Pension Schemes Bill [Lords]

Neil Gray Excerpts

Report stage & 3rd reading & 3rd reading: House of Commons & Report stage: House of Commons
Monday 16th November 2020 Commons Chamber

In conclusion, to do nothing about this would be a missed opportunity. If the Minister is not minded to accept these amendments this evening, I very much hope he will use his undoubted knowledge and ingenuity to help find a solution that can help to bring this nightmare to an end for the plumbers and their families, who have done absolutely nothing other than try to do their best and the most responsible thing by those they employed.

[Neil Gray (Airdrie and Shotts) (SNP)]

It is a pleasure to follow my hon. Friend the Member for Gordon (Richard Thomson), whose helpful, informed and persuasive speech matched the characteristics he brought to the Committee stage in support of the work we did there—I thank him for his efforts.

As I said on Second Reading, we broadly support the Bill, but it could do with some sprucing up in certain areas. Sadly, we did not get far in Committee; in fact, the Bill took a step backwards from some of the good work that had been done in the other place, particularly on a lead-in for commercial dashboards and dashboard financial transactions—that was taken away—as well as on the measures providing reassurances to those involved in open DB schemes.

I will turn to those shortly, but first let me deal with new clause 1, which stands in the name of the Chair of the Select Committee, the right hon. Member for East Ham (Stephen Timms), and has been signed by Members on both sides of the House, including me. I concur with what he said in setting out the reasons why this is so important. I also agree with much of what was said by the hon. Member for Amber Valley (Nigel Mills) in supporting the new clause. I am particularly concerned about this area, not least following my work on the Financial Guidance and Claims Act 2018, which brought MaPS into existence. We held serious concerns that the guidance elements that were supposed to be partnering pension freedoms were not strong enough then and we still hold those now.

I touched on this in Committee, but it is worth repeating for colleagues who may be havering on which way to vote that the Government’s opposition to this new clause appears to be based on the work the Financial Conduct Authority is doing and the idea of providing a stronger nudge—we have heard about that—to people getting guidance as they near retirement age. Unfortunately, I am yet to be convinced that any of that does what new clause 1 would do, which would see the DWP writing to pension scheme members, or their survivors five years prior to their reaching the age of eligibility with a scheduled time and date for a pensions guidance appointment. Ministers would then have to write annually to that person until that appointment was taken up, or their desire to opt out was confirmed. That is far more robust than what exists at present and seems to deliver a much stronger possibility of someone taking the appointment than the stronger nudge trials have evidenced. It is worth repeating the point made by the right hon. Member for East Ham in his strong speech, which cited the MaPS stronger nudge trials and showed that there was only a very small increase in the number of people who went on to have that Pension Wise appointment. The DWP claimed that it significantly increased the uptake of Pension Wise guidance but, as I said in Committee, that is pure spin. The outcome of the stronger nudge trials—

[Guy Opperman]

I just want to correct one point, which I was going to try to deal with in more detail later. The claim has repeatedly been made that this is “spin”, but if one studies the stronger nudge behavioural trial, one sees that more than a quarter of the people who contacted their provider in the trial had already received pension advice or guidance in the last year and therefore were excluded from the sample. So this cannot be seen in the context of a simple figure that keeps being restated, as the hon. Gentleman has just done.

[Neil Gray]

The fact remains, and the Minister has not rebuked the point I made in Committee, that the stronger nudge managed to get successful appointments to move from 3% to 11% of cases. That is not a significant improvement. A stronger nudge is just not going to be enough, which is why we argued during the passage of the 2018 Act for an opt-out guidance system. Now we are back to looking at this again. We still support that approach and new clause 1 would deliver it.

