Pension Schemes Bill [HL]

Debate between Lord Kirkwood of Kirkhope and Lord McKenzie of Luton

3rd reading (Hansard): House of Lords
Monday 16th January 2017 Lords Chamber

[Lord Kirkwood of Kirkhope (LD)]

My Lords, it is a pleasure to follow my friend of many years’ standing, the noble Baroness, Lady Altmann. She is an expert on these things and is right that opportunities have been missed and there are still some bits of unfinished business. However, the House has acquitted itself well in the consideration so far. I welcome the noble Lord, Lord Henley, to his post. Those of us with long memories remember that he has been in this role before, so he is not without experience in these matters and our expectations of him are extremely high. I wish him well in his new responsibilities. I am sure he will continue his predecessor’s attempts at making sure that Members of this House are fully briefed on some of the technical provisions that we still have to deal with.

The Government were right to bring forward amendments to change a lot of the first-time affirmative resolutions and procedures for the statutory instruments that flow from some of these provisions. In passing, I note that this amendment to Clause 11 would introduce a negative procedure. I hope that is sensible, because the more affirmative instruments we get, the better our chance of understanding what is being brought before us. Despite that, I agree with the amendment as it stands.

I hope—this is merely a request for a repeat of an undertaking that was given earlier—that the Government will bring forward an updated impact assessment when, later this year and in 2018, we consider the secondary legislation that flows from this primary legislation. The impact assessment and the continuation of the consideration of the fine print of the provisions are still required to make sure that the Bill achieves its purposes in a way that is fair to all. In the process, I hope that, as the noble Baroness, Lady Altmann, said, the other place can pick up some of the opportunities that have been missed during the Bill’s consideration in this House. However, I wish the Bill well and I hope we continue to have the constructive and positive relationship with the noble Lord, Lord Henley, that we had with his predecessor.

[Lord McKenzie of Luton (Lab)]

My Lords, I begin by welcoming the noble Lord, Lord Henley, to his role, even at this 12th hour on the Bill.

We certainly do not oppose the amendment. As explained, it is intended to put beyond doubt the ability to introduce regulations relating to audit, particularly in relation to scheme funders, which under the Companies Act are not required to provide audited accounts. Perhaps for the record the Minister can set out the nature of scheme funders which might fall into this category. Presumably they could be partnerships, entities incorporated overseas or smaller entities, although I am not sure how they might feature in these arrangements. Can he also tell us whether it is planned to use these powers differentially in respect of scheme funders that fund benefits other than money purchase benefits? As an adjunct to that, we very much share the concerns expressed by the noble Lord, Lord Naseby, about how Clause 11, as it will now be, will work.

As the Bill passes to the other place, it is time to offer our thanks to the Minister, the noble Lord, Lord Young of Cookham, for the courteous and inclusive manner in which he has handled the Bill. We look forward to the same from the noble Lord, Lord Henley, on subsequent Bills. We have already given our thanks to the noble Lord, Lord Freud, for the role that he played. This is a narrow Bill but one with significant implications, which is why we want to see it make speedy progress. It has not been the easiest Bill to scrutinise, given the combination of the technical nature of its subject matter and the raft of regulation-making powers that it contains, but we have seen a Government in listening mode in some respects—although of course not all, and the noble Baroness, Lady Altmann, identified some of those.

I should take this opportunity to thank my noble friends who have participated in our deliberations—in particular, my noble friend Lady Drake for the expertise and precision that she has brought to our work. We trust that the important amendment concerning the scheme funder of last resort which she pressed on the Government will endure.

I also express our thanks to the Liberal Democrats, led by the noble Baroness, Lady Bakewell, the government Back Benches for their constructive approach, and indeed the Cross Benches. We have seen a Bill team who are thoroughly on top of their brief and have patiently spent time explaining to us aspects of the Bill which might otherwise have fallen on stony ground. Taking this matter forward now falls to the tender mercies of our colleagues in the other place.

Pension Schemes Bill [HL]

Debate between Lord Kirkwood of Kirkhope and Lord McKenzie of Luton

Report stage (Hansard): House of Lords
Monday 19th December 2016 Lords Chamber

[Lord Kirkwood of Kirkhope]

My Lords, obviously I welcome the Minister’s amendments, which are a very appropriate response to our discussions in Committee. The compromise that he has struck is useful—and not just in these circumstances. It is actually not a bad idea for legislation to start adopting some of these things because it might avoid some of the tensions we have seen in the past in social security legislation in terms of trying to get access to the secondary legislation. Taking the first regulations under the affirmative procedure is an excellent way out of the problem we saw in Committee.

