Pension Schemes Bill [Lords]

Lord Harrington of Watford Excerpts

2nd reading: House of Commons
Monday 30th January 2017 Commons Chamber

[The Parliamentary Under-Secretary of State for Pensions (Richard Harrington)]

I should point out to you, Mr Deputy Speaker, that your predecessor in the Chair, the hon. Member for North East Derbyshire (Natascha Engel), was very robust in her attempts to reduce the content of Members’ speeches to that which is relevant to the Bill. I will do my best to continue with that tradition.

I was expecting some excellent contributions to this debate and I have not been disappointed. I thank hon. Members on both sides of the House for the general spirit of consensus on the basics of the Bill. A number of hon. Members raised issues that go beyond the authorisation of master trust pension schemes and administration charges, the two issues covered in the Bill, and I am itching to rebut them. However, I realise, Mr Deputy Speaker, that I would be deemed to be out of order as they are out of the scope of the Bill, so I shall not do that. The Government were criticised by Opposition Members on the grounds that the Bill’s scope was not wide enough. I will address two points in particular.

On the scope of auto-enrolment, we will announce shortly a statutory review in 2017. It is my intention to make that review wider than the limited definition within the Bill. That will report by the end of the year. It is not in the Bill, which regulates master trusts, but it has not been ignored by the Government and it will not be.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

I think I do need to help you, Mr Harrington. We all said Members would get one hit and then they would have to get to the Bill. Both Front Benchers have had one hit. Now we can really get into the meat of the Bill.

[Richard Harrington]

I congratulate you, Mr Deputy Speaker, on continuing so well the leadership and robustness started by your predecessor in the Chair. I apologise for any offence caused to the Chair. I actually thought I was speaking within the scope of the Bill, but I will of course be led by the Chair and move on to the substance of the Bill.

As I said, the points raised in the debate by Members on both sides of the House have been broadly complimentary. The whole purpose of the Bill is for the Government to be able to respond very quickly to the phenomenal and exponential growth in master trusts over the past two years. That growth was not predicted by the Opposition, who take credit for auto-enrolment—in fact, there was cross-party consensus—and it was not predicted by either the coalition Government or this Government. It happened very quickly and I believe the Government are doing the right thing by responding quickly. I do not accept that the Government have acted too slowly.

I was very glad to receive the support of the shadow Secretary of State, and she made a very relevant point when she explained her view about the expansion of master trusts. We are not allowed to mention the “w” word, as the hon. Member for Bootle (Peter Dowd) calls it from a sedentary position, because that would be outside the scope of the Bill. The regulation has been very considered. Both Labour Front-Bench spokesmen and the SNP spokesman commented on the large amount of secondary legislation. The reason is very clear: we want to consult very quickly with industry and responsible parties on the detail, but this process will not take a long time. We have to get the detail absolutely right, because this is a one-off chance to regulate. There will be a chance for scrutiny by both Houses, because in the first instance the regulations will be subject to affirmative procedure.

Many Government Members, including my hon. Friend the Member for Tonbridge and Malling (Tom Tugendhat), spoke about transparency. We take this very seriously and we are consulting on it. It is not in the Bill, but it is in the spirit of the Bill, because the regulator will be provided with many powers that will help to enforce transparency and members’ rights, which have been discussed.

[Alex Cunningham]

On the specific point of transparency, why is it necessary to start consulting people when we should simply be saying, “We want to know what all the costs are in the entire investment chain”?

[Richard Harrington]

I must explain to the shadow spokesman that we believe in democracy, and part of that is consulting to get it right. We believe this is very important; it has gone on long enough; it needs to be done right. I am sure that the hon. Gentleman did not mean that the Government should just decide what to do without consulting on this hugely complex area within the industry. When it comes to the regulations, let me repeat that we will consult on all of them. I apologise to the hon. Gentleman if consulting is not correct, but we have to get this absolutely right.

[Alex Cunningham]

I certainly agree with consulting, but will the consultation extend to the members of the master trusts and not just the people who manage the members’ money?

[Richard Harrington]

I believe in full transparency and disclosure, but this is a very complex issue. Brevity of disclosure is sometimes clearer to people, helping them to understand all the costs and charges within their pension, rather than giving them 10, 12 or 14 pages. I would like to move on.

One point was made eloquently by both the hon. Member for Ross, Skye and Lochaber (Ian Blackford) and my hon. Friend the Member for Gloucester (Richard Graham) on the question of whether the Pensions Regulator will be properly resourced to carry out the new duty. I can confirm that we have already had extensive talks with the Pensions Regulator, and that it is the Government’s fundamental view that we cannot enact a Bill such as this which deals with improving and expanding on the response without giving the regulator the proper resources that it needs.

I am pleased to say that many Members of all parties have explained that master trusts are an important part of the pensions industry. The Government are filling a gap between personal pensions and insurance-based pensions that are regulated on the one side, and on the other side the evolution of the trust system, for which there is ample pensions law and regulations. There is a significant gap in the market. We are pleased that master trusts have expanded in the way they have, but they need some regulation and attention because companies have been moving into this area simply because there is that gap in regulation. That does not mean that such trusts are a bad thing, and I am delighted to report that we are carrying out this Bill from a position of little failure. This is not a Government responding to catastrophe or calamity when people have lost money; what has happened has been successful, but we need to provide the correct regulatory framework for it.

I can do no better than conclude my speech by citing my hon. Friend the Member for Gloucester, who said that the Bill was simple and important and that everybody should support it. For that reason, I commend the Bill to the House and support its Second Reading.

Question put and agreed to.

Bill accordingly read a Second time.

Pension Schemes Bill [Lords] (Programme)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Pension Schemes Bill [Lords]:

Committal

(1) The Bill shall be committed to a Public Bill Committee.

Proceedings in Public Bill Committee

(2) Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Tuesday 21 February 2017.

(3) The Public Bill Committee shall have leave to sit twice on the first day on which it meets.

Proceedings on Consideration and up to and including Third Reading

(4) Proceedings on Consideration and any proceedings in legislative grand committee shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which proceedings on Consideration are commenced.

(5) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.

(6) Standing Order No. 83B (Programming committees) shall not apply to proceedings on Consideration or to other proceedings up to and including Third Reading.

Other proceedings

(7) Any other proceedings on the Bill (including any proceedings on consideration of any message from the Lords) may be programmed.—(Mark Spencer.)

Question agreed to.

Pension Schemes Bill [Lords] (Money)

Queen’s recommendation signified.

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the Pension Schemes Bill [Lords], it is expedient to authorise the payment out of money provided by Parliament of:

(1) any expenditure incurred under or by virtue of the Act by the Secretary of State; and

(2) any increase attributable to the Act in the sums payable under any other Act out of money so provided.—(Mark Spencer.)

Question agreed to.

Pension Schemes Bill [Lords] (Ways And Means)

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the Pension Schemes Bill [Lords], it is expedient to authorise:

(1) the levying of charges under the Pension Schemes Act 1993 for the purpose of meeting expenditure arising under any Act resulting from the Pension Schemes Bill [Lords] or any other Act; and

(2) the payment of sums into the Consolidated Fund.—(Mark Spencer.)

Question agreed to.