Constitutional Reform and Governance Bill

It may be convenient for the House if I inform hon. Members that I intend to accept amendments (a) and (b), in the name of the hon. Member for Bournemouth, West (Sir John Butterfill), to amendment 64, which is in my name; and his amendments (a) and (c) to my amendment 67. I also urge the House to accept amendments 90, 93, 94 and 95, which are in his name. I understand that the hon. Gentleman will make clear the reasons why he does not intend to move amendment (a) to amendment 74, amendment (b) to amendment 76, amendments (a) and (b) to amendment 80 and amendments 91 and 92. The provisions relate to part 4 of the Bill, which implements a number of recommendations of the report by the Committee on Standards in Public Life on MPs' expenses—the Kelly report. Lest there be too much complaint that the Bill is longer now than when it began its journey, I should say that although that is true, one of the main reasons is that in the intervening time, we had the expenses scandal, the Kelly report and a decision by the House to establish the Independent Parliamentary Standards Authority, which was done via free-standing, emergency legislation last summer—the Parliamentary Standards Act 2009. That preceded the Kelly report, and we have decided to implement the parts of the report that require legislation in this Bill, because it is the only available vehicle. That inevitably means that the process has been a bit compressed, but I suggest that it would have been disastrous for the already damaged reputation of the House and of politics if we had not proceeded fully to implement the Kelly report by the time of the forthcoming general election. During debates in Committee on the Kelly provisions, the right hon. Member for North-West Hampshire (Sir George Young) and others raised a number of issues that I undertook further to consider. In particular, I undertook to look at how we give effect to the Kelly report's recommendations on MPs' pensions and at the enforcement powers of the compliance officer in respect of the expenses regime. I also told the shadow Leader of the House that I would look carefully at his proposal to require IPSA to be ready to offer guidance to Members on prospective claims for expenses, to avoid our getting into a position in which claims are made and rejected, which would be on the public record. It would be better for advice to be given in advance, and I am pleased to tell the House that an amendment in my name meets that concern. On Members' pensions arrangements, the House will recall that paragraph 13.32 of the Kelly report suggested that either the Senior Salaries Review Body or the independent regulator could, among other things "set the terms and" oversee""the…administration of parliamentary pensions."" Paragraph 13.34 states that the Committee, after consideration, thought that that should be a matter not for the SSRB, but for the new body. Recommendation 43 states:""The independent determination of MPs' pay and pensions should be entrenched in primary legislation in the same way as expenses. The independent regulator"—" IPSA—""should therefore be given statutory responsibility for setting MPs' pay levels and overseeing MPs' pensions as well as for dealing with expenses."" We made some progress on implementing the pensions provisions in Committee. I am grateful to the hon. Member for Bournemouth, West, my right hon. Friend the Member for Islwyn (Mr. Touhig), my right hon. and learned Friend the Leader of the House, and other trustees for their subsequent contributions. I fully recognise that the trustees of the pension fund, who do great, unsung work on behalf of current Members and pensioners are properly anxious to ensure that the new arrangements will work effectively and provide everyone—current Members and pensioners—with appropriate safeguards in respect of their accrued pension entitlements. I have set out what Kelly recommended, and I think everybody accepts that we must remain faithful to the principles that Kelly set out. He said that the full remuneration package of MPs—expenses, pay and pensions—should be subject to determination by IPSA, and that IPSA should, to use its word, "oversee" the administration of the pension scheme. However, there was no suggestion in the Kelly report that IPSA should do everything in respect of pensions, and IPSA has not made that suggestion. The first concern was that there should be proper safeguards for hon. Members' accrued pension rights. My aim is to ensure that the statutory safeguards afforded to members of other occupational pension schemes broadly apply to the parliamentary scheme. As with statutory protection for pension schemes elsewhere, amendment 74 would put a double lock on any provision adversely changing accrued pension rights. It would first be necessary for the trustees to consent to the scheme making such provision and, secondly, each member would have to give his or her informed consent to any changes to accrued rights. It is the Government's view that in giving such approval, and indeed exercising any of their other functions, the trustees would need to act in the best interests of the members in accordance with their clear fiduciary duties as trustees. That protection means that if IPSA were to change the rules of the scheme, the pension entitlements that other hon. Members and I have would be safeguarded if we left service immediately before any change. No adverse changes could be made to that pension entitlement without the agreement of the