Corporation Tax (Northern Ireland) Bill

Lord McAvoy Excerpts

Tuesday 17th March 2015 Lords Chamber

[Lord McAvoy (Lab)]

My Lords, the Labour Opposition welcome and support the Bill and will do everything we can to facilitate its passage. However, that does not mean that we are not looking for further answers to questions that were asked in the House of Commons.

The Minister mentioned action to prevent “brass-plating”, as it has become known. We would like a bit more detail on how that would be stopped. She mentioned rebalancing the Northern Ireland economy. Concerns were expressed in the other place by the honourable Margaret Ritchie about regional imbalance within Northern Ireland, so that issue needs to be addressed.

Before I go any further, I should indicate again that we fully support the Government in looking to the parties in the Northern Ireland Assembly to implement the Stormont agreement. That is part of the deal, and we support the Government in insisting that the Stormont House agreement be implemented.

Some concerns remain that we would like to probe a little further. When government Ministers were asked about the effect of the devolution of corporation tax on the block grant, there was no real response to that. I merely repeat the question that was asked in another place: why were no models done? For example, if corporation tax was set at level X, what would be the effect on the block grant? I do not think that is too demanding a question to ask. Models should have been drawn up so that folk could have a better grasp of what will transpire in this area.

I share the sober assessment that this measure will not solve Northern Ireland’s economic problems or provide the necessary rebalancing of its economy. However, it should be implemented to try to rebalance the economy, as the Minister mentioned.

I want to spend a few minutes on the trade-off between a reduction in corporation tax and spending cuts. The impact of this legislation will need careful managing to ensure that it does not benefit only already wealthy people at the top and does not further perpetuate existing income inequality in Northern Ireland. This should not become a rich man’s Bill.

The importance of funding education in Northern Ireland cannot be overstated. Without adequate investment in education and apprenticeships, jobs and productivity will never increase. If Northern Ireland reduces its corporation tax rate to that of the Republic of Ireland, it will lose at least £300 million from its block grant. That figure was given by the government Minister in the other place. I believe in devolution and giving the Stormont Assembly responsibility for running its affairs, but that agreement should contain safeguards to make sure that there is no dramatic effect on the services that have been mentioned. The devolution of corporation tax—

[Lord Forsyth of Drumlean]

How can the noble Lord say that he supports the Bill and at the same time say that there should be no dramatic effect, when the effect of the Bill will be to reduce the amount of tax paid by profitable businesses if corporation tax was equalised, as he said, by between £300 million and £350 million, which would be money not available for spending on public services? So the necessity is that there will be less money for public services and more money in the pockets of profitable businesses.

[Lord McAvoy]

There is a bit of role reversal going on here. It is me who is supposed to attack the capitalists, not the noble Lord or the Minister. I am starting to feel a bit dizzy.

That is the balance that it is hoped to be reached. The noble Lord shakes his head. I would say to him, “O ye of little faith”. There will be a vested interest for Stormont Ministers to make sure that they balance extra corporation tax against a reduction in the block grant. I fully agree that one has to be very careful here so that this does not result in less money for services but we have been assured that there will be no dramatic impact, and I am always willing to listen to government Ministers. The noble Lord, Lord Newby, is looking a bit puzzled. I hope that he will comment on that point.

Has there been any study or consideration—perhaps the noble Lord, Lord Forsyth of Drumlean, is right—of how the volatility of corporation tax might impact on Northern Ireland’s economy? That is a valid concern. While devolution is devolution, we are devolving the power and are therefore looking for some kind of guarantee in this matter. We hope that its devolution goes ahead in 2017, but a potential stumbling block is that Northern Ireland’s finances must be on a stable footing. It concerns us that we do not know the precise fiscal conditionality required before the Government devolve this power. Can they make any estimate of the resulting decrease in the block grant? There are various calculations, but I would like the Treasury people to have looked at that.

I repeat, in case of doubt, that we support the Bill. In the other place, highly contentious remarks were made to the effect that Labour had done a U-turn because it had previously attacked the devolution of corporation tax. That is quite untrue. We have expressed legitimate concerns, but if anyone wishes to pursue that point, perhaps they could turn to the minutes of the Public Bill Committee, where Nic Dakin asked the Secretary of State for Northern Ireland whether she had seen comment by the Institute for Fiscal Studies that,

“Corporation tax is not a good candidate for devolution”?

The Secretary of State replied that there were risks. The Labour Opposition are not using scare tactics but asking legitimate questions. This process is not the be-all and end-all but could and should be a helpful tool for Northern Ireland.

Briefly on the background to all this, Laurence Robertson, chair of the Northern Ireland Select Committee in the other place, indicated that when the committee was in the United States of America recently it watched violent scenes on the streets of Belfast and Northern Ireland, involving fires and smoke-bombs. That is the biggest turn-off when trying to attract industry into Northern Ireland. There is a two-way street here: devolution is coming from this place, after consideration, but there also has to be a payback, if you like, by people trying to work together—hard as that may be because the past is always there. The damage being done by those scenes is quite substantial.

We hope that this is a contribution to further periods of peace and stability in Northern Ireland. Going back in history, I think that great credit is due to Sir John Major for initiating this process and to Tony Blair and his team for pursuing it. It is to be hoped that the devolution of corporation tax will be a further measure along the road to peace and stability in Northern Ireland.

--- Later in debate ---

[Lord Forsyth of Drumlean]

I think that the argument about the land border is overemphasised. I happen to know that people fly from Scotland to Dublin to go on international flights because the flights from Dublin are priced by the airlines at a very much lower rate. That has nothing whatever to do with air passenger duty or taxation and everything to do with the view of the commercial airlines of what the market will bear for their fares. It is a very simple thing to hop on an aeroplane—there are about six or seven a day out of Edinburgh and as many out of Glasgow—to go to Dublin and then to fly to wherever you want to go, to Hong Kong or the United States or wherever. So I do not think that that argument holds water; but perhaps that is a mixed metaphor, because my noble friend is arguing that it is about a land border.

