My Lords, I shall speak also to Amendment 14 as well as to my clause stand part Motion.
Amendment 18 is a probing amendment whose purpose is to enable discussion of the powers given to the Secretary of State to make regulations altering various key aspects of the scheme. Clauses 18(4) to (8) set out what those powers are. The Government’s policy brief discusses Clause 18(4), and it is worth quoting what it says:
“Concern has been expressed that the Government could therefore use regulations to make changes to the basic principles underpinning a CDC scheme’s financial model, potentially leaving it financially unviable.”
It goes on:
“Concern has also been expressed that changes to the regulations under this clause could have the effect of re-designing an existing collective money purchase scheme—potentially years down the line—by overriding what the scheme rules say about the methods and assumptions to be used in calculating benefits. If this happened, it could undermine the actuarial modelling on which the initial design was based and change the deal offered to members when joining the scheme. It can also affect the intergenerational balance of the scheme.”
The Government’s response to this very serious set of concerns is in three parts, none of which seems to be particularly compelling. The first is to deny that any of this is the purpose of the power to make regulations, but Mandy Rice-Davies would have known to how to respond to that. The second is to say that the
Government will expect Parliament to reject any attempt by a future Government to use them in such a way, but these powers will be exercised by secondary legislation so how will Parliament stop or modify that? What precedents can the Minister point to there? The third response by the Government in support of these powers is that they will consult before using them. None of these arguments strikes me as particularly convincing. The powers granted are enormously wide and unconstrained. Their existence would certainly not add to confidence in the stability of the scheme.
There is surely a more proportionate way of doing what is required. The Government say that without these powers, there is a risk that they would not be able to stop schemes operating on principles that run contrary to the basic principles underlying the provisions in this part of the Bill. If that is the case, surely it would be simpler and proportionate to set out in the Bill these basic principles and that compliance with them as a condition of the scheme’s authorisation. I look forward to the Minister’s response to that proposal. If the Government insist on proceeding with these wide and unconstrained delegated powers, I am sure that the House will want to return to the issue later in our discussions.
I turn to Amendment 14. The Government’s policy brief describes Clause 47 as allowing the Secretary of State to make regulations using the affirmative procedure to remove the restriction on CDC schemes for single employers or connected employers. This would open CDC schemes to multiple employers and master trusts. The DPRRC and the Constitution Committee have both examined the powers in the clause, and the Constitution Committee agrees with the DPRRC that the power granted in it is inappropriate. It notes that the clause is skeletal and contains a broad Henry VIII power. In paragraph 28 of its report on the Bill, the DPRRC states:
“The fact that the Bill currently prohibits multiple-employer collective money purchase schemes suggests that such schemes may give rise to significantly different regulatory issues from those presented by single employer … schemes which are currently allowed under the Bill. This is … supported by the fact that clause 47(3) to (5) gives the Secretary of State such wide powers to make changes to the provisions that govern single employer schemes”.
In the very next paragraph of its report, the committee says:
“Given this background, we consider it is inappropriate to leave the provisions for regulating multiple-employer collective money purchase scheme to subordinate legislation; and, therefore, that the delegation of powers by clause 47 is inappropriate”.
Subsection (5), the subject of my amendment, is a naked Henry VIII power, including as it does the delegated powers to
“(a) modify a provision of this Part, or any other enactment, as it applies to relevant schemes; (b) amend, repeal or revoke a provision of this Part or any other enactment.”
This kind of unfettered licence to amend, repeal or revoke primary legislation by statutory instrument has always been unattractive to this House. My amendment proposes to remove subsection (5) but I ask the Minister to consider withdrawing the whole clause. As the DPRRC and the Constitution Committee have said, if we want to legislate for multiple employer CDC schemes then it should be via primary legislation, not via the use of secondary legislation and Henry VIII powers.
I have also given notice of my intention to oppose the Motion that Clause 51 stands part of the Bill. I have done this so that we may ask the Government about their use of delegated legislation in Part 1. Clause 51 contains very wide-ranging powers, which
“may be used … to make different provision for different purposes; … to make provision in relation to all or only some of the purposes for which it may be used … confer a discretion on a person … make consequential, supplementary or incidental provision … make transitional, transitory or saving provision”.
The last two are probably okay—they seem boilerplate, to have common-sense meanings and to be properly restricted—but the first three powers are very wide. What exactly is it to confer discretion on a person? What does that allow in practice and what limitations are there to it? It is rather attractive but, I would be grateful if the Minister could explicitly answer those three questions when she replies, as well as explaining why the first two very wide powers are needed at all.
The Government have attempted some kind of explanation of Clause 51 on page 13 of their policy briefing note. It states:
“Clause 51 … (2) allows the regulations made under Part 1 to make different provisions for different purposes.”
That is not an explanation; it simply repeats the text of the Bill. I take it that what is meant is that the regulation-making powers set out in Part 1, in their proper context and given their proper purpose, may be amended to encompass different purposes in any way the Government might choose. Why is that necessary? The Government try to explain by way of example. They say:
“This will allow us to make different regulations to provide for different CDC scheme structures if necessary. They cite by way of example Clause 51(2) would allow us to introduce a different regulatory framework for the way in which multi-employer CDCs must calculate and adjust benefit values compared to single-employer CDC schemes should that prove necessary.”
This power already explicitly exists in Clause 47(3) to (5), which we have already discussed. As we have noted, both the Constitution Committee and the DPRRC thought these powers inappropriate. If they were inappropriate in Clause 47, they are no less inappropriate in Clause 51.
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The Government give only this one example of the possible use of the powers in Clause 51. They could equally be used in unrestricted ways anywhere in Part 1. Can the Minister explain why it is necessary to have such wide-ranging and unrestricted powers in the Bill? As it is, most of the delegated powers in Part 1 are vague and undefined and await consultation before taking definitive legislative form, but at least they are tethered, no matter how loosely, to some purpose or objective. Clause 51 powers are not tethered, and it is hard to see why they are in the Bill.
Clause 51(4) and (5) helpfully set out the meaning of negative and positive resolution procedures. This is a helpful reminder given the large number of uses of both in Part 1. However, the use of the powers has another feature noted by the DPRRC in paragraphs 11 to 14 of its report. This is the use of first-time affirmative procedure, in which the first exercise of the power is subject to the affirmative procedure and subsequent
uses to the negative procedure. This applies in particular to Clauses 11 to 14. The Government have set out what they consider to be the reasons for the first-use affirmative procedure. The DPRRC rehearses the reasons in paragraph 13 of its report, and it was not convinced. It concludes:
“The scope of the powers remains the same on the first and subsequent exercises, and therefore there is nothing in principle to prevent the changes made by subsequent exercises of a power from being as significant as the provision made on the first exercise. In the light of this, the House will wish to look carefully at the Government’s arguments in each case as to why they consider it likely that changes made on subsequent exercises of a power will not be of such a nature as to require the affirmative resolution procedure to apply.”
I strongly urge the Minister to take heed of the advice of the DPRRC and to let the House have a schedule of the appropriate arguments for each proposed first-use affirmative. There are many of these cases. Rather than letting us have a schedule of the arguments, perhaps it would be better and simpler for the Minister to agree to replace all first-use affirmative procedures with straightforward affirmative procedures. I beg to move.