My Lords, I thank the Minister for his explanation of this order, and the noble Lord, Lord German, and my noble friend Lady Drake for their contributions.
As the Minister indicated, and the noble Lord, Lord German, reminded us, we had a fairly good canter around this issue on Tuesday, on Report stage of the Pension Schemes Bill. Therefore, noble Lords may be relieved to hear that I will not rehearse all the arguments at the level of detail we went into on that occasion. That said, we cannot allow this order to go through without challenging the core point we made then. I want to look at two things in particular. I would like to push the Minister a bit further as to whether he really believes that there is no problem caused for NEST by the restrictions on transfers remaining until 2017. He suggested that there would not be a problem; he will be unsurprised to know that we disagree. We are concerned that NEST would be unable to sign up employers if any of their employees already
have pensions, given that most will not want to use two pension providers or more. Of course, if the company cannot bring everybody in the company into NEST—those already in the workplace pension scheme and those coming in under auto-enrolment—that is a huge deterrent to go in with NEST at all. The DWP’s research suggested that 80% of employers will want one pension provider. Does this not mean inevitably that the ban on transfers in will hold NEST back? The argument against is that DWP research in 2013 that found that 84% of employers with fewer than 250 employees do not provide a workplace pension and would not be affected—a point indicated by the noble Lord, Lord German.
When this order was debated in another place my honourable friend Gregg McClymont pointed out that recording based on employers is not a good proxy for the number of employees who cannot access NEST on that basis. He made a powerful case that the number of employees potentially excluded from going into NEST because of the ban on transfers in is in fact closer to 11.5 million. Will the Minister not accept now that the ban on transfers in is a significant drag on NEST? Also, can the Minister clarify if lifting the ban on transfers will apply to pots accumulated before auto-enrolment or only to auto-enrolment pots?
We are delighted that the Government have continued Labour’s policy of auto-enrolment. We want it to be as successful as possible and it is clear to us that lifting restrictions as rapidly as possible is the best way to achieve that. It would ensure that millions more employees could access NEST, a body we all regard as a success and which is leading the way in driving the cost of pensions down while driving up quality. Why can it not happen now? I am not going to open up a lengthy debate about the degree to which the Altmark criteria will apply. As the Minister will know, in a debate in another place my honourable friend Gregg McClymont said that in practice the Altmark judgment makes clear that once NEST is up and operational its target market no longer counts as state aid, in any case. He is welcome to come back to that but we will not resolve it today.
I want to know more clearly what efforts the Government have made to find out if they could have brought in these restrictions earlier. Whether or not they wish to do it now, they still need to account for their decision to go only in 2017 and not earlier. The Government blame the EU and pray in aid state aid rules and say they are waiting until 2017 because otherwise there would be a legal challenge. Surely the Government have not been told by the European Commission not to lift restrictions until 2017. Rather they asked not to lift them until 2017 and were told they could do so. This was a point I did not feel came out adequately on Report. There is a difference between being told you can do X and claiming that you have been told that you cannot do Y. The Minister indicated that it was the Government’s own judgment that they would be unlikely to get permission for an earlier date. Can the Minister tell the Grand Committee whether the Government went to the European Commission and asked for the restrictions to be lifted before 2017, and if not, why not?
In terms of legal challenge, can the Minister clarify that if the Government amend the Pensions Schemes Bill that is still going before Parliament to lift the restrictions it would not be open to a UK court to challenge that? That is another argument that has been made against doing so. Surely any speculative attempt to mount such a case would be struck out. I would be interested in his reply.
Finally, can the Minister tell the Committee when he responds to the noble Baroness, Lady Drake, whether the Government have addressed these points in the past? She raised a very interesting point about the position of employers with closed schemes or, of course, ex-employees. Is that something the Government have addressed in their deliberations or reviews and what evidence do they have on that point? I will be interested to hear his response to the noble Baroness’s questions, and the points made by the noble Lord, Lord German and me.
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