My Lords, it is the co-pilot again. I thank the noble Lord for tabling these amendments to Clauses 8 and 11. Clause 8 provides for the Secretary of State to give financial assistance to the single financial guidance body; Clauses 9 and 10 provide for those expenses to be recovered respectively from the levy on pension schemes and through the financial services levy.
At Second Reading and in earlier Committee debates, the noble Lord has questioned this funding framework and the money trail, suggesting that it represents a fundamental change in the way in which things are done currently and that it would radically alter the way in which people operate, particularly in respect of the services provided by MAS. I am not sure that the changes are that fundamental, but, in any case, we think that they are both necessary and beneficial.
One criticism of MAS made by the Farnish review was that it lacked accountability for the activities it delivered and the money spent. As the noble Lord suggested, we need to learn lessons from our experience with MAS. These funding clauses provide a basis for strong accountability and governance arrangements. We want the body to have a clear focus on undertaking its statutory functions. As happens now with the existing organisations, the body will prepare an annual business plan setting out its planned activities and the associated budget required to deliver its proposals. That plan will be discussed and agreed with the DWP.
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Each year, the Secretary of State will instruct the FCA to collect the financial services levy to meet the costs of debt advice as well as specific pensions guidance provided by Pension Wise. It will recover expenses for general pensions guidance from funds collected under the levy on pension schemes. Amounts to be collected under both levies are consulted on. The FCA consults annually on the amounts to be collected from the financial services levy and the DWP consults whenever the Government propose a change in the rates of the
pension schemes levy. It is right—I do not think this was questioned—that the body’s activities are funded by the financial services industry and pension schemes. These are the industries that benefit from people being more financially capable and able to make better-informed financial decisions.
Before moving on to the amendments, I correct a reference made in the first Committee session about non-departmental public bodies and reserves. My noble friend previously indicated that NDPBs could not hold reserves. Officials reviewed advice on this and found that there are circumstances where it is possible for some NDPBs to hold reserves. However, the single financial guidance body should not need to hold reserves. It will be expected to properly evidence and forecast its requirements. The DWP will routinely review the body’s financial performance against plans and work with the body to resolve any significant issues as they arise. As such, we would expect the body to remain within its agreed spending limits.
Returning to the noble Lord’s concerns, the DWP learned from its partnership with other arm’s-length bodies that for the stewardship system to work well there must be clarity about expectations and the approach to assurance and accountability. Accountability and governance matters will form the basis of the framework document agreed between the DWP and the body. In very exceptional circumstances, for example to protect delivery where demand unexpectedly and rapidly increases, it may be necessary for the DWP to fund specific pressures. However, the expectation is that any additional funding would subsequently be recovered from the appropriate levy. There is no plan for taxpayers more generally to meet the costs of the SFGB. Conversely, should there be any unspent levy not drawn down by the body, we would expect to reduce the requirement made against the appropriate levy in subsequent years. Money collected from the levies to fund the body cannot be spent on activities unconnected to that body.
On Amendments 64 and 65, Clause 8 enables the Secretary of State to give financial assistance to the body in any form in connection with its establishment and to enable it to carry out its functions. This assistance is subject to conditions set by the Secretary of State. Amendment 64 would place a requirement on the Secretary of State to publicly consult on any financial assistance he intends to provide for the single financial guidance body. It also seems to require the Secretary of State, prior to providing any financial assistance to the body, to consult on the body’s arrangements with its delivery partners. As I indicated earlier, the body will be required to prepare annual business plans setting out its planned activity and proposed budget requirements. Those business plans will be published. In preparing its plans and as part of its strategic function, which we discussed earlier, the body will need to work closely with a range of stakeholders, including its delivery partners, industry, the devolved authorities and the public and voluntary sectors. The body’s assessment of what activities it will need to undertake and the funding it will need to support them will be informed and evidenced by this collaborative work. As a result, further formal consultation seems unnecessary.
Further to Amendment 64, it is not appropriate for the Secretary of State to consult on the arrangements the body makes with its delivery partners. I think we discussed this on Amendment 47A. It is vital that the new body has the autonomy to design and deliver its services to obtain the best outcomes for the public. However, it will not operate in a vacuum. The services it provides will form part of a wider financial guidance and debt advice landscape. Where the body decides to delegate delivery of its guidance or debt advice functions and procure services from other providers, we would expect it to publish its requirements with adequate time for any prospective delivery partner to provide propositions. We will seek a response to the interesting question raised by the noble Lord, Lord Stevenson, on whether this comes under the European public procurement directives and whether others can bid. For these reasons, we do not consider that the proposals in Amendment 64 are necessary or appropriate.
