Democracy Denied (DPRRC Report)
Baroness Drake Excerpts(1 year, 3 months ago)
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Baroness Drake (Lab)
My Lords, I congratulate the noble Lords, Lord Blencathra and Lord Hodgson of Astley Abbotts, on their excellent committee reports. They have exposed the two key constitutional concerns: that effective parliamentary scrutiny is being undermined by the way in which Bills are framed and that important policy decisions are increasingly being left to delegated legislation, thereby weakening parliamentary scrutiny and increasing ministerial powers.
Those concerns are shared by the Hansard Society and the Constitution Committee. In 2018, the Constitution Committee, chaired by my noble friend Lady Taylor of Bolton, published a report, The Legislative Process: The Delegation of Powers, which identified concerns that align with the conclusions in today’s reports. That report recognised that delegated powers are essential to the legislative process, allowing Parliament to focus on important policy decisions and leaving implementation detail to secondary legislation, but that the level of parliamentary scrutiny was increasingly contentious, evidencing a constitutionally objectionable trend for the Government to seek wide delegated powers that would permit the determination, as well as the implementation, of policy. For some, the determining factor as to whether to include a delegated power was whether Parliament would accept it, rather than any point of principle.
The report also emphasised that, where statutory instruments are used to give effect to significant policy decisions, without any genuine risk of defeat or possible amendment, Parliament is doing little more than rubber-stamping, which is constitutionally unacceptable. By working together, the Delegated Powers Committee and the Secondary Legislation Scrutiny Committee have shone a spotlight on what my noble friend Lady Taylor described as the accelerating and unhealthy
“trends in what … Ministers think they can get away with without properly consulting Parliament”.—[Official Report, 16/9/21; col. 1604.]
They have directed ministerial and parliamentary attention to the need to address
“the culture of using delegated legislation.”
The Constitution Committee continues to highlight constitutional concerns arising from weakening parliamentary scrutiny and enhanced ministerial powers in its reports on Bills brought to this House, which align in many instances with the conclusions in the reports before us today. In its report Brexit Legislation: Constitutional Issues, the committee took stock of all the Brexit legislation and criticised the powers therein for being too broad, too ill-defined and lacking in safeguards. A distinguishing feature was the extent of the delegated powers—skeleton Bills, with little or no detail on the policy or institutions to be created. The European Union (Withdrawal) Bill required Henry VIII powers to facilitate the withdrawal and deliver legal certainty and continuity, but it granted Ministers
“far greater latitude than is constitutionally acceptable”.
The reports COVID-19 and Parliament and COVID-19 and the Use and Scrutiny of Emergency Powers highlighted the volume of SIs laid in response to the pandemic, the use of fast-track procedures, which severely limited Parliament’s ability to scrutinise and provide a constitutional check on the exercise of arbitrary power, and the blurring of the distinction between legislation and guidance.
The Sewel convention does not apply to delegated legislation, but it would be constitutionally questionable for Parliament to circumvent it by legislating in a way that intends delegated legislation to change devolved legislation in areas of devolved competence. This concern was highlighted in the committee’s reports on the Nationality and Borders Bill, the Economic Crime (Transparency and Enforcement) Bill and the Energy Bill. Guidance utilised as disguised legislation was highlighted in its reports on the Public Order Bill and the Health and Care Bill. It was reasserted by the committee in its reports on the Energy Bill and the Northern Ireland Protocol Bill that delegated legislation to create criminal offences is constitutionally unacceptable.
The Delegated Powers Committee and the Secondary Legislation Scrutiny Committee have had several exchanges with the Government on strengthening parliamentary scrutiny. Some progress has been made, but it is clear from the debate today that much more is needed. The governance of our parliamentary democracy is more important than ever, as has been stressed by many Members. One Government’s acts of expediency can be deployed by a future Government as precedent, taking us further down the road away from Parliament making our laws towards Ministers increasingly taking powers to change the rules and regulations.