Colleagues, including my hon. Friends the Members for Perth and North Perthshire (Pete Wishart), for Kilmarnock and Loudoun (Alan Brown) and for Gordon and the hon. Member for North East Fife (Wendy Chamberlain), have passionately and eruditely explained why we have given such a focus to the so-called plumbers’ pension amendments in new clauses 4 and 5. I look forward to hearing the Minister’s response to the compelling arguments that my colleagues have made, but he should be reminded that these new clauses were arrived at with the support of campaigners who feel that the current legislation does not protect them. After hearing what my hon. Friends have said about the impact this has had over many years on their constituents—and presumably after some lobbying from across the House, because at least 30 colleagues have constituents who are impacted, including, according to the campaigners, the hon. Members for Berwickshire, Roxburgh and Selkirk (John Lamont) and for Moray (Douglas Ross) and the Secretary of State for Scotland—the Minister must surely be eager to do something.

Before the Minister speaks, I wish to point him to the correspondence he should have received last week from the director of Plumbing Employers Action Group Ltd., which should allay his fears about new clause 4 setting a precedent, or about passing on liabilities to other employers, as has already been outlined by my hon. Friend the Member for Gordon. It is worth remembering, through all this, that these plumbers have found themselves in this situation through no fault of their own, but because of a lack of information from trustees regarding their potential section 75 obligations. I hope that new clauses 4 and 5 can be accepted to ensure that nobody falls into bankruptcy and poverty through no fault of their own.

Our new clause 2 would help the UK Government in three areas. It would establish an independent advisory commission to look at the terms of this legislation. The Minister knows that it has been a long-term SNP policy to see an independent pensions and savings commission established. The scope of the Bill does not allow us to go that far, but this advisory commission could eventually become the standing commission we wish to see and a sounding board for long-term pensions and savings policy. It would ensure, for instance, that we never saw a repeat of the WASPI scandal.

In the meantime, new clause 2 would also allow the UK Government out of the bind that they find themselves in over commercial dashboards and financial transactions. We believe, as do many stakeholders in the industry, that the rush to see commercial dashboards with financial transactions could be extremely damaging. The hon. Member for Amber Valley has highlighted that risk.

The Minister has previously suggested that commercial dashboards are necessary to allow the independent public dashboard—the MaPS dashboard—to work, but that can only be the case if a deal has been done with the sector to allow commercial dashboards with transactional ability in exchange for the data that the providers have for the public dashboard. The Government could quite easily mandate that data to be provided without the incentive of early commercial dashboards and the risks of financial transactions. Time is the wisest counsellor of all, which is why I do not understand the Government’s determination to plough on without taking stock, without analysing the risks and without ensuring that savers do not suffer detriment from shifting so quickly to commercial dashboards and financial transactions.

We want to see the MaPS dashboard established quickly to provide impartial and reliable information for savers, and that is why we have brought back amendment 8 to reinsert the wording from the Lords that was removed in Committee. This has cross-party backing and backing from stakeholders. The public dashboard has the ability and the potential to be as revolutionary for pensions and savings as auto-enrolment has been, but that can only be the case if the Government get behind it and give it the space to develop. Also, the commission could help with what Members on all sides repeatedly turned to in Committee—namely, finding cross-party consensus on long-term pensions policy. This could be a safe space for those discussions and ensure that pensions policy stood the test of time, because there would be buy-in from all sides.

Our amendment 7 deals with open DB schemes. We have worked extensively with other parties to try to find a form of words to give the scheme providers comfort that they were not going to be forced into making investment decisions that were inappropriate for them. The importance of this has already been highlighted by the hon. Members for North East Fife and for Gloucester (Richard Graham) , as well as by my hon. Friend the Member for Gordon. There is a major concern that open DB schemes will need to de-risk, and there are potentially serious implications for them of doing so. In Committee, the Minister stated in response to one of my lines of questioning:

“I want to make it clear again—I have said it once, but I will say it again—that the Government are not proposing to introduce a one-size-fits-all funding standard”.––[Official Report, Pension Schemes Public Bill Committee, 5 November 2020; c. 81.]

