Pensions Bill

moved Amendment No. 13: 13: Schedule 6, page 66, line 23, leave out ““non-executive”” The noble Baroness said: My Lords, I shall also speak to the other amendments in the group. They concern the conflict of interest provisions in paragraph 2 of Schedule 6. Paragraph 2 says that the chairman and non-executive members cannot be appointed if they have conflicts of interest, and that the Secretary of State has to keep this under review. My Amendments Nos. 13 to 16 would make paragraph 2 applicable to all directors. If it is appropriate not to appoint a non-executive director because of a conflict of interest, it must surely be inappropriate for an executive director with a conflict of interest to be debarred from appointment. The Minister batted this away in Committee, saying that the executive members were public sector employees and hence subject to what she described as, "““the usual rules on proper conduct that apply to all public sector employees””.—[Official Report, 6/6/07; col. 1234.]" She also said that executive directors have to declare interests in accordance with paragraph 13 of Schedule 6. I regard that as a red herring as the declaration of an interest applies to all directors and the declaration of an interest is something less than a conflict of interest. The Minister said that because non-executive directors could have other directorships the issue of conflict of interest could arise, but that this would not arise for executives because they were public sector employees. She seemed to imply that public sector employees would not have other directorships and hence no conflicts of interest. I do not believe that it is axiomatic that a public sector employee can never be a director of something, for example, a non-profit body. If the Minister believes otherwise, will he state the chapter and verse for that? Indeed, will he go further and state how this Bill ensures that any such rules for public sector employees will apply to the employees of the delivery authority? I have looked at the Bill and could find no reference in the schedule or elsewhere to the importation of any such rules, whatever they are. More importantly, a conflict of interest will be capable of arising in other ways. In Committee in another place, the Minister cited a member of someone's family running a company which could be affected by the introduction of personal accounts as an example of a conflict of interest. I can see that; but surely that is just as likely to arise for an executive member as it is for a non-executive member because the existence of the activities of the spouse will be unrelated to the status of the director. That neatly leads me to Amendment No. 17, which amends sub-paragraph (6) of paragraph 2 so that a conflict of interest is defined as a conflict of interest of a director or a person connected with him. Amendment No. 18 adds a new sub-paragraph after sub-paragraph (6). That imports the definition of connected person from Section 252 of the Companies Act 2006, which the Minister will doubtless recall from the many hours we spent on that Act when it was a Bill. He will be aware that that definition is already being used for the declaration of interest provisions in paragraph 13. In Committee, we debated whether the reference to ““financial or other interest”” was sufficiently clear to pick up all indirect conflicts of interest. The Minister was certain that it was, but I remain unconvinced about that. I remain concerned that while paragraph 13 has a very clear delineation of the extent of indirect interests using the well known Companies Act formula, no such certainty exists for these conflicts of interest which might arise indirectly and fall foul of paragraph 2. I hope that the Minister will look more favourably on these amendments than the ones I moved in Committee. I beg to move.