Finally, I congratulate my noble friend Lord Prentis on his maiden speech. I am sure that he will be an asset to the House.
Cabinet Manual: Revision (Constitution Committee Report)
Baroness Drake Excerpts(1 year, 4 months ago)
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Baroness Drake
That this House takes note of the Report from the Constitution Committee Revision of the Cabinet Manual (6th Report, Session 2021–22, HL Paper 34).
Baroness Drake (Lab)
My Lords, the first and to date the only edition of the Cabinet Manual was published in 2011 by the Cameron Government as, to quote the Cabinet Office, a
“guide to laws, conventions and rules on the operation of government.”
Ten years on, in 2021, the Government advised, in a letter dated 5 March from Simon Case, Cabinet Secretary to the chair of the Public Administration and Constitutional Affairs Committee, that it did not plan to update the manual in the short term. The Constitution Committee decided to conduct a short inquiry to explore whether it needed to be updated, the process for doing so, how Parliament should be involved, and what role the manual should play as a public document.
To set the Cabinet Manual in its historical context, amidst allegations of misconduct in public life, the Committee on Standards in Public Life—the Nolan committee—was established by the former Prime Minister, the right honourable Sir John Major, to advise on how standards could be raised. The committee outlined the Seven Principles of Public Life, known as the Nolan principles, a set of ethical standards that those working in the public sector should adhere to.
The standards of conduct and behaviour to be adhered to by Ministers, parliamentarians and officials have been articulated in various codes, including the Ministerial Code, the Civil Service Code and the Code of Conduct for Special Advisers. They all explicitly incorporated the Nolan principles. They include enforcement mechanisms should breaches occur, which generally rest upon soft rather than hard-law remedies. The Cabinet Manual followed on from the publication of the codes. Initiated by the right honourable Gordon Brown and concluded by the right honourable David Cameron, it was inspired in part by the New Zealand Cabinet Manual.
The coalition Government published a draft edition in December 2010 for public consultation, including engagement with Select Committees in both Houses. The manual was endorsed by the Cabinet. It reaches across a wide ground: issues such as the monarchy, elections and government formation, the Cabinet, Ministers, the Civil Service, devolved Administrations, the EU, finances and public information, and more.
As to its status, the manual is intended to provide authoritative guidance to Ministers and officials by recording, rather than being the source of, rules and practice on the operation of government, and therein lies its value. It is a work of reference, recording, rather than prescribing, constitutional rules, including conventions and practices set out in official documents. It does not require behavioural standards beyond what is required by the codes or by law. Accordingly, it does not include enforcement mechanisms, although it broke some new ground with the content regarding elections and government formation.
As a matter of constitutional principle, ensuring adherence to the Cabinet Manual will ultimately be a matter for the Prime Minister. In 2011, both the Constitution Committee and the Public Administration and Constitutional Affairs Committee recognised that, while Parliament has
“a role in scrutinising the draft Manual and future revisions”,
it was for
“executive use and so should not require Parliament’s approval.”
However, the Constitution Committee recommended that the Prime Minister should make clear in the foreword to the next edition the duty on all Ministers to adhere to the constitutional principles contained within it.
For the Cabinet Manual to remain useful, it needs to be regularly updated. If out of date, it will lack authority, cause confusion and risk becoming moribund. As the noble Lord, Lord, Lord O’Donnell, wrote in his preface to the first edition:
“The content of the Cabinet Manual is not static, and the passage of new legislation, the evolution of conventions or changes to the internal procedures of government will mean that the practices and processes it describes will evolve over time.”
He added in his evidence to us that the manual was a
“valuable document … having one, as long as it is up to date, is very, very important for the business of government.”
Much has happened since the manual was published in 2011, including further devolution of powers, the UK’s departure from the EU and changes to the way Parliament is dissolved. Simon Case in his evidence concurred that the main changes would concern Brexit, devolution and repeal of the Fixed-term Parliaments Act. Most of our witnesses agreed that an updated manual was overdue.