Amendment 65 proposes that the body must monitor its use of the financial assistance it receives, publish the results of that monitoring and then use them to inform the consultation process proposed by Amendment 64. I appreciate what the noble Lord seeks to do here but, again, I do not consider it necessary. Paragraph 14 of Schedule 1 sets out requirements for the body to produce an annual report on the exercise of its functions. It requires the body to,
“keep proper accounting records, and … prepare a statement of accounts in respect of each financial year”,
while the Comptroller and Auditor-General—the NAO—must,
“examine, certify and report on the statement of accounts”.
The report and accounts must be laid before Parliament and the body will be required to publish them. The Public Accounts Committee can, if it wants to, look at how public money has been spent by public bodies and the DWP and Treasury Select Committees could look at the SFGB in the context of the merits of government policy, as the SFGB will support both DWP and HMT policy.
The principles for managing public resources and the requirements placed on departments and public bodies in accounting for expenditure are set out in HM Treasury’s Managing Public Money. It will be for the body’s accounting officer, which is usually the CEO, to ensure that there is appropriate control and accounting for the single financial guidance body’s business. For those reasons, we do not think it necessary to include further requirements as proposed by Amendment 65.
Amendment 66 concerns funding for debt advice delivered by the devolved authorities. Clause 11 provides for HM Treasury to recover the debt advice expenses of the devolved authorities from the financial services levy. This amendment would place a requirement on the Treasury to consult with relevant bodies involved in the provision of information, guidance and advice before instructing the FCA to collect funds in connection to the delivery of debt advice in the devolved nations. It may help the Committee if I set out the Government’s rationale for leaving the responsibility and, as a consequence, funding for debt advice with the devolved authorities.
During the course of the public financial guidance review, the Government consulted with the devolved authorities about proposals for reforming the public financial guidance landscape. As a result, the Government concluded that decisions on the use of funds for debt advice are best made locally, so that local knowledge is captured in decision-making. The devolved authorities currently deliver, among a broad range of things, guidance on housing and welfare reform. Leaving responsibility for debt advice with the devolved authorities will create opportunities for them to deliver joined-up services that reflect the needs of people in Scotland, Wales and Northern Ireland. This is a change from the existing arrangements but it has been welcomed by the devolved authorities, placing decision-making and accountability for the delivery of debt advice locally in each country.
HM Treasury officials and Ministers are working closely with their counterparts in the devolved Administrations to ensure that the devolved authorities will be appropriately resourced to provide for the delivery of debt advice in their nations. The Government expect to reach an agreement with the devolved authorities on the funding mechanism shortly. I am confident that this will place debt advice funding in the devolved Administrations on a secure footing in forthcoming years.
However, this does not mean that the new body and the devolved authorities will not work closely with each other for the benefit of people across the UK. As part of its strategic function and in exercising all its functions to achieve its objectives, the SFGB will be required to work closely with the devolved authorities. This will include sharing knowledge, insight and research as well as evidence of best practice. The amendment’s proposal that HM Treasury must consult relevant bodies before instructing the FCA to collect the funds in connection with debt advice delivery for members of the public in the devolved authorities is inappropriate. It would not be appropriate for HM Treasury to consult providers of debt advice on the funding settlement that it would already have reached with the devolved authorities.
When it comes to divvying up the costs—I think the noble Lord raised this issue—the body will be expected to monitor and report its spending against the separate expenditure headings. It is perfectly usual for arm’s-length bodies to have to apportion expenditure across multiple budget headings in this way. This will provide transparency about what expenditure is being met from different levies.
I thank the noble Lord for tabling these amendments. If I have not covered all the points, I will, of course, write to him, but they have given me the opportunity to explain in slightly more detail the money trail for the funding arrangements for the single financial guidance body. I am also grateful that this amendment has allowed me to provide the Committee with more detail on the funding arrangements for the provision of debt advice in the devolved nations. I hope that noble Lords are clearer about the provisions in Clauses 8, 9, 10 and 11 and that the noble Lord will withdraw his amendment.