However, the CBI has contradicted him by saying:

“The regulator’s proposals risk moving back to one-size-fits-all regulation…Businesses and trustees need to be confident that the new code will allow them to make decisions that benefit savers and the long-term health of companies.”

The Minister protested strongly about the Government’s intentions; it may not be their intention to introduce one-size-fits-all regulation, but the Minister is reckoning without the law of unintended consequences. In order to be sure, why not allow a safeguard to be on the face of the Bill to protect against the unintended consequences, identified by the CBI and others, which could otherwise see perfectly healthy DB schemes close down?

[Richard Graham]

The hon. Gentleman is making a point that a number of us made earlier. I notice that in the Committee, on which the hon. Gentleman served, the Minister responded pretty clearly by saying:

“Open schemes with a strong sponsoring employer that are immature and have managed their risk appropriately should not be forced into an inappropriate de-risking journey.”––[Official Report, Pension Schemes Bill [Lords] Public Bill Committee, 5 November 2020; c. 80.]

I found that quite reassuring; what does the hon. Gentleman think?

[Neil Gray]

I was just coming on to quote that very passage from the Minister in Committee—

[Guy Opperman]

Of course!

[Neil Gray]

I was—I have it right here. We took some comfort from that statement from the Minister, but I have to emphasise the word “inappropriate” in respect of that de-risking journey. For the avoidance of doubt, will the Minister confirm that unless schemes started to move towards significant maturity, there would not be any appropriate de-risking journey? Will the Minister further confirm that he has no intention of insisting that all open schemes progressively de-risk their investments if any remain sufficiently far from significant maturity, and that he will ensure that the regulations do not have that effect? If so, how will they ensure that? We also ask the Minister to accept amendment 7, but if that does not happen, we will support the Liberal Democrat amendment 1.

On amendments 9 and 10, we return to the treatment of vulnerable customers and the need to better define the difference between guidance, advice and information. We touched on this in Committee and the Minister accepted the principle of where we were coming from with our amendments but could not accept them into the Bill. I ask him to look at that again. The SNP have tabled amendments to require that specially trained advisers and guidance are made available to people in vulnerable circumstances, including but not limited to persons who suffer long-term sickness or disability, carers, persons on low incomes and recipients of benefits. Circumstances of those types can have a significant impact on people’s finances and long-term savings plans. It is also the case that people in difficult financial circumstances may be more likely to utilise new pension freedoms, but at a cost to their long-term savings.

It is clear that the UK Government had not put in place adequate safeguards to ensure that older people who opt to free up their funds would not end up in a desperate financial situation later. Those with less money are more vulnerable to economic shocks in their personal finances, as well as being potentially more vulnerable to scammers who give misleading or false advice for free. That is why we have re-tabled amendment 10 to ensure that customers who use the pensions dashboard are made more aware of the difference between information, guidance and advice, which are very different things. People who expect advice as to what route they may be able to take may be disappointed to receive only various pieces of information. Likewise, there may be issues with exactly what the body is allowed to advise and to what extent it is able to advise on the options available. It is a simple amendment but would be extremely helpful in taking the issue forward.

As on all these issues, we have tabled amendments in good faith to try to improve the legislation. We look forward to hearing what the Minister has to say in his response to the debate.

[Jonathan Reynolds]

I place on record my thanks to all Members who participated today and in Committee. In particular, I thank my shadow Work and Pensions team for their diligence and hard work. I also place on record our thanks to the Minister and our colleagues from the SNP for the open dialogue that has been maintained throughout the Bill’s passage.

The Opposition did not vote against the Bill on Second Reading, and it is not our intention to vote against Third Reading later. We agree with the broad aims of the Bill and believe that it adds a series of worthwhile improvements to our pension system. However, we have continually sought, as is the role of the Opposition, to improve the Bill further to make it the best legislation that it can possibly be. On Second Reading, I laid out how we wanted to achieve this, with additional measures to protect pensions, people and the planet. Although there was thoughtful debate in Committee, it is disappointing that the Government removed some critical parts of the improvements that were made in the Lords. That is why we have brought back two groups of amendments today, as well as seeking a new amendment, which is an opportunity to make a historic step forward in tackling climate change. I will address each in turn.

