Pensions Bill

moved Amendment No. 10: 10: Clause 8, page 6, line 5, at end insert— ““( ) If the job-holder gives notice under this section before the first contribution is taken, no contribution may be taken from the job holder or the employer on behalf of the job holder.”” The noble Lord said: My Lords, as we have already seen, there is both an advantage and a disadvantage to the Government in having stages of the Bill separated by such an enormous length of time. The advantage is that it gives them much more time to consider, first, whether their responses at the previous stage hold water and, secondly, whether bits of the Bill should be changed because of comments made by the Opposition or their own Back-Bench Members. This has resulted in many more government amendments on today’s Marshalled List, with, I am told in one of the Minister’s numerous but welcome letters, more to come before we finish Report and yet more at Third Reading. I join those who expressed great satisfaction that the Minister’s role in the pensions arena will become—how shall I put it?—rather less passive than it was during Committee. The Minister, even if no one else, knows exactly what I mean. The disadvantage to the Government is that other non-government participants have had much more time to digest the Government’s responses to questions posed, and to produce counterarguments and even completely new thoughts. I sympathise with the Minister in this because I have been in the same position. Nevertheless, the Recess has crystallised my thoughts on the mechanics of the proposals in the Bill for removing money from a worker’s pay packet for up to three months, pending their decision to opt out. There is logic to this proposal as it will concentrate the minds of those who may not opt out to see their wages or salaries apparently reduced. I use the word ““apparently””, because pensions are deferred wages, although the average employee may not appreciate this. Nevertheless, their take-home pay will be reduced by 3 per cent, and with the cost of their household bills rising so rapidly, especially at the moment, they will most certainly feel the difference made by what may seem only a small amount of money to other members of society. The Minister has told us several times that around 6.5 million people will benefit from the new personal accounts outlined in Chapter 5. What is not said—and I ask him now—is how many of those 6.5 million he expects to opt out from the very beginning. Last week, I had the opportunity to visit the National Debtline in Birmingham, which does sterling work in advising people how to clear their debts. Its staff very kindly furnished me with their statistics for July this year, in which they had 21,572 telephone calls—some 3,000 a week. This caused me to do a little arithmetic and produce a worst-case scenario. Almost 47 per cent of callers revealed that they had debts of between £1,000 and £15,000, and almost 40 per cent had debts ranging from £15,000 to £50,000. While I would have expected many of the holders of the lower amount of debt to be either not working at all or on some form of benefit, I was brutally disabused in finding that almost 55 per cent of callers were in either full- or part-time work. If being in debt is the most likely cause of opting out, as I believe that it is, as many as half of the 6.5 million people to whom the Minister referred could do just that. I described that earlier as a worst-case scenario—it will not be anything like that many people—but it will be considerably more than I for one thought when we were discussing the matter in Committee. These repayments will cause a major logistical headache when a large number of withdrawals have to be paid back. In total, that doubles the number that opt out—clearly, because money does more than that, as the money has to go to the employer for his bit and to the employee for his bit, as the noble Lord made clear in col. 978 in Committee. Amendment No. 10 would go a very small way to reducing that. Under the Bill, even though an employee elects to opt out before he gets his first pay packet, money is still taken from those wages and then has to be paid back to him subsequently. This is a total nonsense; it should be quite possible for an employer to know that a member of his staff has opted out. The Bill should therefore reflect that eventuality and money should not be deducted from his pay cheque. Amendment No. 11 is to probe the Government’s intentions behind Amendment No. 24, made in Committee, now to be found in Clause 8, on page 8. In col. 976 of 17 June, the Minister said that, if a worker opts out: "““Our intention is that any contributions paid by jobholders who opt out under Clause 7 will be refunded to the jobholder. Similarly, any contributions paid by the employer will be refunded to the employer””.—[Official Report, 17/06/08; col. 976.]" That means that if 3 million people opt out, refunds for 6 million will be made. Regulations are to be made as to when and how that is to be achieved. As our experience in Committee showed, the Minister had no idea. I raised the matter as early as Second Reading and he could say only that it was too early to say—a fact that he kept on repeating throughout our eight days in Committee. That is why I keep repeating that the parts of this Bill referring to auto-enrolment and personal tax are a year too early; we do not know nearly enough to have much confidence that it will work as intended, even if the intention is correct—which I think that it is, as far as the first five chapters of the Bill go. In broad terms, I remain content with the Bill; it is the detail that concerns me. Amendment No. 11 is to probe how the Government’s thinking on this has progressed over the summer. For the Minister to say, as he did in Committee, that: "““If the money has reached the scheme, there will need to be a process for the money to come back out of the scheme””," is simply not an explanation. It is a sine qua non. He went on to talk about the situation in which an opt-out has occurred and the money has not yet reached the scheme. He then said that: "““Those processes need to be worked through””.—[Official Report, 17/6/08; col. 980.]" Has any working through been done over the summer and, if so, with what result? It is also a fact that the tax forgone has to be reclaimed by HMRC. I assume that that will be done through an adjustment to PAYE, but there is another way—that the gross sum will be reduced by the tax allowance when it is returned to the employee and the tax element sent to HMRC, presumably by the trustee corporation. But, again, we simply do not know. I wonder whether the Minister does. What concerns us with these two amendments is the speed with which the employee and the employer get their money back. I apologise for the time that I have taken. I beg to move.