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Pensions Bill

The authority has been established as an independent expert body to advise on, and take forward, implementation of the personal accounts scheme. However, it is a non-departmental public body, so accountability to Parliament for the authority’s performance in action rests ultimately with the Secretary of State. Clause 71 sets out provisions allowing the Secretary of State to issue directions and guidance. Such provisions are a common feature of relationships between an executive NDPB and its sponsoring department. These measures provide reassurance to the Government and, importantly, to Parliament that appropriate procedures are in place to ensure that the NDPB works within its scope, does its job properly and manages itself to the standards we expect from a public body. I shall take this opportunity to outline the clear distinction between guidance and directions. Directions must be complied with. As a rule, they are issued only in exceptional circumstances and are of such significance that it is only right that they should be published, so the Bill will require that. An example of a possible direction would be if the authority clearly disregarded one of the principles in Clause 70. In such an unlikely event, the Secretary of State might issue a direction requiring the authority to take corrective action. The principles are designed to ensure that PADA gives due weight to the public policy underpinning personal accounts, and the power to give directions will ensure that they work as we intend. Directions should be published promptly. Indeed, during debate in the other place, my honourable friend the Member for Warwick and Leamington said that, "““we intend that the directions would be published as soon as they were made, subject to the necessary practical arrangements””.—[Official Report, Commons, Pensions Bill Committee, 5/2/08; col. 419.]" I will arrange for those to be available in the House Library. Guidance, as the noble Baroness acknowledged, can be much more routine and a standard part of how departments work with their NDPBs. The provision allows the sponsoring department to clarify its expectations of the work being carried out by the NDPB and give policy steers about the work being led by the NDPB. As a rule, the NDPB must have regard to such guidance but does not have to comply with it, as is the case here. Existing legislation for different NDPBs sets a variety of requirements as to whether directions and guidance should be written and published. That is dependent on the nature of the NDPB and the role it is undertaking. The noble Baroness’s amendments seek to ensure that, as with directions, all guidance issued to the authority must be in writing and must be published. I sympathise with the intent of these amendments; transparency in the work of NDPBs and their dealings with Government is of great importance. However, requiring all guidance to be put in writing, or indeed published, is not the most effective way of working—in fact, we think it could get in the way. Guidance will not be an exceptional occurrence; rather, it will be part of the continuing dialogue with my department as the authority carries out its functions in delivering the personal accounts scheme, which is, of course, part of a broad pension reform programme. Guidance covers the full range of activity carried out by both organisations, from the mundane administrative tasks to serious matters of policy formation. As an example of the first, the authority has recently relocated its London office and, while the decision on the suitable location was made by the authority, the department, in its role of steward, provided a great deal of guidance on how such public sector processes are managed. It would obviously be entirely disproportionate to require that sort of guidance to be written down and published. At the other end of the scale, the department and PADA are working together on the secondary legislation to establish the scheme. While many of its aspects are now in the public domain, such as the contribution limit, the further work on scheme development will throw up detailed questions that will need to be resolved by discussion between the authority and the department and, quite possibly, through guidance of one sort or another—some written, some not. It would plainly not be appropriate for all these discussions to be made public. Information will remain available under the Freedom of Information Act in the usual way, but it is important that commercial confidentiality and the need for candid discussions in relation to the development of proposals in this important area of public policy should be respected here, as in all other relevant cases. Of course, once proposals have been agreed, they will be set out in a draft order and rules and will be issued for wide consultation. Given the commitment to consultation that has been demonstrated across this programme, I hope that Members of the Committee will accept the need for periods of policy formation to take place, protected from public exposure. This is particularly important for a time-limited body such as the authority, involved closely with other organisations in a broad programme of reform, working to a demanding timetable. Much of this guidance will, as a matter of good working practice, be made in writing. However, introducing a requirement for all guidance to be put in writing and, further, to be published would impose unnecessary and inappropriate demands on the programme. Of course, the authority and the department will fully adhere to Cabinet Office guidance and to the Freedom of Information Act. I believe that this treatment of directions and guidance strikes the right balance between transparency, effective collaborative working—given the authority’s role in the wider programme—and the need to respect confidentiality in an appropriate manner in a highly commercial context. I hope that that has addressed the noble Baroness’s concerns.