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Pensions Bill

I thank the hon. Members for Eastbourne (Mr. Waterson) and for Rochdale (Paul Rowen) for their general welcome for these amendments. On the 2017 review, our commitment is to commission a review of just two of the features of personal accounts—the annual contribution limit and the prohibition of transfers to and from the scheme. We think that a focused review will be the most straightforward way to meet our commitments in those areas, focusing on the impact of the policies on employers, the pension industry and individual behaviour. The review would examine outcomes in the light of the wider debate on existing pension saving. However, it would be too early after 2012 to commit to a wider review of the reforms, given the phasing in of some features and the long-term nature of pension saving. With regard to the amendment tabled by the hon. Member for Eastbourne, I stress again that we have no intention of unfairly advantaging the scheme, and we have not discounted the possibility of commercial rate loans. However, in light of the unique task that we are giving the scheme, and ahead of knowing more about its costs through the procurement process, it is vital that we retain flexibility in how it is funded. Like any other scheme, personal accounts will be targeted on a particular segment of the market. The scheme will also have a public service obligation to accept all eligible employees, irrespective of whether they are loss-making to the scheme. In the long term, we are confident that the scheme can do that while delivering low costs to members and being self-financing, but in the short term those obligations will add to the challenge of establishing a low-cost scheme. If that is the case, it would be reasonable for the Government to consider whether it was in the public interest to compensate the scheme in some way for the burdens placed on it. Indeed, European state aid rules, whose explicit purpose is to prevent anti-competitive behaviour, recognise that there may be cases in which it is right to compensate a body for performing a public service obligation. These rules are very explicit: it is possible only for the state to recognise the cost of imposing a public service obligation, and it is not possible to go any further. In other words, it is only possible to ensure that the personal account scheme is not disadvantaged by its public service obligations. Therefore, not only do we not want to subsidise the scheme unfairly, but it would be illegal for us to do so. I hope that, with this reassurance, the hon. Gentleman will agree not to press his amendment.