trustees or our individual consent. Secondly, there were concerns that schedule 7, as originally drafted, left open to doubt whether the new arrangements ensured the continuation of a trustee-based scheme with appropriate member representation on the board of trustees. Amendment 64 would put that beyond doubt and set out on the face of the Bill the structure of the board of trustees. The amendments provide for a board of 10 trustees, one of whom would be appointed by IPSA, a second by the Minister for the Civil Service, while the remaining eight would be member-nominated trustees. It will be left to the trustees collectively to make appropriate arrangements for the nomination and selection of the member-nominated trustees, but such arrangements must involve all members of the MPs' and Ministers' pension schemes. The amendments include appropriate transitional provisions, so that there can be a managed progression from the current board of trustees to the new one, but the existing trustees will continue to be trustees until the end of the transitional period. There is also provision for the first eight member-nominated trustees to be chosen from among the existing trustees. Thirdly, amendment 66 would require IPSA to obtain the consent of the trustees before making the administration scheme under paragraph 3 of schedule 7. This is an appropriate further safeguard, given that the administration scheme will set out the trustees' core responsibilities in respect of the administration of the parliamentary contributory pension fund and the management of its assets. I have considered very carefully whether we have got the balance right between the administration scheme and the MPs' pension scheme. I know that this was another issue that has troubled the trustees. After much discussion, I am satisfied, and I hope that the trustees are too, that we have got the demarcation between the two schemes right. The pension scheme will determine the full range of pension benefits and entitlements. In accordance with the overarching principle of independent determination, these are properly matters for sole determination by IPSA, albeit—as the provisions in the Bill make clear—after consultation with the trustees, the Government Actuary, the Senior Salaries Review Body and others. I have studied carefully the amendments in the name of the hon. Member for Bournemouth, West (Sir John Butterfill) and other trustees, and I have had the opportunity to discuss them. I have advised the House on those that I think it should accept. I understand that the hon. Gentleman is ready to withdraw some of his amendments, but I shall address them briefly. Amendments 91 and 92 are not necessary. There is no question that the trustees will owe a fiduciary duty to members of the scheme and that it will continue to operate as a trust-based scheme. Nothing in these provisions would alter the current position in that regard. Amendments 74(a), 76(b) and 80(a) and (b) relate to accrued rights. I think that these amendments were based on a misunderstanding, although everyone has had to run very fast with these provisions. It is important that we get them on the statute book quickly, so all of those advising us on all sides have had to work very fast. The provisions in schedule 7 are based on the provisions in the Parliamentary and Other Pensions Act 1987. Our provisions use the language "pension or future pension", rather than the language "benefit or future benefit" as used in the Pensions Act 1995. The same outcome will be achieved, and there is no question that the use of different language will mean that members are disadvantaged. Finally, I wish to address the IPSA expenses regime and the role of the compliance officer. In Committee, the right hon. Member for North-West Hampshire (Sir George Young) was keen to ensure that there was some explicit duty on IPSA to offer guidance to MPs, and I recognise the need for clear, comprehensive and consistent guidance, alongside the scheme itself. This will be essential if the mistakes of the past are not to be revisited. Moreover, such guidance needs to be a living document, regularly reviewed and updated in the light of experience. In addition, while hon. Members must take personal responsibility for their own expenses claims, it is right that such guidance should be augmented by some facility to seek advice from IPSA, albeit that those arrangements must be a matter for IPSA to determine. In IPSA's consultation paper on the expenses scheme, it made clear its intention to provide such advice and guidance. Amendment 55 will provide statutory underpinning for this. Finally, amendments 56, 58 to 60 and 62 respond to concerns that the enforcement provisions in schedule 5 to the Bill do not enable the compliance officer to exercise appropriate discretion when seeking to recover overpaid expenses in those cases where the compliance officer has established that IPSA was wholly or partly at fault. There may be circumstances where, for example, an MP incurs expenditure in good faith having sought advice from IPSA; IPSA then reimburses that expenditure; but it subsequently transpires that the advice was erroneous and that the expenses should not have been paid. If in exceptional circumstances such as these the compliance officer finds that IPSA is at fault, we agree that the compliance officer should have discretion not to require full repayment of the overpaid expenses. I hope that I have given a helpful explanation of the amendments and that they will command the approval of the House.