic view of environmental policy in Scotland. I look forward to hearing the Minister’s response.
Rebecca Pow
I thank the hon. Member for Edinburgh North and Leith. The amendment gives me a good opportunity to demonstrate that the Government’s new environmental governance framework respects the devolved settlements. She will be aware that the environment is largely a devolved matter and, as such, it is for each Administration to develop and deliver their own environmental governance proposal in relation to the devolved functions.
The Bill therefore makes a clear distinction between devolved and non-devolved functions, and we have ensured that the OEP can cover England and any matters across the wider UK that have not been devolved. That is necessary, as non-devolved matters cannot be addressed by the devolved Administration’s own governance arrangements once these ones are in place.
We expect that all the remaining devolved matters that fall outside the remit of the OEP will be addressed by the devolved Administration’s governance proposals in due course. Indeed, we welcome the steps that Scotland has taken to establish its own environmental body. The Bill is drafted in such a way as to ensure that the OEP can exercise its functions only on matters that are not devolved in respect of Scotland, so it would be inappropriate to delegate such functions to Environmental Standards Scotland, the intended equivalent Scottish body, to deliver those functions.
We do, none the less—and I did want to be at pains to say this—expect that the OEP will work harmoniously and productively with equivalent bodies in the devolved Administrations. That is obviously really important, since we cannot control the air, water or lots of things like that: in many cases, we will be working in tandem. That is why in clause 40(2)(f) we have made provision for the OEP to share information with its devolved equivalents and why in clause 24(4) we have placed a duty on it to consult them on any relevant matters.
Beyond the provisions already in the Bill, the OEP and its equivalent bodies will also have discretion to jointly decide how best to co-ordinate these activities. The OEP has been carefully designed to respect the devolution settlements by limiting its scope to environmental law, the definition of which specifically excludes matters falling within the devolved competence in Northern Ireland, Scotland and Wales.
The Government consider it inappropriate and contrary to the delineation of legislative responsibilities under the devolution settlements to delegate the OEP’s functions in this context. I thank the hon. Member for raising this issue, because I want to be at pains to be clear about how we are working with the devolved Administrations, but I believe the amendment is unnecessary. I ask her to kindly withdraw it.
Deidre Brock
I have great respect for the Minister and for her sincerity—I genuinely do. I think she absolutely means what she says and she absolutely thinks that the way things are at the moment under her ministerial leadership will remain the same forever.
I am afraid that, ultimately, her suggestions do not cut the mustard with me, because environmental policy is devolved to Scotland. The amendment simply requires that, rather than Scottish Ministers just being consulted, they are actually required to give some sort of consent. As the amendment says in sub-paragraph (a), whatever the environmental issue is, the function should be put to a
“body designated by the Scottish Ministers”.
Without that agreement from the Government, I am afraid that I will have to ask that the amendment be put to a vote. Things are either devolved or they are not. I do not think that whether the Government at the time feel that they have a greater locus in an area than the devolved Government in place at the time should be part of the consideration. It is important that the responsibility for environmental policy that rests with devolved Governments is fully respected and that the agreement of the Scottish Government is sought in all instances to do with environmental policy.
Question put, That the amendment be made.