The committee recommended that a draft update be produced as soon as possible, and not later than 12 months from the date of our report, and thereafter that updates be considered at the beginning of each Parliament, endorsed by Parliament, with important revisions reflected immediately in the online version. As with the 2011 edition, we recommended that the process include consulting on the revised version. Regrettably, 18 months later, there is still no updated edition.
The Government responded to the committee’s report in a letter from the noble Lord, Lord True, dated 7 February 2022, in which he comments:
“There is a strong argument for revisiting the Cabinet Manual, and there has been work to identify the main areas that would require updating … I can confirm that the Government intends to publish an updated version … before the end of this Parliament.”
I subsequently wrote to the Prime Minister on behalf of the committee, re-emphasising four of our recommendations which we considered the Government had not given a view on, these being: first, that the Prime Minister make clear in the foreword to the next edition the duty on all Ministers to adhere to the constitutional principles recorded within it; secondly, noting the significant constitutional developments since 2011 and given that an updated manual will serve to guide Ministers as to the constitutional rules pertaining both to recent developments and longer-standing constitutional matters, that it would be prudent to secure a high level of consensus on its content—the Constitution Committee, along with the relevant committees in the House of Commons, should be meaningfully consulted; thirdly, that consultation should include sharing draft revisions to allow for sufficient scrutiny and feedback; and, fourthly, that the Government should consult the relevant committees in the devolved legislatures in line with the Prime Minister’s responsibility
“to ensure that all of government is acting on behalf of the entire United Kingdom: England, Northern Ireland, Scotland, and Wales.”
The noble Lord, Lord True, subsequently replied:
“Our process for updating the Cabinet Manual, including any engagement, will reflect the extent to which significant changes are required or whether the updates are more limited in nature … On ministerial duties, when the first edition was published it was endorsed by the Cabinet. The then Prime Minister made it clear that he would expect everyone working in Government to be mindful of the guidance it contains. This remains the case.”
I ask the Minister to take the opportunity of this debate to update the House on the Government’s timetable for publishing a revised copy of the Cabinet Manual, the approach taken to that revision, and any plans the Government may have for consulting relevant committees of the House of Commons and the Constitution Committee and the relevant committees in the devolved legislatures.
Finally, I shall bring my speech to an end on a more philosophical note. Simon Case in his evidence on to our inquiry on the manual and codes observed:
“They set out, in any given moment, the norms by which government operates, the standard expected of Ministers and the Civil Service … They are important and should be kept at the forefront of people’s minds.”
A “but” followed:
“If we end up in a system in which it is only the letter of the law, or of the codes or the guidance, that runs, we have missed something. It is about culture and people wanting to uphold those basic principles”.
We agree with him on that. In a recent report, Good Chaps No More? Safeguarding the Constitution in Stressful Times, the noble Lord, Lord Hennessy of Nympsfield, a member of the Constitution Committee similarly observes:
“If general standards of good behaviour among senior UK politicians can no longer be taken for granted, then neither can the sustenance of key constitutional principles”.
As to the Constitution Committee, I refer to the sentiment in our concluding paragraph.
“Documents such as the Cabinet Manual, Ministerial Code and Civil Service Code are an important part of the United Kingdom’s constitutional framework. Together with the Nolan Principles, respect for the Manual and Codes is essential for upholding principles of good governance, including adherence to constitutional conventions and the proper conduct of public and political life. They are crucial to the wider national wellbeing as well as to the public’s trust in government. They must never be treated as optional extras to be swept aside or ignored to suit the convenience of the executive.”
I beg to move.
Baroness Drake (Lab)
I thank the Minister for what I believe is a positive reply. I welcome his acknowledgement of the importance of the manual and that he takes the committee’s report seriously. I agree with him that, in revising the manual, all the parties should seek to embrace the principles that we all share rather than having a narrower political debate. It was interesting that my noble friend Lady Warwick referred to the committee’s report as having understandable constraints by delegating to footnotes particular illustrations of instances of behaviour. It is in the nature of the Constitution Committee to be restrained or constrained so that, when we bring constitutional issues to this House to consider, it has more authority in doing so.