I am totally opposed to giving air passenger duty powers to the Scottish Parliament because it will have a catastrophic effect on Newcastle and the rest of the north of England. Already the amount that we pay in taxes is very considerable. I am arguing that as a United Kingdom we should have a unitary tax system and that this tinkering is absolutely inimical to maintaining a United Kingdom. If as a United Kingdom we believe that reducing corporation tax will result in more revenue and business development, that should be the policy for the United Kingdom.

The noble Lord, Lord McAvoy, chided me for attacking capitalism when it was his job. I was merely pointing out to him the inconsistency of his position. If he supports this Bill and argues that he is in favour of these reductions in corporation tax to help business expand and grow, he cannot at the same time satisfy the noble Baroness, Lady Blood, in her concern about the impact—even if you believe, as I believe, that cutting the top rate of tax from 50% to 45% has resulted in revenues going up by £8.5 billion. I believe that tax cuts can have a dynamic effect. Similarly, when the Liberal Democrats insisted on putting up capital gains tax from 18% to 29%, what happened? The revenue went down by several billion pounds. My noble friend nods; I apologise for not being very positive. However, even if you believe that that is not the case, there is a time lag, and in between times you do not have the money and you have to take that money away from public services. The noble Baroness made that point. I do not think that will be particularly popular and it seems a very strange approach to a situation where people cannot agree on balancing the budget and on meeting their obligations as it is. So I think this Bill is a deal and a piece of constitutional tinkering which is misguided in its approach.

As a Scot, I am worried because I have not heard a single argument here today, other than there is a land border, which will enable me to fend off the devo-max brigade in Scotland and the nationalists who are now running rampant in the polls. The latest poll has them on 55%. That has all been caused by raising expectations and confusing two things—that is, confusing more powers with more money. Everyone in this Chamber knows that having more powers will actually mean less money, but it is being sold to the voters—I suspect that it may well have been sold in this way in Northern Ireland—that if their parliament has more powers, they will have better education and health services and better everything else. However, that is a fantasy. When people wake up to the fact that this is a misguided fantasy, they will blame London and our United Kingdom will be fractured. Therefore, I am very disappointed by this Bill.

However, I agree with my noble friends Lord Alderdice and Lord Trimble on the importance of stimulating the private sector. Scotland also has too large a public sector and we need to encourage business, but corporation tax is paid only by profitable businesses and businesses which are generating capital for investment. However, lots of businesses are struggling. If you want to encourage businesses and cut taxes—that is a priority—why not deal with business rates and levels of national insurance, as I hope my right honourable friend the Chancellor will tomorrow? Corporation tax is a very odd choice indeed.

For all that is said about the success of the tiger economy in the Republic of Ireland, corporation tax receipts went up so dramatically in the Republic when the rates were low because lots of businesses operating in the United Kingdom repatriated their profits to the Republic. According to leaks that have emerged before the Budget, the Chancellor says that he will take action against the Amazons and others who organise their affairs so that they pay tax in low corporation tax countries. The Government seem to be trying to have it both ways.

By the way, no one has mentioned the impact of all this on the Barnett formula. The Labour leader in Scotland is saying that if people vote nationalist, they will lose Barnett. If you continue to devolve more and more tax-raising powers to the constituent parts of the United Kingdom, by definition you will erode and lose Barnett. As was pointed out in the earlier part of the debate, we also have to think about why there is such a disparity in grant to the constituent parts of the United Kingdom. Therefore, as we go down this road, we must move towards a more needs-based system of funding which again will put pressure on Northern Ireland and the public services. So I am with the noble Lord, Lord McAvoy, in arguing that we need a constitutional convention and we need to look at these things as a whole and not on a bit-by-bit basis. Does the noble Lord wish to intervene?

[Lord McAvoy]

Very briefly. The noble Lord has made an excellent case. If he cares to cross the Floor, we will always find room for him.

[Lord Forsyth of Drumlean]

I suggest to the noble Lord that the Labour Party in Scotland is in enough trouble without me adding to its difficulties.

Pension Schemes Bill

Lord McAvoy Excerpts

Tuesday 27th January 2015 Lords Chamber

Moved by

[Lord McAvoy]

1: After Clause 18, insert the following new Clause—
“Fiduciary duty of trustees
(1) The Secretary of State may by regulations—
(a) require any pension scheme, which is not already overseen by independent trustees, to appoint a board of independent trustees; and(b) set out the powers and duties of a board appointed under paragraph (a).(2) Regulations under this section—
(a) shall be made by statutory instrument, and(b) may not be made unless a draft of the instrument has been laid before, and approved by resolution of, each House of Parliament.(3) The board of independent trustees shall have a fiduciary duty towards members of the scheme overseen by them.
(4) The fiduciary duty set out in subsection (3) shall take precedence over any duty to—
(a) the shareholders in, or(b) other owners of,the operators of the scheme.(5) In relation to any matters of member interest, decisions of the board of independent trustees shall be binding on the board of directors or other analogous bodies.”

[Lord McAvoy (Lab)]

My Lords, the amendment stands in my name and that of my noble friend Lord Bradley. It is our contention that the Bill does not go far enough to address the governance of defined contribution pension schemes. We have consistently argued on the Bill and the previous Bill that all workplace pension schemes must be run by independent boards of trustees. Those trustees would have a fiduciary duty that would take precedence over any duty owed to shareholders. In proposing the amendment, we are setting out a clear responsibility that all those looking after someone else’s money or advising on investments should be subject to fiduciary standards of care. That will mean that conflicts of interest must be resolved in the beneficiaries’ interest. That omission from the Bill is perhaps surprising given the findings of the government consultation document entitled, Reshaping Workplace Pensions for Future Generations. Paragraph 22 states:

“Collective schemes are complex and can be opaque—because of the indirect relationship between contributions and benefits. This necessitates strong standards of communication and governance. We intend collective schemes to be overseen by experienced fiduciaries acting on behalf of members, taking decisions at scheme level and removing the need for individuals to make difficult choices over fund allocations and retirement income products”.

