Financial Assistance Scheme (Miscellaneous Amendments) Regulations 2010

My Lords, I thank the Minister for introducing the draft regulations. As he noted, they are extremely long and complicated, and contain some very impressive formulae for valuations in every conceivable circumstance. I am glad, therefore, not only that there is a comprehensive Explanatory Memorandum but that the Joint Committee on Statutory Instruments has reported on the regulations and that they were debated yesterday in another place. One point has been highlighted by this scrutiny: it is clear that FAS is to end up in a very different place from where it started. Some of the developments that we have observed during the past year were anticipated, as the Minister pointed out. When the primary legislation establishing the scheme was passed, it was clear that there would be some level of operational flexibility in order to respond to the challenges that the liquidised schemes were likely to throw up. However, as the Joint Committee’s report makes clear, we are now looking at a final scheme that is right on the acceptable edge of that flexibility. The Government have gone to some pains to demonstrate that the regulations are empowered by the original Act, and I accept their concern that any more delay to the provisions might harm the pensioners whom the scheme was always intended to help. Since the end result of the regulations is the implementation of the Young review, hopefully ensuring not only that pensioners receive their entitlement but that assets are maximised to offset taxpayer liability, I will not stand in the Government’s way. However, I thank the Joint Committee for raising the matter. So much statutory legislation passes through this House—indeed, we seem to have considered a never-ending flood of statutory instruments in recent days—that it is very hard to perform the necessary checks and scrutiny that they deserve. The Joint Committee on Statutory Instruments and our own Committee on the Merits of Statutory Instruments do a sterling job of handling all these orders, and they were quite right to raise the matter. The Minister in another place yesterday suggested that the regulations were the final piece of the jigsaw—the Minister here made the same point just now—and that, once they had been implemented and any minor changes made, it would be time for a consolidation of all the relevant legislation. Can the Minister expand a little on when he expects such consolidation to be possible? Pension regulation is always complicated. The matter is made much worse when it is scattered across multiple Acts and statutory instruments. How will the regulations impact on the government account book? It appears that the total pension liability of affected pensioners is in the region of £3.5 billion, and that an estimated £l.7 billion of assets remain in the schemes to be used to offset this cost. How will these remaining assets be accounted for by the Government? Public sector net debt conveniently does not include future liabilities—something for which this Government must be rather grateful, given their inability to bring public sector pensions under control. Will these assets therefore be counted against the mountain of debt that this Government have built up, while the liability is to be consigned to the accounting equivalent of a black hole? Finally, I note that, after several years of debate, the Government have finally accepted the last of the strong recommendations made by these Benches for the FAS to be rolled up into the PPF. On 6 June 2007, my noble friend Lord Skelmersdale, who was then the opposition spokesman for this department, won a vote on a large group of amendments to the Pensions Act 2007. The Government rejected those amendments when the Bill went to another place. There was a vigorous process of ping-pong, but we were unable to keep those changes in the Act. The amendments not only guaranteed pensioners under the FAS 90 per cent of their liability—rather than the considerably smaller proportion the Government were offering—but also suggested the obvious good sense of rolling the FAS into the PPF and putting it under the management of the PPF board. The Government accepted the 90 per cent figure a few years ago, and I am very pleased that the second of the recommendations in those amendments has now been accepted.