I welcome the fact that we will get an update in the new year. Perhaps the issue of the devolved legislatures is something for further discussion, but I thank the Minister and all noble Lords who have contributed today. It was an excellent debate, and I have certainly developed my thinking on the basis of the contributions. I was particularly pleased to see the noble Lord, Lord Hennessy, in his place, because I am aware of the personal barriers that he has had to manage to be here. His wit and wisdom are so valued, and I keep coming across ever greater numbers of senior civil servants who at some point were tutored by him, which is sometimes reflected by what they say. We have a lot to thank him for in terms of civil servants, from what I hear.
What was clear that came across in the debate today was a common view that the Cabinet Manual and the code are essential for upholding the principles of good governance, but they are inseparable from a culture whereby people want to uphold the good and right principles. They have to go hand in hand. Although I know that the noble Lord, Lord Howell, has a sense of pessimism about standards, I tend to be with the noble Lord, Lord True. There are lots of good people, and sometimes the challenge is to help them to behave as good people. That is a real issue before us.
I am conscious of the time, and shall not cover all my points. I thank the Minister and everyone who has contributed. I am sure that the Constitution Committee will be pleased to further engage and will be pleased with the debate and its content.
Pension Schemes Bill [HL]
Baroness Drake ExcerptsMonday 2nd March 2020
(4 years, 1 month ago)
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Lord Flight (Con)
My Lords, I support Amendments 43 and 44 in the name of the noble Lord, Lord Young. He made the point that equity release is a growing source of income for people later in life. I would say it more strongly than that: I can imagine it being the biggest source of income for such people in 20 years’ time. I understand that the financial advisers who advise otherwise on pension fund matters are not qualified to advise generally on equity release. That has been substantially cleaned up, as it were, over the past 10 years so it is not a problem, but if the dashboard cannot include equity release, it does not meet its objective of setting out what people have to live on in older age. We do not want to delay wider progress but if equity release is not included quite speedily in the dashboard, it will not do its job.
Baroness Drake (Lab)
My Lords, the purpose of Amendment 39 is to contain the delegated powers in the Bill so that they do not provide the power to authorise commercial dashboards to engage in transactional activities. Any authorisation regime to permit transactions should be addressed in a future Bill.
In a previous contribution, I sought to set out the policy still to be settled when the dashboard is focused on enabling individuals to view their pensions information in one place. When functionality is extended to the ability to transact on a commercial dashboard, the challenges and potential risks are even greater; there are multiple ways in which detriment to savers can occur. We should again remind ourselves that the dashboard project can extend to the whole of the UK pension system—public and private—embracing many millions of people. Allowing transactions over dashboards needs separate and clear consideration. It cannot be implicitly tucked into the delegated powers in this Bill.
Issues of private and public good will be impacted by whether the dashboard is fit for purpose when it comes to transactions: private good at the individual level and public good at the whole pension system level. I have yet to see the behavioural outcomes strategy associated with the dashboard. I assume the Government are not agnostic on the matter, given that the state supports the long-term saving system with some £45 billion of tax relief, so they will have a direct interest in knowing that the outcomes are good.
Baroness Drake
At one level it is entirely up to the consumer, but if somebody hacks into the system or steals their identity, that is not under the control of the consumer.
Earl Howe
I will come on to the question of identity in a second when I address the amendment tabled by my noble friend Lord Young. Clearly, we want to do our utmost to ensure that the system is secure and that data can be accessed only by those entitled to access it.
I share the aim of noble Lords to make dashboards as useful as possible to individuals planning for their retirement. To that end, we are considering many of the aspects in these amendments as potential features of pensions dashboards in the future. Having said that, I need to come back to a point that I made earlier. The development of a pensions dashboard service that gives consumers a single point of access to their pensions information is a complex undertaking.