The timetable that the Minister has laid out is very reassuring and gives people an idea of what to expect in terms of the consultation and the timeframe available. I understand Amendment 24. I know that such provision has been used previously in pensions legislation, but Ministers at the Dispatch Box will be well advised to note that this clause will be particularly carefully looked at not just by the House committees that scrutinise these matters but by the usual suspects on the Back Benches who crawl over the fine print of these things. If the use of such procedure is deemed to be inappropriate, the negative procedure is always available to us to make sure that there is no abuse of the powers taken under Amendment 24. Otherwise, the noble Lord, Lord McKenzie, and the rest of us are doing quite well so far. I hope that we can keep up this strike rate for the rest of Report.

[Lord McKenzie of Luton]

My Lords, I thank the Minister for the introduction of these amendments, which are very welcome. He has been true to his word and we thank him for taking us through the process of dealing with the regulations. One of our criticisms of the Bill was the plethora of regulation-making powers therein contained without the prospect of sight of even drafts of such regulations by the time we had to conclude our deliberations.

It was for this reason that we sought to strengthen the parliamentary process for this secondary legislation by subjecting it to the affirmative regulation procedure. The Government are meeting us part way on this matter by requiring in some key areas that the affirmative procedure apply to the first regulations made under various provisions. As we have heard, the changes apply to fit and proper person requirements, financial sustainability, the business plan, systems and process, continuity strategies and significant events.

We have also had the benefit of briefings with the Minister and the Bill team, which have aided our understanding of the regime and how it is meant to operate in respect of a range of issues including non-money purchase benefits, significant events, tax and pause orders and connected employers. As our continuing amendments should signal, we are not in total accord with the Bill as it stands and consider further change desirable.

As to the Henry VIII clause introduced by Amendment 24, the Minister is right that we discussed it before it was laid and I was grateful for that opportunity to engage. We are not enamoured generally of such provisions, particularly when they emerge at the tail end of our deliberations. As originally explained to us, they will be constrained by being used only to make the implementation of the regulations effective. In the event, they seem to go further than that. I wonder whether the Minister might comment. We recognise also that these types of provision have been used by Governments of all persuasions.

We recognise the complexity of the provisions in the Bill as well as the agility of the sector in adapting to change and sometimes circumventing it. Our own scrutiny of the Bill has caused us to conclude that the primary legislation is not in perfect shape even after being improved by our amendments, but until the detail of the regulations has been consulted on, it is difficult to foresee in every respect ideally what changes might have been appropriate. This is notwithstanding the flexibility that the Government have already taken for themselves; for example, in Clause 39.

For us, the imperative is to see a fit-for-purpose Bill on the statute book as quickly as possible. We will therefore not oppose this amendment.

Pension Schemes Bill [HL]

Debate between Lord Kirkwood of Kirkhope and Lord McKenzie of Luton

Committee: 2nd sitting (Hansard): House of Lords
Monday 28th November 2016 Lords Chamber

[Lord McKenzie of Luton]

My Lords, I will comment briefly. I find it difficult to support this proposition. The noble Baroness drew attention to contracting in local authorities, and we understand that—a number of us have been there. But is not the key issue here that the market does not produce the right result? There is weakness on the buyer side, and given the complexity of the product, you need some specific provision to deal with that. We are dealing here of course with a ban on member-borne commission and a cap on early exit charges. The latter in particular is seen to be an inhibitor to people accessing their pensions—indeed, the evidence is clear that it is an inhibitor. If those issues have to be addressed, then we have to use the mechanisms which are at hand. I agree that causing an override of these contract provisions is not the most comfortable mechanism, but it already exists in relation to scheme details, I understand, between the FCA and contract-based schemes, and this extends it to deal with other contractual arrangements relating to schemes.

I am afraid that this proposition does not have our support. We think it is important that we go ahead and get the ban on member-borne commission and the cap on early exit charges in place as soon as possible. On that latter point, I am bound to say we are somewhat disappointed. We are pleased to see the press release from the Minister announcing a cap of, I think, 1%, or 0% for new provisions. But it is will be October next year before that is in place, which again seems a little bit tardy, because the FCA is moving to get the restrictions in place by the end of March.

[Lord Kirkwood of Kirkhope (LD)]

My Lords, I will add my voice to commend the merits of my noble friend’s position. I understand what the noble Lord, Lord McKenzie, says, and I understand too the grave situation and the need for protection, but as I have said before—the Minister was sensitive enough to pick it up the last time we discussed this—the provision of an override completely freezes the responsibilities and duties of the trustees. There is a master trust here, which presumably—I cannot see any way round this—has a trust deed which sets out the rules and responsibilities. The provisions in this clause do not just override the contracts but run a coach and horses through the trust deed and the responsibilities of the trustees. It is effectively a vote of no confidence in the trustees, as far as I can interpret how this is to be used, and that is an extremely serious situation.

