Pensions Bill

moved Amendment No. 22: 22: Clause 130, page 66, line 17, leave out from ““functions),”” to end of line 21 and insert ““the existing provision becomes sub-paragraph (1). (2A) For paragraph (e) of that sub-paragraph substitute— ““(e) permitting the Regulator to authorise such persons, in such circumstances and under such arrangements, as the Regulator may determine, to exercise on behalf of the Regulator— (i) the power to determine whether to exercise any of the functions listed in sub-paragraph (2); (ii) the power to exercise any of the functions listed in sub-paragraph (2) or such other functions as may be prescribed.”” (2B) After that sub-paragraph insert— ““(2) The functions mentioned in sub-paragraph (1)(e) are— (a) the power to issue an improvement notice under section 13; (b) the power to issue a third party notice under section 14; (c) the power to recover unpaid contributions under section 17; (d) the power to require information under section 72; (e) the power to vary or revoke a determination, order, notice or direction under section 101; (f) the power to require payment of a penalty under section 10 of the Pensions Act 1995; (g) the power to issue a compliance notice under section 34 of the Pensions Act 2008; (h) the power to issue a third party compliance notice under section 35 of that Act; (i) the power to issue an unpaid contributions notice under section 36 of that Act; (j) the power to issue a fixed penalty notice under section 39 of that Act; (k) the power to issue an escalating penalty notice under section 40 of that Act; (l) the power to recover penalties under section 41 of that Act; (m) the power to review a notice under section 42 of that Act; (n) the power to issue a compliance notice in respect of prohibited recruitment conduct under section 50 of that Act; (o) the power to issue a penalty notice in respect of prohibited recruitment conduct under section 51 of that Act.”””” The noble Lord said: My Lords, these technical amendments are designed to ensure that there is no confusion about the regulator’s ability to contract out its functions. Paragraph 21 of Schedule 1 to the Pensions Act 2004 enables regulations to be made permitting the regulator to contract out its regulatory functions. Through the introduction of Clause 130 of this Bill, we amended Schedule 1 in Committee to facilitate the regulator’s ability to contract out its functions by removing the requirement to specify the identity of the contractor in regulations. As I said at the time, it is important that the regulator has the ability to contract out the functions associated with the compliance regime to ensure that it can fulfil this new role in the most efficient and cost-effective way. However, as the Bill is currently drafted, there remains some doubt as to whether the regulator will be able to deliver through contractors. Our intention in delivering the compliance regime is that the regulator will be able to delegate both the power to determine whether to exercise its functions and its power to actually exercise those functions. This distinction is made in other parts of the Pensions Act 2004 but not in paragraph 21 as amended by Clause 130. Without this distinction, there is a risk that the regulator would not be able to delegate decision-making relating to a function. In the case of compliance notices, for example, this could mean that, every time a contractor wanted to issue a notice to an employer who had failed to auto-enrol a jobholder, it would need to pass this information back to the regulator for a formal decision and therefore, potentially, significantly increase the time for processing the notice and the potential for bottlenecks. We are therefore seeking to introduce technical amendments to Clause 130 that would ensure absolute clarity by referring to both exercise and determination. However, we do not want this power to allow the regulator to delegate both the exercise and determination for the whole range of its functions. We want to explicitly limit the ability to contract out determination to the regulator’s activities to enforce the new compliance regime. The regulator has done further design work over the summer on operational models and has identified the range of functions, both in this Bill and the 2004 Act, to enable it to deliver the compliance regime. The amendment therefore explicitly limits the power to delegate the determination to those functions. The Secretary of State will retain his existing power, as amended in Committee, to enable the regulator to contract out the exercise, but not the determination, of functions that are prescribed in regulations. Finally, Amendment No. 23 ensures that any regulations that have already been made under the contracting-out powers in Schedule 1 to the 2004 Act remain in force and may be amended for consolidation purposes only. It is worth stressing that these amendments relate to an existing regulation-making power. To enable the regulator to contract out any of its functions, regulations will have to be laid before the House. In relation to the functions that the regulator is seeking to contract out to deliver the compliance regime, we will be publishing regulations next year for consultation. I hope that noble Lords agree that it is important to ensure absolute clarity around the regulator’s ability to contract out and that they are reassured by our efforts to limit this power as far as possible. I beg to move. On Question, amendment agreed to.