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Financial Assistance Scheme (Miscellaneous Amendments) Regulations 2008

My Lords, this is the first opportunity that we have been given to debate these regulations, which are particularly important as the sooner payments get to the recipients, the better off they will be, especially as they will have been waiting years for their badly needed payments. Some will even have died. It is no recompense that their family may get some of their award. These complicated regulations are stage two in a multipronged series to give effect to the expansion of the FAS announced by Written Ministerial Statement on 17 December last year, as the Minister said. It had taken five long years to bring the Government, kicking and screaming, to that point. The Explanatory Notes say in paragraph 7.3: "““From its inception the FAS has received significant public interest””." That is a masterly understatement. I congratulate whoever drafted that sentence. Unlike my noble friend Lord Taylor of Holbeach on the first set of these regulations, I will not chronicle the sorry history of the FAS from the Parliamentary Ombudsman’s report through to the action in the courts that brought the Government to that point. Suffice it to say that the amount of money that is now to be expended on the scheme—some £2.9 billion in net present-value terms—is a great deal better than the original proposal. However, will the Minister admit that this is a gross figure? Because all pensions count as taxable income, can he say what the figure is expected to be net of income tax at the current rates of 20 and 40 per cent? As I am dealing with general points, I suggested months ago that it would be both sensible and cost-saving to give the FAS over to be run by the PPF. Now that these regulations involve the PPF to a large extent, why will not the Secretary of State follow my advice? As for the improvements made by the regulations, the biggest by far is the early payment of pension to those who retired sick before their normal retirement age. Many schemes taken over by the FAS will have paid pensions from that point, but the regulations propose that pension will be paid only from five years before a qualifying member's normal retirement age. Since the FAS rules only permit normal retirement age to be between 60 and 65 no matter what the ages actually were in the original pension scheme, the earliest that ill-health or early retirement benefits can be paid is at age 55, even though, as I said, the retirement may have been much earlier and the original pension scheme may have allowed pension to be paid from that earlier date. Why did the Government come to the decision that they have? Was it to save money, or for some other reason? The Explanatory Notes give me the impression that this may—just may—be an interim decision. None the less, I am glad that these regulations cover it now, because the afflicted people are inevitably in straitened financial circumstances and may even have died before receiving anything at all. It is small recompense that their relatives may get a reduced amount. I would assume, too, that many are on state benefits of one sort or another. What does the Minister believe is the net cost of this provision? Also, can he tell me a little more about how the interim payments will work? There is great interest in this from the Pensions Action Group. The regulations also allow certain schemes backed by solvent employers that started to wind up before 1997, before the employer was required to fund the full buy-out cost. Why was this date chosen? As the Minister mentioned, the Government are now to take on the residual assets of pension schemes that come into the FAS. This was proposed by the Andrew Young review, and I can readily understand why. It is especially important that those assets are not run down prior to the schemes being accepted into the FAS. It is equally important that information held by the trustees should be given promptly to the FAS, especially when pension or ill health payments are already in payment before the scheme is accepted into the FAS. I approve of introducing timescales for this. Incidentally, I hope that such payments made from, say, the age of 45 will not be terminated by the Secretary of State. Lastly, although I cannot find it in these regulations, I understand that FAS payments are to be increased not by earnings or even inflation but by 2.5 per cent annually. Can the Minister tell me whether this means an annual FAS uprating order, like the mesothelioma one, or will it be part of the general uprating order? I have made the point before that it would be sensible for all regularly updated benefits to be included in a single uprating order. Can the Minister tell me whether any serious consideration has been given to this, or must I live with the off-the-cuff answer that he has given me previously?