First, on protecting pensions, a well-regulated pensions system is vital to give people confidence that it will be there for them in their retirement. Pension funds are not just any financial product. They are usually the sole means of looking after someone in old age, and are responsible for their financial security for an entire phase of their life. Today’s retirement landscape is challenging. The Labour party does not oppose the pensions industry in finding new ways to meet those challenges, but we strongly believe that any innovation must be well regulated, which is why we have introduced new clause 6. We introduced that provision in Committee, to ask the Government to introduce proper regulation of so-called pensions superfunds, which are profit-making consolidation vehicles for defined-benefit pension schemes. At present, they are subject only to an interim regulatory regime announced by the Pensions Regulator in the summer.

That is a substantial change, as these funds currently advertise high rates of return to pension investors. We believe that, as a minimum, those products need a proper and robust regulatory regime, underpinned by legislation, that is on a level playing field with the rest of the industry. We are not a lone voice on that. The Governor of the Bank of England has written to the Secretary of State to raise concerns about the potential risk to financial stability and to scheme members. The Opposition would like to hear a commitment today from the Minister that legislation for a full regulatory regime will be forthcoming before the market begins to develop seriously.

Moving on to other matters, the adequate funding of defined-benefit schemes is critical to their future. We were disappointed by the removal in Committee of clause 123, which related to the funding requirements of open and closed defined-benefit schemes. That point has just been made, and I shall not quote the Minister directly again. However, we understand that he has relied frequently on the regulator’s bespoke option in the draft defined-benefit funding code to provide reassurance for open schemes that they will not be required to follow the funding and investment strategies of closed schemes. However, there is a long list of people who have expressed doubt about that option, and who believe that it risks the premature closure of otherwise healthy schemes, including the Pensions and Lifetime Savings Association, the Institute and Faculty of Actuaries, Lane Clark & Peacock, the Trades Union Congress, the Confederation of British Industry, and even one of the Minister’s predecessors as pensions Minister, Baroness Altmann. I recognise that there is no disagreement between the Minister and Opposition parties on the desired outcome, but we still believe that there is virtue in reintroducing the clause. If amendment 7 or amendment 1 is pressed to a vote, that will be done with our support.

Protecting people in schemes is vital, which is why we have introduced three changes, to try to strengthen the consumer protections in the Bill, with amendments 11 to 15. We all agree that the pensions dashboard, when it arrives, will be an incredible opportunity for people to see all their pensions information in one place for the first time, but safeguards must be built in to prevent hasty decision making and consumer exploitation. The last thing we want is for people to make bad choices, prompted, for example, by market disruptions or unscrupulous operators, until they are more accustomed to that level of access. We believe that we can tackle both those things by giving the public dashboard a protected head start and keeping commercial transactions off the dashboard until further legislation is introduced in line with our amendments.

We also believe that there must be accessible and transparent fee information on the dashboard. For too long, it has been possible to rely on the opacity and complexity of pensions to obscure the real lifetime cost of transactions. Greater transparency would surely be welcome.

I spoke on Second Reading about the scourge of pension scams. People can become particularly vulnerable to scams in the years immediately before retirement. We have heard throughout the debates on the Bill terrible stories, such as the one articulated by my right hon. Friend the Member for East Ham (Stephen Timms), about people falling victim to fraudsters who rely on confusion about pension freedoms, and not only take people’s lifetime savings but leave them with a huge tax liability. No punishment is severe enough for those who commit those crimes. We all agree that further action is needed, so we support the amendments tabled by my right hon. Friend, who chairs the Work and Pensions Committee, as they would create an opt-out system for speaking with Pension Wise in the five years before retirement.

