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Postal Services Bill [HL]

I am grateful for what I take to be a measure of support from the noble Lord. The reason for adopting this approach is set out in the impact assessment. Another option would be for the assets to be transferred, for there to be a funded scheme as the noble Lord suggests, and for the Government simply to plug the gap on some ongoing basis. The analysis in the impact assessment very clearly shows concerns over the investment risk that that would involve and leave the Government with. It was not an attractive option. It was estimated that, over time, it would lead to greater costs being borne by the Government and the taxpayer. That is the fundamental reason for adopting the current approach. Amendment 72 would require the Secretary of State to report on the assets that are transferred from the RMPP to the Government. At present, as the noble Lord, Lord De Mauley, suggested, the assets in the scheme are a mixture of equities, gilts, properties, bonds and cash. The type and mix of assets left with the RMPP will be the subject of discussions with the trustees and actuaries. That is the discussion that must take place to identify the appropriate mix of assets to be left, bearing in mind the ongoing liabilities that the RMPP will have. An exact pro rata mix is unlikely, given the indivisibility of some investments. The Government fully recognise the importance of transparency in any transfer of assets. Indeed, we would expect an order for the transfer of assets to include details of the classes of assets transferred, including, for example, details of any cash or gilts that were transferred to the Consolidated Fund or to the Treasury. However, the order will need to contain some flexibility on the exact mix of assets transferred, given that a transfer may take place some months after a transfer of liabilities and the time an order is laid. There could conceivably be some changes in the value and composition of the relevant assets to be transferred, so any order cannot be totally prescriptive. Following a transfer of assets, the Government will also be transparent in publishing the breakdown of assets and the wider public finance impact in the Pre-Budget Report or Budget immediately following the transfer. As this information will already be in the public domain in the ways that I have described, we see no necessity for a separate obligation for the Government to report on the classes of asset transferred. I hope that the noble Lord, Lord De Mauley, will accept that because what he seeks to achieve in respect of transparency will arise from the mechanisms that I have just set out. Amendment 74A concerns Clause 21. This clause limits the Secretary of State’s power to transfer assets out of the RMPP. It provides members with a legal safeguard to ensure that the transfer of assets does not worsen the funding position of the RMPP. In relation to this restriction on the transfer of assets, subsection (4) provides that the values of liabilities and assets will be determined, calculated and verified by a prescribed person and in the prescribed manner, the details of which will be set out in secondary legislation. Similar to what Amendment 74A proposes, the Government intend to hire an appropriately qualified actuary, but we do not believe that it is necessary to put this on the face of the Bill. There are a number of factors that Government will need to take into account in procurement decisions, and this is just one factor. In addition, the relevant actuarial bodies could change in the future. I understand, for example, that a merger has been proposed between the Institute of Actuaries and the Faculty of Actuaries. It therefore makes sense to set out in secondary legislation the details of who will carry out the valuation and on what basis . Amendment 74A also requires the valuation to employ, ""a conservative set of assumptions used in the private sector"." This amendment appears to relate more to a full actuarial valuation of the scheme such as the one the trustees are currently undertaking. The purpose of the valuation referred to in subsection (4) is different and much narrower in its scope. It is purely to ensure that the restriction on the transfer of assets in Clause 21 is met. It is important that the assumptions used are appropriate to the RMPP and protect both scheme members and the taxpayer. As such, it is entirely legitimate for the Government to set out the assumptions in an order after consultation with the trustees. By contrast, the proposed wording of Amendment 74A is unclear and could hold the Government and the taxpayer hostage to fortune. I hope that that explanation has reassured the noble Lord, Lord De Mauley, and that he will be able to withdraw the amendment.