I remind the Committee that there are over 40,000 schemes, around 25 million people with private pensions wealth and a huge amount of state pension information. My noble friend Lady Altmann was absolutely right to stress that. It is why we have asked the industry delivery group to work with representatives from the pensions industry and consumer groups to ensure that the service is accurate, secure and consumer focused. Once again, I underline the word “secure”. I have to sound a cautionary note to noble Lords who want to broaden out the service in short order. Again, my noble friend Lady Altmann is quite right: adding any further complexity at this stage, however well intentioned, risks delaying the delivery of pension dashboard services to individuals.
I am sure we can agree that it is important that the design of this service is consumer focused. It must consider potential risks to the consumer and provide benefits to individuals planning for their retirement. The industry delivery group will undertake further user research and testing to ensure that that is the case. Any additional functionality should be made available only if three conditions are met: a clear consumer need should have been identified; safeguards and protections must be in place; and any functionality must be controlled and tested.
With those thoughts and aims in mind, I turn, first, to the amendments tabled by my noble friend Lord Young. In Amendment 45, he raises the important point of identity verification. This is crucial in giving consumers and pension providers confidence in the security of their data. In order to ensure a consistent consumer experience, the dashboard infrastructure should have one digital identity standard agreed across the industry. The level of identity verification used must be consistent with the internationally recognised standard published by government—the good practice guidance on identity proofing and verification. The good practice guidance is designed to be as inclusive as possible, so that as many people as possible are able to securely access the online services.
The creation of a digitally secure identity is complex. Last year, the Government introduced the digital identity unit, which is now leading work to develop a digital identity solution that can be used across the public and private sectors. The industry delivery group will work with the digital identity unit to enable the delivery of a secure, effective and inclusive identity service for users of the pensions dashboard. I understood what my noble friend said about Verify, and I assure him that the industry delivery group has this issue squarely on its radar. It is being informed by industry experts and consumer groups, and it will carefully consider available options and make recommendations on the best identity solution for pensions dashboards. The solution may not be Verify.
ID verification will have to meet the standards for all parties, including state pension, and that requires a high level above that for an individual scheme. Whatever happens, I can assure my noble friend that dashboards will be free at the point of use for consumers; that includes identity verification. Digital identity remains a priority for government and we are considering ways in which to continue this work with departments across government. We hope to make announcements on that in due course.
On Amendment 38, the Government fully support beneficiaries with entitlements having access to their pension information via dashboards. I can tell my noble friend Lord Young that this clause, as already drafted, enables this to happen. The delivery of this facility will be considered by the industry delivery group. However, his amendment does not distinguish between beneficiaries with entitlements and potential beneficiaries, without current entitlements to the scheme. Creating provision for a person with a potential entitlement introduces considerable legal and technical challenges about data protection and confidentiality in relation to the principal scheme member. The members themselves should have control of the access to such information, and this should happen only with consent. We should be wary of undermining confidence that an individual’s own pensions data will be kept safe, confidential and secure.
On Amendments 43 and 44, the Government recognise that some people will have a range of assets, including their homes, which could be used to form part of an individual’s retirement income. I understand all that my noble friend said in favour of adding to the dashboard in this way. However, I question whether such amendments are either wise or necessary. Many income projection tools are available through independent financial advisers to support individuals with this. The amendments open up the possibility of financial advisers being able to add information and make calculations directly on to a dashboard. This would significantly extend the scope of pensions dashboards, adding more complexity and risk to delivery.
That cautionary note is quite a good segue into Amendment 39 in the name of the noble Baroness, Lady Sherlock, on financial transactions. The document Pensions Dashboards: Government Response to the Consultation sets out that qualifying pensions dashboard services will not initially have the capability to facilitate transactions. They will start with a “find and view” function, allowing only individuals to see their information. Further functionality will be carefully considered, taking into account the potential risks to consumers alongside the potential benefits.