The Bill sets up a new model of collective pensions. This will have a form of independence within the governance arrangements, with an alignment of interests. It falls short of our proposal for independent trustees with a clear fiduciary duty to act in savers’ interests, but is an acknowledgement of the principles underpinning good governance. The Government have failed to take the opportunity to require that independence in the governance of all pension schemes.

In Committee, the noble Lord, Lord Bourne of Aberystwyth, said:

“I do not think that we are miles apart on our desired outcome, but we believe that working with the industry, consumer groups and pension groups to achieve the best interests is the right way forward. If we can achieve the same end without making it mandatory, we believe that that is the right approach. It is probably at the root of the difference between the two parties that we believe that we are achieving the result without having to make it mandatory”.—[Official Report, 7/1/15; cols. 381-2.]

In response, we say to the Minister: how long should we give the industry to change? How much evidence do we need to prove that government action is needed and that it is our responsibility to act? Enough is enough.

During the past three years alone, the failures of the pension industry have been well documented. Market studies have been produced by the Office of Fair Trading and the Financial Conduct Authority and reports produced by the Pensions Institute and the Centre for Policy Studies, among others, as well as by journalists from the Times, the Telegraph, the Mail and the Guardian, through to Channel 4 documentaries, to name but a few. There can hardly be a literate adult in the UK who does not understand that there is something seriously amiss with our pension industry. Nor should we ignore the fact that many of those commentators and financial experts have called on the Government to take action because of the failure of regulation, the failure of parts of the market to follow ABI codes of practice or adopt best practice. It has been given a chance to improve for the past decade or more, and even the mis-selling scandals that have cost the industry dear have not been enough to prompt the change that we all believe is necessary.

One further matter should be considered: the success of auto-enrolment. Auto-enrolment has proved attractive and more people have remained in the schemes to date than we had dared hope. We have helped people to do the sensible thing, but that will not be sustained if we do not protect savers from excessive charges, poor returns, poor management practices, mis-selling scandals and the like. People need to trust the private sector pensions industry. As my noble friend Lady Drake said in Committee:

“It will be a major regulatory failure of public policy if millions of citizens are auto-enrolled into pension schemes but Parliament has not ensured that sound governance is in place.—[Official Report, 7/1/15; col. 378.]

I beg to move.

--- Later in debate ---

[Lord Bourne of Aberystwyth (Con)]

My Lords, I first thank the noble Lord, Lord McAvoy, for his contribution. I will do my best to answer his points and those of my noble friend Lord German.

I welcome the opportunity to debate this amendment again, having discussed it at length in Committee. It is fair to say—as the noble Lord said in opening—that, in philosophical terms, there are differences between the Government and the Opposition on this issue. However, we certainly want the freedoms that the new system contained in the Pension Schemes Bill offers. To that extent, we are united. However, we are certainly coming at it from different angles.

The noble Lord, Lord Bradley, suggested in Committee that all workplace pension schemes should be run by trustees and have a legal duty to prioritise members’ interests. In the same debate the noble Baroness, Lady Drake, made a broader case for extending a fiduciary duty to all who have the discretion to manage other people’s money. The Government share the concerns of the noble Lord and the noble Baroness that pension schemes should be well run. As I said in Committee, the Government are committed to ensuring that all workplace pension schemes are well governed, with members’ interests at the heart of everything they do. That is why, in March last year, we set out our proposals for strengthening the governance of occupational pension schemes that are money purchase schemes, and to the money purchase benefits provided by other schemes, in the Command Paper, Better Workplace Pensions: Further Measures for Savers. I should add that the majority of stakeholders supported these proposals by saying that they represented a positive change, intended to drive the right behaviours.

As noble Lords will be aware, in that publication last October we put these proposals on a sure footing by consulting on draft regulations to place minimum governance standards on, broadly, all occupational pension schemes which are money purchase or have money purchase elements to them. That consultation has now ended; we will shortly be publishing the Government’s response and laying the final draft regulations before Parliament, to come into force this April. For workplace personal pension schemes, the FCA has also completed its consultation on draft rules for independent governance committees, which were referred to by my noble friend Lord German and which will ensure oversight of these schemes in members’ interests from April 2015, and aims to publish its policy statement by early February of this year. That probably answers my noble friend’s point: these committees are essentially supervisory rather than day-to-day, which would be the role of trustees.

In respect of the governance of collective benefits, I can reassure noble Lords that we have a number of provisions in Part 2 that enable us to make requirements in regulations about some of the key aspects of running a scheme offering collective benefits. These are specifically tailored to such schemes and reflect key differences in the rights that members have in collective benefits, compared to money purchase benefits. We may also make regulations under a power in Part 3 to require certain decisions in respect of collective benefits, and in relation to defined ambition schemes, to be made in the best interests of members to ensure appropriate safeguarding of members’ interests. This reflects the different nature of the decisions being made on behalf of members in these types of pensions, compared to money purchase pensions.

I will refer now to another point made by the noble Lord, Lord Bradley, in Committee. He proposed that a trust-based approach is preferable to a contract-based one. I emphasise again that we must not assume that trust-based schemes are always better governed than contract-based workplace pension schemes. There is no evidence that one governance structure necessarily delivers better outcomes than the others. As I said in Committee, we consider that scale, good governance and charge levels are among the key determinants of member outcomes, not whether a scheme is contract or trust-based. But as I also emphasised, while we are interested in scale inasmuch as it may help schemes to improve quality and lower charges, it is not an aim in itself and bigger does not always mean better. The governance of contract-based schemes has grown significantly stronger in recent years, led by the FCA with the Treating Customers Fairly principles, which have formalised firms’ responsibilities to their customers.

