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Pensions Bill

I shall add briefly to this debate. This is an extremely important subject and has been put very seductively by the noble Lord, Lord Judd, who argued for it passionately. He has done the Committee a service in bringing these amendments to our attention. I know his record; he is passionate about the work of the Aegis Trust. All sides of the Committee would want to recognise and acknowledge the work that it has done. It is exemplary and has been done over many years. The context in which we are discussing these amendments is the better for what it has achieved. However, this is not the place to start this debate. Ethical investment is a much wider issue than merely trying to attach it to the fund to which the amendments relate. I would be shoulder to shoulder with noble Lords who have argued in favour of the philosophy behind these amendments when it comes to corporate social responsibility and to requiring investors and the people responsible for investment decisions to be tasked with the long-term global consequences of some of their decisions, but I am frightened by the consequences that these amendments would have on the set-up of these funds. I was more in favour of these amendments until I heard Mr Tim Jones, the chief executive of PADA, who made it clear to me, in a way that I had not properly understood, that his members cannot afford anything more than a core, stripped-down scheme. That is the core function of the Bill. The noble Lord, Lord Skelmersdale, put it well, and I concur with his position. Against a background of 50 per cent more people retiring by 2050 and 7 million people in this country undersaving, that must be at the forefront of our mind as we go through this important Bill clause by clause. Even if we get a low-cost, minimal scheme, it will be hard enough to make it successful without taking it into other dimensions. These are not frivolous or bells and whistles issues. I know that people talk about embellishments, but I do not consider ethical investment to be de minimus or in any way a second-order issue, but I do not think that these amendments would enable Tim Jones and his people to design a default scheme that would be able to stay anywhere within the 0.3 per cent costs that we are aiming for. Without that, it might fail, and that is too big a risk for me. I hesitate to take issue with colleagues who have spoken, such as the noble Lord, Lord Joffe, who I know knows a lot more about these things than I do, but I feel that including the new clauses in the Bill would be onerous, and not just financially. I give the noble Lord an example of that. My understanding is that if we passed the amendments, we would find it impossible to allow the design of the PADA scheme to include tracker funds. If you go for tracker funds, I cannot see that you could possibly ever guarantee that they were all ethical investments because they are so diverse, by definition—that is their value. If you rule out access to tracker funds, you take a whole raft of initiatives away from the design and build of the new scheme in a way that must be inimical to the long-term objectives for pensions, which we are all trying to get to work. Also, if I were a member of the trustee corporation and the new clauses were in the parent Bill, in primary legislation, I would have a care about legal challenge. It may well be voluntary, it may be a set of standards that we are asking trustees in the new organisation to aspire to, but people who feel disappointed and think that the new clauses are not being properly respected by the trustees would sue. Ultimately, there would be judicial review and the rest. That is absolutely the last thing that the new set of pension provisions that we are putting together needs. I am willing to give the Government the benefit of the doubt on the consultation offered. The points made in the other place in the Public Bill Committee were taken seriously by Mr O’Brien, the Minister—