Pensions Bill

My Lords, noble Lords will be aware, as has been said, that this amendment was debated in Committee. Several points were raised then, from different sides of the Chamber. The noble Baroness, Lady Noakes, justified her need for more reporting because the Government have, she said, "““a poor record of delivering new IT systems””.—[Official Report, 11/6/07; col. 1515.]" There was also some concern that if the costs of the scheme were to be covered through some form of government subsidy, this would be unfair to existing pension providers. I do not think that that point has been pushed this evening. The delivery authority is being set up to engage the necessary expertise to advise on the delivery of personal accounts within a framework set by government. Of course I understand the concerns expressed here today. The Government's track record of delivering on large-scale IT projects has not altogether been a happy one. But it is sometimes easy to forget the track record of the routine work of this department—the DWP ensures that state pensions are paid every week or month to around 10.5 million pensioners in the UK and a further 1 million who live outside the UK. In this initial advisory phase, as we have said throughout the consultation on personal accounts, the delivery authority's sole source of financing will be the Department for Work and Pensions, from grant-in-aid. As such, the department will be required to report on its accounts in the usual way. I am not sure that a requirement to report on public expenditure in connection with personal accounts—from the point at which this Bill is passed, and every six months thereafter—would help to ensure that the necessary IT for the personal accounts scheme is delivered. Six months is incredibly frequent; it will be a job-creation scheme for accountants. In this initial phase, the authority will also provide advice and consider proposals on the most effective way to finance the scheme. It has been suggested by some in the industry that any form of government subsidy would distort the market for pension provision. That is not our intention. We recognise that the personal accounts scheme should not receive state support—that gives it an unfair competitive advantage over other pension providers. We intend the scheme to be self-financing in the long run through membership charges. However, in the short term, there are likely to be costs arising from a number of activities, such as acquiring the necessary IT and testing it, before the scheme receives any revenue from membership charges. Some respondents to our consultation on personal accounts suggested that members, "““should not bear an unreasonable burden of the start-up costs of the scheme””." Others were concerned that any taxpayer subsidy would create an imbalance in the market for workplace pensions. We are considering a range of funding options for the personal accounts scheme. The optimal financing solution will require balancing our commitment to those who are not covered by existing pension provision—the 7 million who are not saving enough—without adversely impacting on the market for pension provision. We are all well aware of the constraints on the government purse and the need to be accountable to the taxpayer. Provisions in Schedule 6 require the delivery authority to report annually on its performance and financial position—a requirement that applies equally to other nondepartmental public bodies. The delivery authority will be required to provide a report to the Secretary of State, certified by the Comptroller and Auditor General, for examination and approval. I see no benefit in adding further burdens to the comprehensive regime of financial accountability that already exists. The income and expenditure, public or private, associated with the personal accounts scheme, beyond the delivery authority's advisory phase, is not a matter for the provisions in the Bill. It is our intention to bring forward further information on the funding options we are considering in a subsequent Bill, subject to the will of Parliament. There will be further opportunity for your Lordships to examine that information. I therefore urge that the amendment be withdrawn. This is not an attempt to withhold any information, but if we are asking for six-monthly financial reporting with 10-yearly projections as well as all the other routine reporting that needs to take place, that really is way over the top. The noble Lord raised the issue of gateway reviews and their availability. I am not particularly excited on that issue, but I shall look into the matter and perhaps write to him.