The introduction of independent governance committees with a duty to act in members’ interests, from April 2015, will further strengthen the governance of contract-based schemes. Also from April of this year, the Government and the FCA are intending to introduce measures so that certain savers in, broadly, all occupational and contract-based schemes providing money purchase benefits which are used for automatic enrolment will not be subject to high or inappropriate charges. The positioning in the Bill of this amendment limits the powers to schemes with collective benefits. However, it is not clear whether this is the intention behind the amendment.

We would not want to single out collective schemes here and, as I have mentioned, there are powers in Part 3 covering the interests of members of collective schemes. If the noble Lord, Lord McAvoy, intended the amendment to apply to all schemes, I am not sure whether it would achieve this. As I explained in Committee, if this amendment were exercised across all schemes, it would require independent trustees to be recruited for tens of thousands of pension schemes. I believe that this answers a point raised by my noble friend Lord German. Data from the Pensions Regulator show that there are at least 47,680 private workplace schemes alone, although I accept that not all those will need to recruit independent trustees. My noble friend Lord German put a powerful case for not passing this amendment, as it is not clear whether it is intended to cover just collective benefit schemes or schemes more widely. Clearly, there will be a cost associated with it.

[Lord McAvoy]

I thank the Minister for giving way. The Minister has raised some objections that are less extreme than those of the noble Lord, Lord German—so there is a difference in fairness here. Our new Clause 13 was initially a response to the problem of having so many trustees. Let us not forget this direct quote from my honourable friend Gregg McClymont:

“Our new clause 13 would initiate a response to that problem, but let us not forget that of the 200,000 pension schemes in the UK the vast majority are group personal pensions under the management of four or five—no more than half a dozen—insurance companies. A governance board properly constituted of trustees attached to each one of those major insurance companies would deal with the vast majority of pension schemes in the UK. That is a very important point”.—[Official Report, Commons, Pension Schemes Bill Committee, 4/11/14; col. 324.]

[Lord Bourne of Aberystwyth]

I am grateful to the noble Lord opposite for that intervention, but the case remains there is clearly going to be a cost associated with this. This is an objection to it, but the prime objection is that we do not accept the principle that contract-based schemes need such a fundamental change. Though different in essence from the fiduciary nature of trustees’ duties and trust schemes, there are of course obligations placed on contract-based schemes, as I have tried to set out.

We all agree that good governance of pension schemes is essential. This is why the Government’s proposed new governance standards, applying across broadly all workplace pension schemes in respect of money purchase benefits will further protect members by ensuring that schemes are run in their interests. It is also why this Bill makes provision for targeted regulation-making powers in respect to the running and good governance of collective benefits and certain decisions in defined ambition schemes and in relation to collective benefits.

I accordingly and respectfully ask the noble Lord to withdraw this amendment.

[Lord McAvoy]

My Lords, maybe I am paranoid or maybe I just have a suspicious mind or maybe my mother knew what she was doing when she called me “Thomas”, but I do not believe that it is entirely coincidental that what someone called the Welsh mafia are in operation here, with certain facts—in inverted commas—being produced. Cost has been mentioned by the noble Lord, Lord German, and the Minister. Can anyone in this House give an exact figure for the cost to the members of pension schemes where there has not been proper fiduciary guarantees of independent governance? Can anyone give me a quote? Plenty of folk can quote instances where money has been lost through pension funds. I do not think that the principle that we are putting forward here is as unreasonable as has been portrayed, particularly by the noble Lord, Lord German. We will return to scale at a later stage. In the mean time, we will try to find an estimate of how much has been lost to ordinary members of pension schemes through a lack of governance.

In the mean time, however, I beg leave to withdraw the amendment.

Amendment 1 withdrawn.

Pension Schemes Bill

Lord McAvoy Excerpts

Tuesday 27th January 2015 Lords Chamber

Moved by

[Lord McAvoy]

10: Before Clause 67, insert the following new Clause—
“Scale of pension schemes
(1) The fiduciary duty of pension scheme trustees shall include a duty to consider whether the scheme has sufficient scale to deliver good value for members.
(2) Where trustees take the view that the scheme has insufficient scale, they must consider whether merger with another scheme would be in the members’ interests.
(3) The Pensions Regulator shall have the power to direct merger of pensions schemes where it would be in the interests of the members of each of the relevant schemes for merger to take place.
(4) The Pensions Regulator shall exercise this power in accordance with a methodology on which it has publicly consulted and which has been agreed with the Secretary of State.
(5) The methodology set out in subsection (4) shall be kept under regular review and revised when necessary, subject to further consultation and agreement from the Secretary of State.”

[Lord McAvoy (Lab)]

My Lords, Amendment 10 would ensure that the fiduciary duty of pension scheme trustees should include a duty to consider whether the scheme had sufficient scale to deliver good value for members. It is the same amendment that we proposed in Committee but, having reflected on the Minister’s answers, we believe that this is so important an issue that we want to return to it.

The Minister said in Committee that,

“although … the market is driving things in the direction of scale, it is the case that managers and trustees should be considering this as part of their duties”.—[Official Report, 7/1/15; col. 393.]

He also said that the framework was already there to enable mergers and scaling up, and indeed they are happening. However, it is crucial to us on this side of the House, whether the issue is governance and transparency or the way in which duties are imposed on trustees, that we should always be looking to get best value and protect the interests of the public throughout this process. Strengthening the arm of the Pensions Regulator will help to achieve that scale.

It is our view—and that of the Pensions Regulator, which was set out in evidence—that there has to be a scaling up of the UK pensions industry. At the moment there are far too many schemes, and we want a process in place to try to reduce that and build up scale. Our proposed new clause would not by any means reduce the number to a handful, but would give powers to trustees and the regulator to promote scale. It would be a sensible addition to the powers of trustees and the regulator. Given the widespread consensus in the pension industry that scaling up will have to happen, and that in doing so costs would be reduced and there would be a better outcome for savers, I hope and believe that the Government will wish to support the amendment. I beg to move.

[Lord German (LD)]

My Lords, once again I have a few questions for the movers of the amendment as well as the Minister. The sense that I get from the amendment is that bigger is always best and small is not to be preferred. The truth, presumably, lies somewhere in the middle of all that.

