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Pensions Bill

I shall certainly take that comment away and consider whether I need to speak to officials about the impact of our drafting. However, we believe that the power is not as wide as might first appear. It does provide retrospection but only in relation to novel situations of material risk, and it would require consultation before it could be used to introduce changes. However, I shall take away that point and reflect on it. We shall not get to vote on the amendment tonight in any event; we have at least a day to do that. The noble Lord, Lord Lucas, asked whether the powers had been found wanting. The DWP and the regulator have seen many proposals for managing pensions liability and many are likely to be robust. However, the 2004 Act was not drafted with such innovation in view, and we need to keep on top of the innovations that are in the market at the moment. The noble Lord said that clearance could be torn up. The regulator has made it plain that if clearance has been given, it will not reopen that clearance as it must have been based on proper facts. That applies to any clearance. It is likely to be against the ECHR to legislate that existing clearance has become valueless but, in any event, that is not the intent. The noble Lord also touched on the issue of good faith. The legal principle of good faith sets a very high evidential burden and can easily be circumvented by those whose intent is avoidance. It therefore safeguards not only those who should be protected but those whose activities are, rightly, the target of the regulator. Good faith currently applies only to one of the two limbs in relation to issuing a contribution notice—namely, where the main purpose of an act is to prevent a debt becoming due or otherwise to settle or compromise it. It does not apply where the main purpose is to prevent recovery of a debt. The Government consulted on additional grounds to act on the basis of outcome rather than intent. They are exploring the safeguards that would be appropriate, such as additional reasonableness factors and test of material detriment, but those are still under consideration. The proposal to remove good faith is something that generated a considerable number of comments in the consultation exercise. We need to give full and proper consideration to the responses we have received, including alternatives that have been suggested, before formulating detailed regulations for further consultation. On the fair value point touched on by the noble Lord, it is not the Government’s intention that a transaction, whereby a person purchases assets or securities at fair value, would normally trigger the regulator’s use of its anti-avoidance powers, provided that, as part of the transaction, the pension scheme was properly considered and adequately addressed. However, the fact that a person had purchased assets or securities at fair value would not necessarily provide the reassurances needed. That would be only the first step in ensuring that capital was available to mitigate the risks to the scheme; it does not of itself get the capital to the scheme. I have tried to deal with the points that have been raised. Given the time, we will perhaps have an opportunity to consider the Government’s amendment at greater length on Wednesday, but I hope that the amendment to the amendment will be withdrawn.