Finally, I have spoken about protecting pensions and protecting people, and now I want to talk about protecting the planet. Our colleagues in the Lords worked hard with the Government to bring in requirements in the Bill on the assessment and disclosure of climate risk in pension investments. This is a historic step: the first time it has ever been included in UK pensions legislation, and we all should and do celebrate that fact. However, we know that, with the climate emergency getting even more serious, it is possible to go even further. Amendment 16 would allow regulators to mandate occupational schemes to develop a clear investment strategy that is aligned with net zero greenhouse gas emissions at the pace the science demands.

The Paris agreement of 2016, which committed to efforts to limit global warming to 1.5° was a groundbreaking and critical step forward in global co-operation to beat climate change, but I believe we do not do enough to explain to the public and our constituents that the changes we need will only be delivered by starting to influence how vast amounts of private capital are allocated, alongside direct Government decisions on, for instance, decarbonising power and transport. I have to say that I would have thought that argument would garner more sympathy with Conservative Members of Parliament.

UK pension funds represent trillions of pounds, and steering more of that towards our climate goals, yes, would be radical, but this amendment is not just about where capital is allocated. It is about the stewardship that we need to see from all asset managers over the companies they have investments in. This is not a divestment amendment, nor does it limit the choices available to fund managers. The hon. Member for Grantham and Stamford (Gareth Davies) said that the ESG data is patchy, and he is right, but he will appreciate that asset managers demanding better data have been a fundamentally important driver in making that better, and the E—environmental—is actually the most robust part of ESG data. It does not make sense to me to say that the data exists for the Government to issue a green bond, but not for a pension fund to formulate a Paris investment strategy.

We, as the Opposition, ask the Government to deliver a green economic recovery from the pandemic by investing to support the creation of at least 400,000 new jobs, but achieving progress on climate change demands change in every part of our economy, and despite what we have heard from Government Members today, the industry is already showing us what is possible. Aviva, one of the UK’s biggest pension providers—it supports this amendment —has recently announced that its auto-enrolment default funds will aim to achieve net zero by 2050. That is £32 billion of capital, which is actually going beyond the scope of this amendment. In October this year, the BT Pension Scheme set a goal of net zero by 2035 for its entire portfolio, worth £55 billion. There is also a great deal of good practice in public sector DB schemes, such as the Local Government Pension Scheme.

What is more, today’s amendment was developed and backed by a whole host of organisations across the public and private sectors, with dozens reiterating their support in a letter to the Prime Minister last week. These include ClientEarth, Make My Money Matter, ShareAction, E3G, Christian Aid, West Yorkshire Pension Fund, Good Energy, Ecotricity, the Aldersgate Group, the Climate Coalition, the Carbon Tracker Initiative, Friends of the Earth, Greenpeace, Business in the Community and the TUC. I would like to thank all those organisations for the work they have done in getting us to this point. However, I will also say to the Minister that this is not a top-down initiative. The evidence shows that Members themselves want their funds to start taking this seriously.

In addition, the investment case makes this simply the right thing to do. The Department for Work and Pensions has itself acknowledged that considering the financial impacts of climate change is consistent with fiduciary duty. Pension funds are long-term stewards of capital. What could be more long term than the sustainability of our environment and our economy? These two objectives simply do not conflict. As is said in an excellent comment piece in The Daily Telegraph today—that in itself is a sign of the times—it

“now looks irrefutable that environmental and social factors are a clear guide to company quality and future investment returns.”

I reiterate that this is not about the Government dictating to pension funds about when and who to invest their money in, and we are not seeking to compromise trustee independence. It is simply about putting a strategy in place that considers their role in meeting our climate objectives. Trustees can maintain their total discretion over what strategy they choose to achieve that goal. Furthermore, this proposal is designed to allow the Government the flexibility to guide schemes via regulations to ensure that trustees have a strategic plan to become Paris aligned over a period of time. Any measures resulting from this amendment would be subject to extensive consultation with market participants, so that their design could take into account what works best for schemes of different types and sizes. This is written to be as accommodating as possible. The Chancellor of the Exchequer came to the House last week and outlined his ambitions to make the UK a leader in green finance. It is true that we have been lagging behind our European counterparts for many years when it comes to green bonds. As the shadow Economic Secretary in the last Parliament, I made that point frequently, and I was often given reasons why we could not do that similar to those we have heard today against amendment 16. I am tempted to say that if we wait until the end of this Parliament, even this amendment may well become Government policy.