There are questions that arise from the amendment. When you have schemes—I presume there are many tens of thousands of them are around, but I do not know how many of them are of the size and scale interpreted by the amendment—it is important to ask what defines sufficient scale, which is the first part of the noble Lord’s amendment. I would like to understand what “sufficient” means. I presume that noble Lords would want to see all pension schemes with good governance, low fees and good outcomes for their members.

So my first question is: what is it that big schemes can provide that smaller ones cannot? I understand from reading Hansard from the other place that one of the suggestions from the movers of this amendment there was that asset management could be moved in-house. I wonder whether that is a sensible provision. Can the Minister tell us whether or not there have been successes with in-house asset management? Is that a given for securing lower costs and a better outcome for the consumer?

I turn to the other pressure that the amendment seeks to apply. The claim is that by forcing schemes to merge, there will be economies of scale. In the capping regime that the Government have undertaken, there must be a league table of high-cost fee pension schemes. Can the Minister say how many bigger and how many smaller providers are in that league table? This will enable us to discover whether or not big is best and whether there are appropriate economies of scale.

I need to test another issue with the movers of this amendment: namely, merging. Merging with whom and how is it to be determined? What the amendment seeks to do is to force pension schemes to merge. I understand that there has already been a significant shift in the number of schemes that have merged; the extent of the direction of travel is extensive. Perhaps the Minister could remind us of the speed with which schemes are merging and growing bigger. But if you force mergers, as with any arranged marriage you need to engage in a partner search. I wonder whether the movers of the amendment can tell us how this partner search is going to take place; who is going to undertake it and who is going to police it—because I think that would be almost impossible.

I remain to be convinced that forcing unwilling, low-cost, good value for money, well governed, smaller pension schemes to merge is the right approach to ensure that the members of the scheme get the best returns. There are alternatives. The fee cap, disclosure, regulation of governance and transparency are all issues that this Government have taken on board and are progressing. I am left with some doubts about whether the forced marriage regime which is being proposed by the noble Lords opposite is the best approach when there are better alternatives.

--- Later in debate ---

[Lord McAvoy]

I thank the Minister for his response. However, I have struggled a wee bit to align some of the comments made by the Minister and by his loyal and noble friend Lord German. We have been accused of saying that bigger is beautiful, but no, we did not, and of saying that bigger is best, but no, we have not said that. The Minister has used the word “sledgehammer” to describe this minor, moderate amendment, and it is just not true. The noble Lord, Lord German, referred to a “forced marriage”. The only forced marriage I see is, more appropriately, across the Benches here and it is heading for a rocky end in divorce and mayhem and not on good terms either.

I repeat what the amendment would do. It would ensure that:

“The fiduciary duty of pension scheme trustees shall include a duty to consider whether the scheme has sufficient scale to deliver good value for members”.

The only duty is to consider. It is not a forced marriage, it is not bigger is best, it is not big is beautiful, and it is not a sledgehammer. I am losing track of all the various adjectives used here to describe this little amendment. We think it is a reasonable duty to give them to make sure they at least consider it. No force of any kind is envisaged at all. The Minister is not an extreme person but I am disappointed that he has perhaps been waylaid by his loyal and noble friend into using some extreme language which does not fit the amendment. However, I beg leave to withdraw the amendment.

Amendment 10 withdrawn.

Pension Schemes Bill

Lord McAvoy Excerpts

Monday 12th January 2015 Lords Chamber

[Lord Newby (LD)]

My Lords, the Government intend that all those who stand to benefit directly from the new pensions flexibilities provided by the Taxation of Pensions Act 2014 should have access to pensions guidance, which will help to empower them to make informed decisions about their pension savings.

The amendments to Clause 47 and Schedule 3 are technical amendments to ensure that this is the case. The amendments in this group adjust the definition of pensions guidance in new Sections 333A and 137FB of the Financial Services and Markets Act 2000, to extend pensions guidance to survivors of members who have benefits to which the flexibilities will apply, rather than just to members of pension schemes. This is needed because in some circumstances pension schemes may provide benefits to survivors of members of the scheme other than insurance-based products or cash lump sums—that is, flexible benefits—without their becoming members of the scheme. I beg to move.

[Lord McAvoy (Lab)]

My Lords, a large number of government amendments have been tabled for today’s business. The impression given is of last-minute thoughts responding to last-minute contributions and suggestions. If the Government had been doing their groundwork properly, they would not have had to respond to such issues by moving the amendments.

I thank the Minister for doing his best to explain the amendment. I think he has said that these are minor and technical amendments, but can he confirm that that is so and that they do not substantively change the effect of the Bill? Quite frankly, we know what the Government are saying in these amendments. I do not think there has been time to study them very well, so we will reflect on what the Minister has said and consider it very carefully ahead of Report.

[Lord Newby]

My Lords, I can absolutely confirm that these are minor and technical amendments.

Pension Schemes Bill

Lord McAvoy Excerpts

Monday 12th January 2015 Lords Chamber

[Lord McAvoy (Lab)]

My Lords, I thank the Minister for his explanation of the amendments. “Challenging”is is one of the words that he used. I would like to challenge the thrust of what the Government are saying about these amendments. Although, strictly speaking, he has not used the words “technical amendments”, nevertheless they are in that category. I would like to probe a wee bit further and ask how the amendments came about. What advice was taken, what discussions took place and what organisations were in touch with Ministers to press this change? It could be argued—slightly tendentiously, but it could be argued—that this changes the Bill quite a bit. When did the Government decide to bring out this amendment whereby people with a guaranteed annuity rate pension would have to take advice? It has been a constant theme—not only previously but today in particular—that a number of amendments seem to be afterthoughts or a result of lobbying. It is a good thing in that these are very important issues and people are entitled to try to influence government. However, I would like to probe a wee bit further and ask what process was entered into that ended up with this amendment.