In the past, trust law has served pension provision well in this country. In addition, there are extremely onerous fit-and-proper-person tests in the earlier clauses of this Bill. The assumption should be that people of good faith and knowledge and experience will not get into these positions at all. We have always been able to rely, in the main, on trustees doing their duty well, but this clause gives them no chance to do that. It sets them aside and is a vote of no confidence in what they do. If I was in that position, I would resign as a trustee—and if the trustees of the master trust resign, then the pause period might be not just three months or six months but a lot longer. My position in supporting careful consideration of this clause before we vote it into law is not just about the important points my noble friend made but about how this will impact on the assumption and service of trustees. If I was invited to become a master trustee in these circumstances, I would look twice at the provisions in this clause before agreeing to do any such thing.

Welfare Reform and Work Bill

Debate between Lord Kirkwood of Kirkhope and Lord McKenzie of Luton

Monday 29th February 2016 Lords Chamber

[Lord Kirkwood of Kirkhope]

My Lords, I would like to add a couple of broad points to this important debate on this significant subject. As far as I am concerned, the noble Lord, Lord Low, has done the House a great service in tabling his amendment. I take the point made by the noble Lord, Lord Young of Cookham, as a former Chief Whip; the amendment may well be defective, and I certainly do not want to go back into the territory covered by the report of the noble Lord, Lord Strathclyde. However, the noble Lord, Lord Low, is saying that the House of Commons has asserted its rights in the process of ping-pong but this is merely a Motion to ask for some extra time.

As one or two other colleagues have said in the debate, I would want that extra time, if for no other reason than—a point made by the noble Baroness, Lady Thomas—to look at the White Paper. The White Paper that is coming will be significant and I am looking forward to it; it is an opportunity to have a look at this whole important policy area again. Taking this decision this evening would be a retrograde step and might make it more difficult for us to take the proper opportunity that the White Paper represents. If this change were not to be introduced until May 2017, that would be a sensible pause. I take the Minister’s point about the difficulty and technicality of meeting the test set out in the amendment, but it would be perfectly possible to have a sensible stab at estimating the impact on this particularly vulnerable group of our fellow citizens—the DWP has hundreds of researchers who do this work all the time.

I want to draw a broader point from that: we would not need to be here if we had had a proper impact assessment in the first place. To make an even broader point, it is now deemed to be old-fashioned and not sensible to have White Papers, Green Papers and a pre-legislative process for our legislation because it all has to be done for the greater glorification of Chancellors at Budget time so that they can make ex cathedra statements and get plaudits in the Sun newspaper the next day, only for us to find a fortnight later that all is not as it seemed. There is a plea here and a lesson to be learned: we should be more deliberative about the consultation process in these specialist areas of policy in order to get this kind of thing done right in the first place.

I make a point in passing about universal credit that a number of colleagues have made: this strips out some of the many advantages that universal credit will have in future, and that is regrettable. I also make the point that the £640 million saving has to be measured against the £100 million. I accept that again the influence of the noble Lord, Lord Freud, on this has been entirely beneficial. No other Minister could have had the success he has had in refining in important but second and third-order ways when considered against the fact that we are spending a sixth of the savings we are making in support for people who are in the work-related activity group. That is not enough. If it had been 50:50 and the Government came forward to the House with the savings bill—and it is correct to bear in mind that we are facing austerity as you cannot ignore that either, but to put one-sixth of the saving into the support services that are necessary for people in the WRAG group is not a proper balance or the right judgment—the House would have been a bit more willing to listen if the balance had been a bit more even.

The other thing is that the personal independence payment provisions we have introduced will not survive the test of time. The assistance we give people who are in the support group is nearly absent, and we need to do far more to provide help for people in that group to find work in the longer term. Therefore the Government would be well advised to think again. The noble Lord, Lord Low, has brought forward an important amendment; if he presses it to a Division I shall certainly support him, and I hope that other Members of the House will do the same.

[Lord McKenzie of Luton (Lab)]

My Lords, as others have said, we should be grateful to the noble Lord, Lord Freud, for his focus on a number of initiatives that seek to ameliorate the problems created by withdrawal of the WRAG component for new claims after March 2017, whether those were intended or unintended. However, I will be clear up front: we do not consider that the Government’s package of proposals adequately deals with the consequences of that withdrawal.