With the new US Administration poised to rejoin the Paris agreement in 2021 under the new leadership of President-elect Joe Biden, I put it to the House that we can make this an even more historic week for tackling climate change by passing amendment 16 today. That is why we seek to include it in the Bill.

[Guy Opperman]

This is a hugely important piece of legislation. It is a landmark Bill. It will impact the lives of millions of people across this country and it will make our pensions safer, better and greener. I genuinely believe that the work we are doing on CDCs and the pensions dashboard, the fact that we are giving real powers to the regulator and taking the opportunity to crack down on the callous crooks who take our constituents’ pensions, the work we are doing on scams, and the fact that we have for the first time put climate change at the heart of pensions means that this will be groundbreaking legislation that we should all be proud of. I welcome the cross-party support that we have heard.

I may not be able to address all 30 amendments or the 17 separate requests for clarification, so I refer all colleagues—and those in the other place, when they consider this matter—to the two days of debate in Committee, where I expanded in great detail on many of these issues. I will happily write to individuals who asked me to address particular points. I will of course meet the ASW, as the hon. Member for Cardiff South and Penarth (Stephen Doughty) requested, and write on the Roadchef issue, but I cannot promise anything more than previous Ministers have done.

Regretfully, I will not engage with the WASPI debate, as the hon. Member for Strangford (Jim Shannon) made clear that he would. I continue to defend this Government’s position, as I defend the Government of the two former Labour Pensions Ministers sitting on the Back Benches, who supported the exact same policy during the Labour Government. I very much take forward all the work that is done on a cross-party basis. I put on the record my thanks to the Clerks, to all colleagues who have spoken in this debate and to colleagues from across the House for their work in Committee, which was of great assistance to the House.

I turn first to clause 123 and the various amendments on open DB that were raised by a variety of colleagues. We have made it entirely clear that we do not want to see good schemes close. We support DB and we are not proposing a one-size-fits-all regime that forces immature schemes with strong sponsors into an inappropriate de-risking journey. We have also made it clear that we will use secondary legislation to ensure that the requirement for all schemes to have a funding and investment strategy works appropriately for open schemes and ensures that immature open schemes are not prevented from taking appropriate investment risks where that is supportable.

As we have explained, it would be wrong for all schemes that are expected to stay open to be treated differently from other schemes. Not all open schemes in this category share the same characteristics. Some will be maturing just like closed schemes, and it would be wrong to treat such schemes for all purposes as if they were the same as immature schemes.

We hope that we have provided reassurance that open schemes will be able to adopt funding and investment strategies that are appropriate to their individual circumstances. The regime will remain scheme specific and will continue to apply flexibly to the individual circumstances of each scheme, including those that remain open to new members.

We have made it entirely clear that we will frame our secondary legislation in such a way that schemes that are and are expected to remain immature, and have a strong employer covenant, continue to be able to invest in a substantial proportion of return-seeking assets, which will help to keep costs down. I have engaged with a range of parties—I met a number of them in detail on 2 October, and I have subsequently had discussions with a number of organisations—and we are trying to reassure them of the way ahead.

The Pensions Regulator is a regulator, not a legislator. It must regulate in accordance with the legislation made by Parliament, but we believe that the right way forward is a combination of primary legislation, regulations and the defined-benefit funding code, whereby we will seek to effectively balance employer affordability and member security, taking into account the circumstances of different types of schemes as is appropriate.

