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Pensions Bill

moved Amendment No. 112U: 112U: Schedule 1, page 62, line 8, after ““assistance”” insert ““on commercial terms”” The noble Baroness said: I shall move Amendment No. 112U and speak also to Amendments Nos. 112V and 113P. These amendments concern the terms on which the Secretary of State may provide finance to the trustee corporation or to PADA. I have included the latter for the convenience of the Committee as the principles of financial assistance for personal accounts run across both organisations. Under paragraph 18 of Schedule 1 the Secretary of State may provide financial assistance to the trustee corporation in the form of grants, loans, guarantees or indemnities and the Secretary of State may set the conditions for such assistance. An identical power is provided for PADA in Clause 72. These provisions clearly allow the Secretary of State to provide money to underpin the personal accounts scheme as grants or on other non-commercial terms. That has caused considerable consternation among the pensions provider bodies, which will be competing with the personal accounts scheme, as they can see unfair competition written all over the Bill. Bodies such as the ABI want there to be no public subsidy for the trustee corporation and are concerned at the amount of grant-aided expenditure that PADA is racking up. My amendments do not go as far as that. There may be expenses that, on public policy grounds should be met by the public purse but, if that is the case, there needs to be transparency about why those costs should be subsidised. The default position is that finance should be made available on commercial terms. That is, in most cases there will be a requirement for market interest and repayment terms. My Amendments Nos. 112U and 112V seek to achieve this for the trustee corporation, and Amendment No. 113P does so for PADA. They are not in exactly the same form, which is my fault, but could easily be harmonised for Report and the idea behind the amendments is the same. During the course of the Bill, I do not believe we can settle exactly how finance should be made available to the trustee corporation or to PADA. We believe that there should be a presumption that finance should be available only on commercial terms. As I have said, I have accepted that the reality is that some subsidy may well be necessary. My amendments allow Parliament a modest involvement in agreeing whether finance is to be provided on a subsidised basis in future by requiring the Secretary of State to make a report to the House setting out why he needs to provide finance on a non-commercial basis. There is no other parliamentary procedure involved, but it is about transparency. As well as transparency to Parliament, it would allow other bodies, such as the National Association of Pension Funds, which has raised this issue with us, to scrutinise the reasons for subsidy and make representations if it feels that the subsidy is likely to cause an unfair advantage for the personal accounts scheme. At present, the only information that will be available on funding from the pension corporation or PADA will come out when the annual accounts come out, which, as the Minister will be aware, could be 15 to 18 months after financial assistance has actually been given. We believe that that time period is too long in the context of the kind of transparency that should be available about such an important issue. I hope that the Minister will agree. I beg to move.