[Lord Newby]

My Lords, I agree with the noble Lord that the amendments are very technical at one level. However, they are not technical amendments; they are proper substantive amendments. They broaden the scope of the type of pension where people will be required to take advice. I will happily write to him if I can provide him with more details. I think that it simply became apparent to officials during the Bill’s passage that this was a potential—relatively small—market involving a type of pension lump sum that had not been covered in the way that had always been intended for this sort of thing. As we find with most Bills as they go through the House, the Government introduce amendments because they become apparent to officials as they do more work and to parliamentary counsel as it does more work. If there was anything more specific that led to these amendments, I will definitely write to him.

--- Later in debate ---

[Lord Bourne of Aberystwyth (Con)]

My Lords, I now turn to a further group of amendments which make minor changes to the clauses dealing with draw-down of pension benefits.

The first set of amendments follows amendments made in Committee in the other place to what is now the Taxation of Pensions Act. The Taxation of Pensions Act will allow for payment of death benefits to nominees and successors of members in relation to money purchase arrangements. The Act makes provision for a nominees’ draw-down pension and a successors’ draw-down pension. These amendments make the changes to this Bill to reflect the introduction of these new types of draw-down pension. They amend Clauses 55 and 56 so that these types of pension are treated in the same way as a dependants’ draw-down pension. They also insert definitions of a nominees’ draw-down pension and a successors’ draw-down pension into Clause 74. Amendments to Clauses 60 and 61 do the same for Northern Ireland. The second set of amendments makes small changes to Clauses 72 to 74, which deal with the definition of terms used in Part 4 of the Bill. As I said, these amendments make minor changes. I hope that noble Lords will agree, and I commend these amendments to the House. I beg to move.

[Lord McAvoy]

My Lords, I thank the noble Lord for his succinct exposition of the amendments. These are more in line with the phrase “minor and technical”. Nevertheless, I still make the point that there has been a barrage of amendments. We will study these carefully and, if necessary, do something on Report. I just make the point that we will be scrutinising them carefully.

Amendment 51 agreed.

--- Later in debate ---

[Lord Bourne of Aberystwyth]

My Lords, this group of amendments makes a number of small consequential amendments, all designed to ensure that the transfer provisions work as intended. The amendments are somewhat technical and I hope your Lordships will bear with me while I set out in a little more detail what they do.

Amendments 54, 63 and 64 are consequential on Clauses 55 to 57, which make provision in relation to drawdown. Clause 55 contains a provision that overrides scheme rules to the extent that there is any conflict. Clauses 56 and 57 also contain provisions allowing regulations made under them to override scheme rules to the extent that there is a conflict. The amendments make provision to insert a reference to Clauses 55 to 57 into the list of relevant legislative provisions for the purposes of the scheme rules definition in Sections 100B and 101AI of the Pension Schemes Act 1993—in relation to transfer—Section 67A of the Pensions Act 1995—in relation to members’ subsisting rights—and for the purposes of the Pensions Act 2004. Amendments 62, 67, 71 and 73 further ensure that the definitions of scheme rules in the 1993 and 2004 Acts also apply for personal pension schemes, taking account of any provisions that override these rules. These provisions are needed to ensure that the new overrides are taken into account in the existing legislation and so that it is clear what is meant by scheme rules where a provision has been overridden. Amendments 58, 63, 64, 77, 82 and 86 make provision for corresponding changes to Northern Ireland legislation.

I now turn to Amendments 59, 70 and 72. These make amendments to Schedule 4 to update existing cross-references to the transfer rights contained in the Judicial Pensions Act 1981, the Judicial Pensions and Retirement Act 1993, the Pensions Act 1995 and the Scottish Parliamentary Pensions Act 2009, so that they point to Chapters 1 and 2 of new Part 4ZA of the Pensions Schemes Act 1993. This will ensure that transfer provisions continue to operate as intended in conjunction with this Bill in relation to these pension schemes. This schedule also introduces identical provisions for Northern Ireland legislation in Amendments 76 and 87.

Amendments 60, 61, 68, 69, 75, 76, 78, 79, 83 and 84 amend Schedule 4 to make a number of minor and consequential changes to various sections of the Pensions Schemes Act 1993 and its Northern Ireland equivalent to ensure that the precise wording of the these sections operates as intended, now that a member’s statutory right to transfer will apply at benefit category level.

Finally in this group, Amendments 65 and 66 make small drafting amendments to new Section 100C of the Pension Schemes Act 1993 to put the meaning of “normal pension age” beyond doubt, with corresponding amendments for the Northern Ireland equivalent through Amendments 80 and 81. The amendments make minor and technical changes to the Bill which are important to ensuring that the legislation operates correctly. I beg to move.

[Lord McAvoy]

My Lords, I make the point about minor and technical amendments again. We will study them carefully, although with less suspicion than those in other categories. However, I will just say that Amendment 54 takes up a full page on the Marshalled List of amendments. Again, it reinforces the image of things being hurried or missed out when an amendment of that length has to be moved. Having said that, we accept it as a minor and technical amendment.

Amendment 54 agreed.

--- Later in debate ---

[Lord Newby]

My Lords, the purpose of Amendments 87, 88 and 89, which amend Clause 66, is to improve the drafting of technical aspects of this clause, which introduces restrictions on transfers out of unfunded defined benefit public service pension schemes to schemes from which it is possible to acquire a rise or entitlement to flexi-benefits. Amendment 87 ensures that the definition of unfunded public service defined benefit schemes applies where it is needed. Amendment 88 enables the Treasury to make regulations relating to public service pension schemes which can currently be made only by the Secretary of State. Amendment 89 ensures that certain regulations already in force will apply until new regulations are made under certain of the new powers provided for in this clause.

Turning to the amendments in respect of Clause 67, as a reminder, I say that the purpose of this clause is to introduce a new safeguard for funded defined benefit public service pension schemes which gives Ministers a power to designate a scheme or part of a scheme, and in that way require the reduction of cash-equivalent transfer values in respect of transfers from that scheme to another scheme in which the member will be acquiring flexible benefits.