[Neil Gray]

Nothing that the Minister has said contradicts anything in our amendment 7 or, for that matter, our amendment 1. It would not be the first time if the regulations did not necessarily live up to the promises made in the passage of the primary legislation, so why not just accept amendment 7 or, indeed, amendment 1 so that the commitment is in the Bill?

[Guy Opperman]

I assure the House that no Minister in my position could accept amendment 1, which was proposed by the House of Lords and has been tabled by the hon. Member for North East Fife (Wendy Chamberlain).

No Government could commit to ensuring that contributions remained affordable or that scheme closures were not accelerated. We cannot be bound to ensure that all schemes that are expected to remain open are treated differently from other schemes, as open schemes in that category do not all share the same characteristics. As I have made clear, some such schemes will be maturing, just like closed schemes; the potential for abuse would open up. A closed scheme could reopen to very small numbers of new members, circumvent safeguards and pursue a riskier investment strategy that would otherwise be inappropriate. We do not want good schemes to close unnecessarily or to introduce a one-size-fits-all regime. I refer briefly to the Pensions Regulator’s comments in paragraph 475 of the consultation:

“We acknowledge that if such schemes do continue to admit new entrants and do not mature then the scheme will not actually reach significant maturity. We are content that such a scheme retains the same flexibility in its funding and investment strategies that all immature schemes have.”

Similar comments are made later, and I refer hon. Members to the statements I made at great length in Committee.

I turn now to amendments 2 to 5. I dealt briefly with the points made by the right hon. Gentleman the Chair of the Select Committee about clause 125 and the work we have done. Let me be clear that that clause will ensure that transfers will not go ahead if the conditions set out in the regulations are not met. Those conditions can relate to the destination of a transfer, so that transfers can be prevented to schemes that do not have the right authorisations or if a member has not supplied the evidence of employment or residency, for example.

Importantly, those conditions can also include other red flags, such as who else is involved in the transfer. If those red flags are apparent, the regulations will enable trustees to refuse to transfer if the red flag is significant or to direct the member to guidance or information that they must take prior to being allowed to transfer. Trustees will also need to undertake due diligence to establish whether those conditions are met.

Clause 125 puts trustees in the driving seat in relation to permitting transfers to proceed. I make it clear that we will continue to work with the Work and Pensions Committee, the Treasury Committee, the various advisory groups and the all-party parliamentary group on pension scams, with whose members I have had detailed meetings in the past month, to ensure how we can have the best possible regulations to determine circumstances in which different conditions for transfers might apply.

I now move on to the dashboard amendments. I welcome the support in the House for the dashboard; I am particularly grateful to the various contributions that made it clear that this part of the legislation is absolutely transformational, bringing pensions information into the 21st century. I accept entirely what was made clear by the hon. Member for Wallasey: this is a huge project, involving tens of thousands of schemes that will need to be brought forward. The first dashboard will have a “find and view” capability only. At an appropriate time in the future, dashboards may act as a safe space for supporting and safeguarding financial transactions. That will be fully considered and informed by user testing and safeguards, and protections would continue to apply.

However, I resist the amendments in respect of transactions. We have discussed at great length the likelihood of the need for individuals to have a greater say on their pensions. Why would we seek to exclude consolidation going forward? Transactions are not clearly defined in the amendments; they could prevent dashboards from providing useful modelling tools that could inform people of the potential benefits of increasing their contributions. As I made clear to colleagues making the case for the amendments, the consumer association Which? has come out comprehensively against them. It states in its submission on Second Reading:

“we do not agree that the introduction of commercial dashboards should be delayed, or that the transactions should be banned.”

It then goes into more detail:

“there is a need to protect consumers from the risk of commercial dashboards…However, this must be done via the introduction of consumer protections and regulatory oversight rather than a blanket ban.”

The point is also made strongly that the Opposition amendments risk us being left with a dashboard that does not do as much as initially anticipated, resulting in consumers not being as engaged. That could represent a huge missed opportunity. It is crucial that dashboards are both safe and fully functioning to give consumers the most choice and the most exposure to innovation. Therefore, with respect, I will resist the dashboard amendments.

