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Pensions Bill

I hear the points made by both Opposition spokesmen. It is important that we give full and fair consideration to the UN principles, and that is why I wrote to the chief executive of PADA to ensure that the board did so. I received a positive response. Tim Jones, the chief executive, confirmed that the issue of responsible investment will be explicitly addressed in the investment consultation that the authority will undertake later this year. I am not sure why Opposition Members do not want the consultation to take place before that happens. It would be a better way to approach the issue. We want to have a discussion on the UN principles, and what better way than to create a consultation process in which the broad principles of the pension fund proposal and the creation of personal accounts can be discussed openly and fully? The UN principles could then be the focus of that debate. That would be a positive response. I am especially interested in the views of the hon. Member for Eastbourne (Mr. Waterson) on this matter. One of the key issues that we have considered on personal accounts is the need to ensure that they complement rather than compete with current provision. We also want to ensure that personal accounts do not have advantages over and above other schemes, which is one reason why I was sceptical about some of the proposals made in relation to pay-as-you-save. However, nor do we want to create a situation in which there are disadvantages. Would the application of the UN principles be a disadvantage? It would be interesting to find out whether the Conservatives regard them as an advantage in some way. If the principles would oblige this particular pension scheme to apply the principles, would they oblige all other pension schemes to comply with them? We have taken the view that the principles are very worth while, but it should be a matter for the trustees to consider, for each individual pension scheme, whether they wish to apply them. The Conservatives seem to be suggesting that we should oblige a particular pension scheme to take on those principles—in fact that we should oblige not only the pension scheme to take them on, but PADA, which is a delivery authority that does not run a pension scheme but merely sets one up. I am perplexed about what the Conservative party's policy now is. If we are to oblige this particular pension scheme to have this provision, why not all public sector pension schemes—why not all private sector pension schemes? Is that now Conservative party policy? I would be interested to know. My view remains that which we set out in Committee. The principles are good and valuable, and we want to see pension schemes take account of them when the trustees regard that as appropriate. We will not force pension scheme trustees to adopt them. We are happy to say to those who are setting up personal account schemes that they should consider the principles. Indeed, we have had a positive response from people who have said that they will consult on the inclusion of the principles in their pension schemes. We have played a positive role in promoting that approach. We have always held the view that the trustee should decide the principles on which a scheme operates and invests. That has always been part of our law. There are some constraints on trustees, but we have essentially said that the interests of the members are best protected by giving obligations to the trustee, which they have to enforce, that are limited to ensuring that the trustee looks after the best interests of the members. It now seems that some people are suggesting that we must go further—not with the consent of the trustees, but otherwise. We need to be a little cautious before we do that. As a result of the Committee debates, I contacted Tim Jones, the chief executive. We have had his response and we need to recognise that we have created PADA in order to ensure that it consults properly with the public in the setting up of one of the biggest pension schemes, if not the biggest, ever created in this country. The aim is that there should be widespread public consultation for the precise reason why up to 9 million people, many of whom are not currently saving, will be signing up to the scheme. If the scheme is to be treated in an entirely different way from any other scheme so that the trustees cannot make decisions about what investment principles they will operate under, that is quite a significant step. In a sense, I am with the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander) in saying that the principles are good and that I hope that in due course the trustees will have regard to them. I can see that argument. We would not have written to the chief executive of PADA if we had not taken the view that it was important that that should be so. There is a need for the trustees' independence and expertise in making such decisions to be recognised, too. That is the basis on which pensions have been protected in this country for a long time, and I do not think that we should tamper with it for the purpose of making a change that is, at best, symbolic, given that we already have a clear concession from the chief executive that the matter will be consulted on. New clause 12 and amendment No. 39 presume that socially responsible investment approaches would be in the best interests of members. However, signing up to the UN principles would require active management of funds, which is more expensive than passive management of funds. It must be for the trustee to decide whether the additional costs are in the members' best interests. Otherwise, we will effectively be telling the trustees that they must manage their funds in a particular way and ensure that the principles that the UN has put forward are complied with. Let us be clear about this: we will be saying that if there is any extra cost in doing so, it will fall upon the people who contribute to the pension scheme. After consultation with members of the public, the trustees may decide that they want to do that. Many of us in the House might well say that that is a laudable thing for them to decide, providing that they have consulted with the scheme's members, and providing that if PADA has taken a view that it is advisable for the principles to be had regard to, it has itself consulted stakeholders and the public in setting up the scheme. We are being asked to ignore all that and take a step that we have not taken elsewhere. We are being asked to take a step that goes well beyond and has potential cost implications for some of the poorest contributors that there are likely to be to pension schemes. I do not know whether either Opposition Front-Bench team has made an assessment of the potential costs for such low-paid people. I suspect that they have not, and that they are prepared to impose additional costs on members and potential members of the personal accounts scheme without even considering the implications and without talking to them or consulting them. They should proceed with a great deal of care. It would be wrong to argue that the scheme should be used to set an example to other companies or pension schemes, as suggested by some Members in Committee. The scheme's only purpose is to represent the best interests of its members within the existing legal framework. It is not the right instrument to express Parliament's general views on investment. We are creating a pension scheme for low and moderate income people. We may have all sorts of views about what we see as a desirable investment policy, but do we really want to impose those views on people on low incomes, whereas we are not imposing them on people in other pension schemes who are much more able to afford to pay for the principles?