Amendments 90, 91 and 92 clarify the schemes covered in Scotland by the new safeguard for funded defined benefit public service pension schemes, which is introduced in Clause 67. They ensure that only schemes which are public service pension schemes within the meaning of Section 1 of the Pension Schemes Act 1993 fall within the power introduced by this clause.

Amendment 93 improves the drafting of Clause 67. Rather than speaking of “acquiring” flexible benefits, the clause will refer to acquiring a “right or entitlement to” flexible benefits, which is more accurate. Amendments 94, 95 and 96 amend Clause 69 to make provision for Northern Ireland parallel to that made for Great Britain by amendments described above. Similarly, Amendment 97 amends Clause 70 to make provision for Northern Ireland parallel to that made for Great Britain by the amendments described above. I beg to move.

[Lord McAvoy]

My Lords, I thank the Minister for his exposition. He sold me when he mentioned Scotland, so I think we accept that these amendments are genuinely minor and technical, although, to coin a phrase, we will reserve our position in case we discover something. I hope my noble friend Lord McKenzie of Luton can resist the temptation to jump up and shout, “Me too!”.

Amendment 87 agreed.

--- Later in debate ---

[Lord Bourne of Aberystwyth]

My Lords, Clause 80 provides a power to enable the Secretary of State or the Treasury to make consequential changes needed to any primary or secondary legislation, whenever made. Clause 81 makes provision for the regulation-making powers that have been set out in the Bill and the procedure for exercising those powers.

The amendments to Clauses 80 and 81 are technical and enable the regulation-making powers contained in the two clauses to be extended to the Department for Social Development in Northern Ireland in relation to Northern Ireland legislation. This will allow the Secretary of State for the Department for Social Development in Northern Ireland, who is responsible for social security benefits and pensions in Northern Ireland, to make consequential amendments to provisions in Northern Ireland legislation, where appropriate. In line with the provisions for Great Britain, including Scotland, where the powers are used to amend primary legislation, they are subject to confirmatory procedure, which is equivalent to the affirmative resolution procedure in this House. These changes and other provisions in the Bill allow the Northern Ireland authorities to maintain parity with pensions legislation in Great Britain. Clause 84 sets out when the different parts of the Bill will come into force.

The Government have given a commitment that from April 2015 people will be able to access their pension savings flexibly. These amendments ensure that the regulation-making powers in Part 4 come into force on Royal Assent so that the relevant regulations can come into effect on 6 April 2015 in line with the commitment given. The amendments also ensure that amendments made to include reference to the Bill in the definition of pensions legislation in the Pensions Act 2004 come into force from 6 April 2015. I beg to move.

[Lord McAvoy]

My Lords, I thank the Minister for his exposition. Somebody must have told him about my Irish grandparents. That is the other side of my Celtic tradition. We accept that these are minor and technical amendments and have no objections to them, with the usual proviso.

Amendment 106 agreed.

Assisted Dying Bill [HL]

Lord McAvoy Excerpts

Friday 7th November 2014 Lords Chamber

[Lord Newby]

My Lords, my noble friend the Chief Whip had numerous discussions earlier in the week with the principal protagonists on the Bill. On precedents, noble Lords will remember that we sat beyond 5 pm for the Second Reading of the Bill from the noble and learned Lord, Lord Falconer, as we did in the 2005 Parliament when the noble Lord, Lord Joffe, brought forward a Bill on the same subject. The House sat beyond 5 pm for its Second Reading on that occasion. If your Lordships look at the pattern of Fridays, we have risen at 3 pm or thereabouts on the vast bulk of them. This Bill is clearly unusual in its significance and the amount of attention that it has generated, both inside and outside your Lordships’ House. I do not think that either my noble friend the Chief Whip or I detect any mood to move beyond 3 pm as a normal finishing time on Fridays.

[Lord McAvoy (Lab)]

My Lords, to follow up on that issue, will the Minister indicate how much consideration was given to noble Lords who do not stay in London? If no consideration was given to the inconvenience, extra travel time and all the rest of it for anyone who does not stay in London, that would only confirm the trend towards this place becoming a metropolitan House rather than a House of the United Kingdom.

[Lord Newby]

My Lords, consideration was given to that, which is why we are not suggesting that the House sit beyond 5 pm, although it is conceivable, given the number of amendments, that one could go on beyond even then. The other thing that was in my mind, although I cannot speak for anyone else, is that for the country, looking in at our deliberations, the idea that it would be impossible to sit beyond 3 pm on a matter of this importance does not necessarily put your Lordships’ House in a good light.

Queen’s Speech

Lord McAvoy Excerpts

Wednesday 11th June 2014 Lords Chamber

[Lord McAvoy (Lab)]

My Lords, I welcome the commitment in the gracious Speech that the Government will continue to,

“make the case for Scotland to remain a part of the United Kingdom”.

As we all know, in less than 100 days’ time Scots will vote in a referendum on independence. All Westminster parties are committed to reform of the devolution settlement. All are committed to reforming the union rather than destroying it. I would like to take this opportunity once more to express the negative consequences of a yes vote for Scots and for all inhabitants of the British Isles.

Unlike my noble friend Lord Parekh, who is not in his place, I do not regard pointing out financial consequences to Scottish people as frightening them or trying to intimidate them or boss them about. I echo the point made by my noble friend Lady Quin: outlining difficulties and consequences is the act of a friend, not of someone being threatening.

Arrangements for devolution are founded and based on the fundamental principle that the union is a collective partnership. Scottish independence would end a 300 year-old agreement of working together for the common good of all. In its stead it would erect unnecessary barriers to the prosperity and well-being of Scots and the inhabitants of the remainder of the United Kingdom.

It is not a question of whether Scotland could go it alone—of course it could—but should it? The answer is firmly no. Withdrawal from the union would diminish Scotland. It would be a signal of Scotland turning in on itself, at precisely the same time that co-operation and collaboration are becoming ever more important. To draw a dividing line between Gretna and Berwick would see Scotland drift away from its biggest market and lose significant economic clout.

