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Pensions Bill

My Lords, this has been a fascinating debate and I genuinely look forward to Committee stage, even though some of it is going to be a bit tough. Given the range of points that have been raised, I shall eschew my formal text and try to deal with as many points as I can. Those that I cannot cover will, I am sure, recur in Committee. I should say to the noble Lord, Lord Skelmersdale, that I am pleased that we are starting the train journey together and hope that we will complete it together. The noble Lord asked about the positioning of personal accounts in the framework of the Bill. The absolute cornerstone of the Bill is auto-enrolment, not only for personal accounts but for a range of provision. That is why we have started it off and it is right to do so. The noble Lord and the noble Baroness, Lady Noakes, challenged the issue of implementation. The first act of the incoming chief executive, Tim Jones, was to review the delivery plans and a summary of that review has been placed in the Library. This work confirms the achievability of a 2012 launch for the personal accounts scheme. Not surprisingly, at this stage some of the factors that will influence progress are uncertain—not least the passage of this legislation—and we will need to monitor carefully the delivery assumptions that we have made. That said, 2012 is our intention and we believe that it can be delivered. I will not dwell for long on the issue, but I cannot let the challenge go without responding on issues around dividend tax credits and this Government’s record on pensions. The abolition of payable dividend tax credits was part of a wider package of measures designed to improve the long-term investment climate in the UK. I would be interested to know at some stage when these matters are raised whether in fact it is Conservative policy to reverse that position and increase the rate of corporation tax. We all know that the wider effects on pension schemes were caused by a stock market fall due to the dotcom crash when there was a £210 billion fall in the market value. We know that many firms took contribution holidays in the 1980s and 1990s—on the Conservatives’ watch, I may say—believing bullish equity markets to be a long-term trend. There were also rapid increases in life expectancy. I should also say that the current level of tax relief for pension funds is estimated to be around £17.5 billion in 2008-09. It is this Government who have sought to rebuild faith in pensions. We put in place the Pension Protection Fund, we have proactively protected pension scheme members through the Pensions Regulator and delivered a just settlement on the FAS, as well as setting up the Turner commission and all the good stuff that has flowed from that. My noble friend Lord Judd, with particular passion, and the noble Lord, Lord Skelmersdale, raised the issue of ethical investment. I repeat what my honourable friend Mike O’Brien said at a national ethical investment reception last week: it is only if institutions and others embrace the concept of good governance and ethical investment that our economy can thrive and that our legacy to future generations will be a positive one. Economic success cannot be regarded as in conflict with social and environmental goals. He said that ethical investment and effective governance of investment decisions attracted much debate in the other place, which it did, and that there is also wide-ranging consumer support for an ethical choice to be included in the personal accounts scheme. Such investment decisions are, quite rightly, the responsibility of the scheme trustee, but we recognise the importance of good governance and socially responsible investment. I am pleased to see that the Personal Accounts Delivery Authority will be consulting on these matters in the autumn. I say to my noble friends that I am not aware that the Government have objected to this at any stage; indeed, our position has been that it is for the trustees to decide because this is an independent scheme. I hope that the consultation on this matter will lead to the appropriate conclusion, which we would all support. A number of noble Lords—the noble Lords, Lord Skelmersdale and Lord Oakeshott, and my noble friend Lady Turner—raised the issue of levelling down. As I said in my opening remarks, our reforms are designed to complement, not replace, existing employer provision. There are a range of issues, which I identified, that support that. Our research shows that most employers with good schemes support our reforms, and the majority, particularly the larger employers, plan to maintain their schemes at current levels. We are not complacent about the issue, however, and we will continue to track employers’ attitudes and likely reactions to the reforms as we move towards 2012.