I will start by addressing the specific points raised by the Minister. First is the commitment to increase the funding in 2017-18 for the flexible support fund with guidance to jobcentres to ensure that the additional funding is targeted specifically at those with limited capability for work. The sum of £15 million has been mentioned. Obviously, this is to be welcomed so far as it goes and it could be used to help with extra costs of expenditure on attending interviews, training courses, accessing the internet, and so on. The focus on those in the WRAG is important because at present, as the 57 pages—would you believe it?—of guidance to district managers makes clear, the fund can be used to support all Jobcentre Plus customers, including 16 and 17 year-olds. Does the Minister have any indication of the current annual application of the fund to those in the WRAG, and how many claimants in the WRAG is the new money expected to help? With half a million people in the WRAG, £15 million amounts to 50p a week on average.

As for those with progressive deteriorating conditions, increasing awareness of the right to seek reassessment is fine but is this not just what the system should deliver anyway? Perhaps the Minister can say a little more about how it works at present, what data there are on the numbers currently seeking reassessment from the WRAG, and what information there is on the timescales within which these assessment are delivered. If it is envisaged that this awareness-raising would lead to greater numbers of individuals being reassessed, what additional resource is being made available to cope with it all?

On permitted work, the proposition is that someone on ESA will in the future be able to undertake work for more than 52 weeks, which, as we have heard, is the current limit, as long as it is for fewer than 16 hours a week and earnings do not exceed £107.50. It is understood that such earnings would not be taken into account for benefit purposes, including housing benefit. Perhaps the Minister can confirm that. Can he also say what the position will be in relation to council tax support schemes?

Welfare Reform and Work Bill

Debate between Lord Kirkwood of Kirkhope and Lord McKenzie of Luton

Tuesday 12th January 2016 Lords Chamber

[Lord McKenzie of Luton (Lab)]

My Lords, we thank the Minister, the noble Baroness, Lady Evans, for her introduction and we are grateful for the separate briefing that we received before Christmas with her colleague, the noble Baroness, Lady Williams. This is a very substantial list of government amendments, but we will not oppose them, as overall they are intended to make the policy work more effectively and securely. We understand that they are, in essence, technical.

However, we might just reflect on the fact that in Committee in another place we saw the introduction of four new clauses and one substantial new schedule, with more government amendments on Report. The amendments in this group include those—for example, 108B—which replace provisions inserted by government amendments in Committee in the House of Commons. This creates the impression that the policy has not been fully worked through. I wonder what else is being worked on which will require amendment before we are finished with this Bill.

We know from the Government’s briefing note of Clauses 21 to 28 and Schedule 2 that work is under way on regulations to come into force on 1 April 2016. These are to cover further exceptions but also alternative provision for accepted categories and alternative conditions for granting directions. Regulations are also to cover the enforcement of Schedule 2 by the regulator. Can the Minister say whether we will see at least a draft of these regulations before we get to Report? Clearly, the clock is ticking, and drafting must have reached an advanced stage if the regulations are to come into force on 1 April this year.

So far as Clause 23 is concerned, there is the opportunity for the Secretary of State to direct that the provisions of Clause 21 do not apply to a local authority if it would be unable to avoid serious financial difficulties. Similar considerations arise for private registered providers, where the regulator has to take a view on financial viability. Can the Minister say whether any general guidance will be published covering these matters? We note that the Secretary of State is taking powers to publish measures which individual local authorities can take, so we are back with central government micromanaging the affairs of local authorities—so much for devolving power. But as I say, we do not and will not oppose these amendments.

[Lord Kirkwood of Kirkhope (LD)]

My Lords, I support what the noble Lord, Lord McKenzie, has just said. He is right to say that the process of this particular measure and its sections through its various parliamentary stages has been less than best practice. Of course, it is not the Minister’s fault; I think that the Committee is grateful to her for her concise explanation of what these amendments seek to do, and it is agreed that they are, by and large, improvements. However, having substantial bits of policy of the kind covered by the sections and amendments that we are dealing with this evening in a summer Budget Statement, with no prospect of any consultation beforehand—an ex cathedra Statement by the Chancellor of the Exchequer, and then a long Summer Recess where everybody tries to work out what on earth it all meant—is not a good way of producing legislation.

It does not surprise me that there was a degree of confusion at the Commons Committee stages and that we are now faced at this quite late stage with admittedly helpful amendments. However, they are technical and they need consideration, because they increase the corpus of housing law and make things more complicated. Not only does the primary legislation make it more complicated; it will spawn secondary legislation. This House will no doubt look forward to studying it in great detail, larding and littering the statute book with consequential changes, including protecting mortgagees, implied terms in leases—which is always dangerous; from a legal point of view, implication by statutory legislation is never a good thing—and transitional protection, which may well be necessary. But at this stage I think it is appropriate for the noble Lord, Lord McKenzie, and the Committee to say to the Minister that housing Bills and measures of this kind should be done properly. Consultation and Green Papers are always an advantage. If we had had a Green Paper in relation to these clauses, some of the difficulties that the Minister faced in introducing these amendments could have been avoided and could be avoided in future.