At the moment there is completely free movement of people, goods and investment between the four nations of the United Kingdom. This movement is clearly to the benefit of all. It is unlikely that such a situation would continue were a border to be drawn on the map. Today one in five Scots is employed by companies based in England, Wales and Northern Ireland, and 70% of Scotland’s exports, accounting for around 35% of Scottish GDP, go to the rest of the United Kingdom.

The openness of economic and political union has benefited the Scottish economy. Independence would erect barriers that would threaten current and future prosperity. Already Standard Life, one of Scotland’s most successful companies, has announced that it is preparing contingency plans to move some of its operations to England in the event of a yes vote. Royal Bank of Scotland has expressed similar uncertainty about its place in an independent Scotland. Scotland’s largest employer, the nuclear base on the Clyde, employs more than 6,000 people. Under UK government plans, it will employ an additional 1,500 people by 2020. These existing and future jobs are dependent upon UK military contracts, which would vanish due to barriers erected by independence.

The Confederation of British Industry—not an organisation that I usually quote with approval—whose members employ 500,000 people in Scotland, has been damning of the vision proposed by the Scottish Government’s White Paper. It has warned that Scottish industry would face two lots of red tape and Scots higher borrowing costs, and that on jobs and growth there is a risk of “jeopardising” Scotland’s future success.

The key point, as my right honourable friend Gordon Brown has made a great point of indicating, is that the United Kingdom has been a “sharing union”, in which the wealth, in all senses of the term, has been shared. Independence would prevent a sharing of the resources that make the United Kingdom a social union as well.

Labour established a UK-wide welfare state, which has provided for common pensions across the UK. That social union has sought to deliver a decent standard of living for all. Social security and the allocation of resources on the basis of need are best provided for by the union. In this instance, I join with the Government in continuing to make the case for Scotland to remain part of the United Kingdom. Remaining part of the political, economic and social union which is the United Kingdom is the surest way to secure Scotland’s future prosperity and common living standards for all.

Scottish Independence: Currency Union

Lord McAvoy Excerpts

Wednesday 12th March 2014 Lords Chamber

[Lord Newby]

My Lords, one thing I find slightly surprising, at a bit of a distance from this debate, is that any aspect of independence that is tricky seems to be met by the response from the Scottish First Minister that, “No, it’s not tricky. Don’t worry, it’ll be fine”—often with zero evidence to back it up. I hope that colleagues in my party and other parties in Scotland will carry on pointing out to the Scottish people the hollowness of many of his assertions.

[Lord McAvoy (Lab)]

My Lords, the establishment of a single currency between a separate Scotland and the rest of the United Kingdom would require negotiations with a trusted partner. There would be great difficulty in trusting Mr Salmond, the First Minister, who only last year described the pound as a millstone around Scotland’s neck. Where is the trusted partner there?

[Lord Newby]

Quite.

Northern Ireland: Corporation Tax

Lord McAvoy Excerpts

Monday 18th March 2013 Lords Chamber

[Lord McAvoy]

My Lords, I welcome the fact that, after two years of dithering, the Government look as if they are finally coming to a conclusion and a response. However, does the Minister agree that we need action now and not just on the issue mentioned here? Will the Government support our proposals temporarily to cut VAT, give support to small businesses through national insurance breaks and bring forward major infrastructure projects—all of which will give real help to business, construction and manufacturing, get Northern Ireland’s economy moving and put young people back to work?

[Lord Newby]

No, my Lords. Sadly—from the noble Lord’s point of view—we will not be supporting the noble Lord’s proposals, not least because, taking just the VAT proposal on its own, it would cost about £12 billion. I am not sure where he suggests we should get that money from.

Ulster Bank

Lord McAvoy Excerpts

Thursday 5th July 2012 Lords Chamber

Asked By

[Lord McAvoy]

To ask Her Majesty’s Government what steps they are taking to ensure benefits and allowances are being paid to recipients with Ulster Bank accounts.

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, my honourable friend the Financial Secretary has spoken to Stephen Hester, chief executive of the Royal Bank of Scotland, about the technical difficulties affecting both NatWest and Ulster Bank to ensure that RBS is doing everything it can to resolve these issues as quickly as possible. Social security is a devolved matter in Northern Ireland but the Social Security Agency in Northern Ireland is advising benefit customers to go directly to their local branch where funds should be available to them.

[Lord McAvoy]

My Lords, I thank the Minister for his Answer but the fact remains that 100,000 customers of Ulster Bank are suffering chaos in their accounts affecting direct debits, benefits and pensions. This also has an effect on small businesses and suppliers. Vernon Coaker called for the Secretary of State for Northern Ireland to intervene but Owen Paterson says it is not his problem and he refuses to help. He holds the important position of Secretary of State for Northern Ireland. Does the Minister accept that this is a disgraceful situation where 100,000 customers and small businesses in Northern Ireland are facing financial disaster but receive no help from a do-nothing Secretary of State for Northern Ireland who is not fit for the job?

[Lord Sassoon]

My Lords, I do not accept that for one minute. This is a very serious issue affecting, as the noble Lord says, 100,000 individuals in Northern Ireland and the Republic of Ireland. My right honourable friend the Secretary of State for Northern Ireland has been actively on the case. He has discussed the Ulster Bank issue with my right honourable friends the Chancellor and the Secretary of State for Business. The Minister of State for Northern Ireland has spoken to the Northern Ireland Minister of Finance and Personnel and to Sir Philip Hampton, chair of RBS, who has made commitments about the fair and proper treatment of Ulster Bank’s customers with full compensation for financial loss. Ulster Bank itself is putting out daily updates and extending branch opening hours and has a freephone number. These are very serious issues. Once the dust has settled, the FSA will be requiring a full explanation from RBS and NatWest to make sure that any necessary steps are taken so that this does not happen again.