It may reassure the noble Baroness, Lady Drake, that although the Government have been clear that we want to enable consumer-focused innovation in the long term, this does not necessarily lead to transactions on dashboards. I also respectfully remind her of the mantra that we have uttered many times: that the consumers’ interests must come first. We set out in our consultation document three overarching design principles, which underpin the pensions dashboard ecosystem. These are: first, to put the consumer at the heart of the process by giving people access to clear information online; secondly, to ensure that consumers’ data are secure, accurate and simple to understand; and, thirdly, to ensure that the consumer is always in control over who has access to their data.
Baroness Drake
Perhaps I may put three questions to the Minister in response to his comments. First, he opened by pointing out the overwhelming support for the dashboard that was evident in the consultation; I have no argument with that. Does he accept that the consumer focus groups, taken in the broadest sense, actually lined up behind the Government’s starting with a public-owned dashboard and had quite strong views about proceeding without one? Does he accept that when one disaggregates the responses to the consultation, that is a correct summary? I am quite happy to name the organisations on which I base that view.
Secondly, the Minister actually gave a very good explanation of why one should not run into transactions on the dashboard: not just because of the technical and IT requirements to building a safe dashboard, but because of the whole behavioural market- weakness issues that come into play. However, I do not think I heard him say that, as a result of recognising that, the issue would come back to the Houses of Parliament through another Bill before proceeding to transactions. That was the assurance. I do not think that simply a discussion on regulations would meet Parliament’s need to scrutinise such a big transition. To push again, will he confirm that the Government would need to come back to Parliament before proceeding to transactional activity?
Thirdly, the Minister mentioned delegated access, about which I am deeply concerned. I have no issue with MaPS having delegated access, because it was set up on a certain basis where it was implicit that the dashboard would improve the efficiency of the guidance service. Financial advisers are an issue of some substance. The FCA’s report and actions on the market in financial advice to pensioners is not good reading. Just by September 2018—and the up-to-date figure will be greater—the transfer advice in DB covered assets worth £82.8 billion. In terms of the recommended product, the regulator found 35% were suitable, 24% were unsuitable and 40% were unclear. They produced other reports to express their deep concern. I put a simple question: in the case of Port Talbot, if advisers did not advise those steel-workers well and delegated access to all their pension-pot assets, how great would the detriment have been to those steel-workers? It is not a principle that delegated access may be given to advisers at some point when there is a high level of confidence down stream, but evidence provided by the regulator—not anecdotal evidence from me—says that this market is not working well, which fills it with deep concern.
Baroness Sherlock
My Lords, I want to ask a couple of questions so that the Minister does not need to come back to us twice.
My noble friend Lady Drake powerfully picked up the points on transactions that I wanted to make. I heard the Minister say that the Government’s intention is to proceed to transactions at some point—I would be grateful if he could correct that if I misunderstood—but I did not hear him say why they feel that this is a good idea. I heard him say carefully that they would want assurances to protect consumers, but I did not hear anything about the positive driver for doing so that outweighs the risks that manifestly come with it, which my noble friend just articulated.
I apologise; I have two more questions. I should say that I am hugely grateful for the Minister’s thorough response; I appreciate him taking the time to give us that. It may be that, in all that, I missed the answers to a couple of my questions; I apologise if he gave them and I did not pick them up.
First, am I right in understanding that the dashboard will not cover legacy private pensions and new private pensions not covered by auto-enrolment? If so, do the regulations, as they stand, allow those to be included subsequently, and do the Government have any views on whether they were going to do so?
The Minister touched on my second question but did not answer it. On Wednesday, he said that
“we entirely understand the importance of having a dashboard run by a public body without any commercial interest.”—[Official Report, 26/2/20; col. GC 182.]
Why do the Government think that that is a good idea? Why are they not worried that there could be a long period when there are only commercial dashboards and no public dashboard?