Clause 118 of the Bill, and the FCA regulated activity, will enable the creation of both regulations and FCA rules, which could include signposting to MaPS guidance. The pensions dashboards programme usability working group will explore how best to help users understand the information presented to them and where they can get more help.

In respect of costs and charges, I raised that in great detail in Committee, but colleagues will be aware that the Government intend, and have legislated, that costs and charges should be part of dashboards in the future, just like they will be in the simpler statement. That is legislated for in clause 119(2), and it is appropriate that we proceed with that only once the dashboard delivery group has consulted in a proper way.

As to the restrictions on multiple dashboards for one year, I made the point in Committee that in creating dashboards we need to go where the consumer is rather than forcing the consumer to come to us. That surely is the essence of this issue: it will increase engagement with pensions, and we should reach people where they are. We should not seek to constrain options available but ensure that all opportunities are properly regulated, safe to use and secure.

I turn to the amendments to clause 124—the climate change clause—tabled by the Labour Front Benchers. I am afraid the reality is that Labour’s proposals would direct investment, breach fiduciary duties and lead to divestment and negative outcomes. We want the transformation of the United Kingdom economy and the retrofitting of the country to happen in a partnership with business, legislators, pension schemes and citizens, but I am afraid the amendment would negatively affect that. It would be entirely the wrong way forward.

Labour’s proposal is roundly criticised by the PLSA in a letter in which it strongly endorsed and advocated the Government’s proposals to ensure that the appropriate governance frameworks are in place to support schemes investing in a climate-aware way. It expressed deep concern about the Opposition amendment. With the PLSA’s permission, I will put its letter of 12 November in the House of Commons Library. Likewise, I will put in the Library a letter dated 13 November 2020 from the independent Association of Pension Lawyers, which also massively opposes that proposal. The reality is, the Government are already taking powers to require trustees to set targets in relation to their management of climate risk. We consulted on the use of those powers in August. Our consultation, “Taking action on climate risk”—I note, interestingly, that Labour Front Benchers did not respond to the consultation; I question whether they have even read it—sets them out in great detail.

This is the factual reality: we are already doing what is in the key parts of the amendment in clause 124 as introduced in the House of Lords. In the space of two years, the DWP has made regulations on environmental, social and governance criteria, on stewardship investment and now, in clause 124, on mandatory climate change governance and reporting. We need to allow our proposed policy measures to take effect before reviewing their impact and contemplating further measures. Of the 50 large pension schemes I wrote to last year, 70% are going well beyond the minimum legal requirements. Many have gone considerably further in the past 12 months, as nudged and persuaded by the Government. Fiduciaries do not need such a blunt measure in order to act, so we strongly reject the amendment.

I will turn now to the new clauses, and I will address them in some detail to the best of my ability. I will, if I may, deal with the relatively easy ones. I entirely endorse the view that this Government must bring forward legislation in respect of superfunds in the fullness of time. The hon. Member for Stalybridge and Hyde (Jonathan Reynolds) will understand that that would be a substantial piece of legislation—certainly a 50-clause Bill and possibly more. I entirely accept that further work must be done in this Parliament on automatic enrolment, but I cannot accept new clause 3 or new clause 6.

--- Later in debate ---

[Neil Gray]

Like others, I wish to put on record my thanks to the Clerks, Huw Yardley and Kenneth Fox, and to Djuna Thurley in the Library, for their support. I also thank our SNP researchers Zoe Carre and Linda Nagy for their fantastic assistance, as well as my hon. Friend the Member for Gordon (Richard Thomson) for his considerable and informed support in Committee.

This Bill takes matters forward in the pensions world. It could have gone further, and I regret that it does not, but we thank the Minister and the other parties for working together constructively on such an important piece of legislation. We look with interest to its further stages in the other place.