My Lords, as always, the noble Baroness, Lady Drake, raises interesting issues in great detail which are always worthy of further examination. I hope that my noble friend will reflect on them. This is a bit of replay from the debate that we have had in the Chamber on the Pension Schemes Bill on an amendment that was simply about the date. It is the date issue that I want to say a few words about. The two arguments evinced to support an earlier date are that it will affect transfers in and that we do not have to worry too much about the European Commission and state aid rules. I am not a lawyer but I know my noble friend is a lawyer and I hope he will be able to rebut that argument.
However, the debate around the European Commission issue relates to the Altmark judgment, which my noble friend has just mentioned, and the second criterion, which is that NEST receives no economic advantage that may favour the recipient undertaking over competing undertakings. It is my understanding that NEST received quite a substantial degree of financial assistance from the Government. If it had not been for that financial assistance, NEST would not have existed. Therefore, the role played by that financial assistance is still important for the task set out, which is yet incomplete. My noble friend mentioned it: 1.2 million of what we call small and micro companies to be auto-enrolled by 2018 is a substantial task. That is one of the tasks for which NEST was set up. Many of the small companies that I have spoken to—this may be anecdotal—have in the past paid no consideration whatever to a pension scheme for their employees. This will be the first time that they are doing it. That is probably the case for nearly the whole lot. If so, the exceptions—the people already enrolled who may want to transfer in—will be an almost invisible statistic. If that is the case, surely the challenge facing NEST is to deal with that huge array of small companies that are going to need more help from NEST in order to undertake the work.
Noble Lords who have talked to NEST will know that their advisers go out and talk to companies, and it is more difficult to talk about these issues to companies with only three or four employees. They do not necessarily
have the time to slot it in, and it is much more difficult for smaller companies to work towards a solution. For most of these employers NEST will be the easiest, most competent, most reliable and most appropriate source for their pension scheme. Surely, therefore, that task is one of the tasks set in train by this application to the European Commission. If the reason for providing state aid was to give a financial inducement that would allow it to undertake that job, and that job is not complete and a huge number of companies are still to be engaged with, that, surely, is the challenge that NEST has.
In relation to the European issue and the year, perhaps my noble friend could indicate in his response whether, if it took more than a year to make an application—based on the information provided by the previous Labour Government on the date at which the restrictions on NEST would be lifted—will it be more difficult to do it in advance of that date? Would it be any easier than the more than a year that it has taken so far to get approval for 2017? If it is going to be the same period or longer, we are not talking about this year whatever happens. Even if the Government were to go back right now and start this process all over again, even if they thought that they had a strong case and that no economic advantage was being provided, it would still take until 2016—some way into 2016—and then until the appropriate start date for this. So, even if that were the case, we would probably be talking about, I guess, a gap of 10 or 11 months. It is my understanding, however, from the criteria that my noble friend read out in his opening remarks, that NEST has been given economic advantage, which is continuing, because they are the doing the same job as the one described to the European Commission at the start.
In conclusion, it might be interesting to ask whether the timetable for this activity of NEST in the original submission to the European Commission is roughly the same as the curent activity—in other words whether it was anticipated that this range of companies would be coming in towards this final period of the original application to the European Commission. If the timetable was right then, surely it is right now.