Baroness Drake
The liability model has not been settled. That is perfectly understandable; I do not rush to criticise it because there is a lot to do. All I would say, because I cannot resist doing so, is that it goes to the argument that one should start with a public dashboard. My question follows on from that asked by my noble friend Lord Hutton. On reading Clause 118, clearly powers are given to certain parties to set requirements—with the exclusion of the Secretary of State, who is in a totally different position. Can the Minister confirm that no such powers under Clause 118 can override the FCA’s existing powers? He may not be able to answer that yet but it would give clarity.
Lord Sharkey (LD)
My Lords, my noble friend’s amendment, among other things, speaks about advertising. The underlying question about advertising, however, is surely why allow it at all? That was touched upon by the noble Lord, Lord Vaux, and the noble Baroness, Lady Altmann. You can see the benefit, obviously, to commercial dashboard providers: another revenue stream and/or the cross-selling of their products. However, it is hard to see why the customer would want yet another advertising channel while there are already thousands—perhaps tens of thousands—of advertising channels. What really is the benefit to the consumer; or perhaps more accurately, what really is the risk-benefit balance for the consumer created by the existence of advertising on commercial dashboards? What assessment have the Government made of this risk-benefit balance? If the answer is none, perhaps they should consider doing exactly that. I am curious about whether the Government have, in fact, indicated to potential commercial dashboard providers that they will be able to run ads on their dashboards. Is there some implicit quid pro quo going on here?
Baroness Drake
My Lords, I have some sympathy with the noble Baroness’s amendment in wanting to set out in regulation, rather than rely on regulatory rules, some of the things that will be required to make the dashboard function well. I suspect that there are three drivers behind that sentiment. One is that, in this market, the providers are particularly dominant: there is not an equality of arms when it comes to seeking people’s opinion or influencing government policy. Secondly, the FCA itself recognises that it is very difficult to get a functioning market and that it needs to think more and more about intruding in controlling providers’ supply-side behaviour. Thirdly, although the Government understandably want to rely on consultation, those consultations can be dominated by the providers in this market.
Very often, some of the raw consumer issues somehow do not come to the surface and the consumer groups often do not have sufficient resources to do the kind of detailed analysis that a submission requires to pull out some of the fault lines when these things are looked at through a consumer perspective. Members of the public are not going to participate because they simply do not understand what the issues are in relation to their interests until they experience them. I therefore have a lot of sympathy, leaving aside the precise wording of this amendment. The Government need to understand that sense of those three sentiments that often drive many of these amendments: the providers are over-dominant; even the FCA recognises the need for greater intrusion on providers in the supply-side; and consultation is often not an effective remedy for sufficiently capturing the consumers’ interests. Therefore, the more that is put in regulation, the better.
Baroness Sherlock
My Lords, I am grateful to the noble Baroness, Lady Bowles, for having opened up this territory. She is a creative inventor of amendments: she has drawn out here a good selection of the kind of things that regulations would need to cover. Will the Minister tell the Committee—whether or not he wants to accept this amendment—whether it is the Government’s intention to cover those matters within regulation? Are any of these items on the list matters that the Government think are inappropriate for regulations to cover them?
The noble Baroness also made a strong case in general for end-to-end regulation. The Minister has described the process that the Government are going through to develop a liability map. I presume that in this, there will also be a similar kind of regulatory map. There also needs to be a redress map to ensure that there are no gaps down the middle of all of those things. It is also particularly important that there is not a regulatory gap. In terms of redress, it is important that there are no gaps; if things overlap, that does not matter so much. For example, there are times when a pension complaint could go either to the Pensions Ombudsman or the Financial Ombudsman service. They judge things by slightly different criteria and in different ways: fair or reasonable versus the legal position. However, it does matter that nothing falls down the cracks. If a complaint is submitted to an organisation such as the Financial Ombudsman Service and there is any possibility that it is out of scope, firms will, and do, regularly take them to court to try to stop the complaint being heard, and exactly the same thing will happen with the regulators.
Therefore, it is really important that somebody has gone through the regulatory map incredibly carefully and made sure that either the regulator already has all the powers and the full scope necessary to cover all these matters or that it will be granted them. I am sure that that is already happening but it would be helpful if the Minister could reassure us about it.
My noble friend Lady Drake made a very strong point about both the drivers of the need for this change and the inequality of arms. The latter is also very strong on the advocacy side. Many times I have seen that there has been a lot of money behind those advocating on behalf of the firms but very little resource behind those advocating on behalf of the consumer. Therefore, it will be very important to make sure that one amplifies the voices that speak up for the consumer interest as well as those that speak for the provider interest.
Baroness Drake
I certainly agree with the spirit behind the amendment—that transparency is a good thing and that the costs should be known—but I just hesitate over how the costs are looked at. One would think from some of the debates that I have participated in that I am reluctant to harness financial technology, but that is absolutely not the case. I am very pro it; I just want it done well.
I spoke at an industry event the other day. I will not name the person but it was the first time I had heard the CEO of a major financial organisation say, absolutely correctly, that a single piece of public policy—auto-enrolment—brought billions of pounds into the financial services industry which providers themselves did not achieve. I am conscious that the industry is very aware of its costs but it benefited hugely from a simple piece of public policy, and I found it quite rewarding that there was recognition of that. I have often said that all this money is coming in because the state took the decision to use the private sector to deliver a second-tier pension and therefore it has a wider responsibility for delivering a big piece of public policy.
I am not saying how one should do it, but it would be wrong not to attribute to the cost of the pension dashboard costs that should be incurred anyway. Where you start in looking at costs influences what they aggregate to. Getting the data accurate in order for the dashboard to work has to be done anyway. You cannot make a profit on inaccurate data. I know that that has been the model for a long time but it is not the correct model; it is a dysfunction in the market. On the trust-based side, the Pensions Regulator is driving, and is required to drive that occupational trust-based schemes and master trusts increase the accuracy of their data. If you are auto-enrolling somebody into a product, the least you should do is provide them with accurate data about what they have accrued. I would not want to attribute to the costs of the dashboard something that the industry and pension schemes should be doing anyway, which is getting their data accurate. It is indefensible to say, “It’s an unacceptable cost to require us to get our data accurate.” If they were told, “You’ve got to get it 100% as opposed to 99.9% accurate,” that might be unreasonable within the timescale, but that should be at the heart of providing pensions, whether contractually, by trust or whatever.
Also, the sector has a duty to harness what is available in financial technology so that people can access more easily what is available. I agree that there should be this visibility, but I make a plea. Some of these things required by the dashboard should be done anyway, and some are being driven to be done by regulators. We must not overstate the costs attributable to the dashboard when they would be incurred anyway to meet other government priorities or the efficient operating of pension schemes or market providers. That is my only hesitation.
Baroness Neville-Rolfe
I am a big supporter of auto-enrolment, which has been transformative and helps with this long-term problem of providing for old age. The cleaning of data is not a big aspect of the impact assessment I read, although I am sure that we will be advised on that by the department. A lot of it is setting the things up. It is good that data is gradually being tidied up. We must ensure that the system is clean for the future.
Baroness Stedman-Scott
In the circumstances, I will write to the noble Lord if he will allow me.
In conclusion, for the reasons I have outlined, I ask the noble Baroness, Lady Altmann, to withdraw her amendment.
Baroness Drake
This has become more problematic because of pension freedom. Before that, you could not quickly rush to play Gauguin in Tahiti and disappear, taking all your money with you, because you could not get it out in that way. At the age of 55, you can now do that if the taxman can chase you for the marginal rate of tax. There were partners, particularly women, who had certain protections in DB. In DC, at least the requirement to annuitise left some mechanism to temper this problem, although it did not deal exclusively with it. Pension freedom has transformed that.
I know that we will come later to the issue of gender and pensions—where I suspect that we will come back to this issue, among others—but there is a real issue here for partners, particularly women. If the person with the pension chooses simply to take the cash and go, once that has happened, it is very difficult for the partner to protect themselves or do anything about it. That is the underlying tension.