Contribution
My Lords, I will speak to my Amendment 58. My remarks will apply to all the other amendments in this group, apart from Amendments 64 and 65, to which I will speak shortly, and Amendment 69 in the name of the noble Viscount, Lord Younger, which I also support.
My views on this group of amendments follow on from the comments I made earlier about jargon and trying to make pensions more member-friendly—more intelligible to the ordinary person. I believe that this is an extremely important area, having met so many members who simply do not understand what they are being told. The remarks from the noble Baroness, Lady Bowles, encapsulate some of that: if we cannot understand what we are being told in the communications, neither can members.
It was interesting to see that the original consultation suggestions of red, amber and green, which people would have at least a good chance of understanding, have instead been put into the Bill as “fully delivering”, “intermediate” and “not delivering”. Delivering what? We are talking about value; this is not Ocado or Amazon. The noble Baroness, Lady Warwick, in her remarks on the first group used the terms “good value” and “poor value” as if they were in the Bill—but they are not. My proposals in these amendments—to change the term “fully delivering” to “good value”, and “not delivering” to “poor value”—simply respond to what most people would expect this clause to tell them. I hope that the Minister understands that. Obviously, this is a probing amendment, so she may prefer other ways to express what we are trying to achieve here, but I hope that the intention behind these amendments will, in some way, feed into both the Bill and how the value-for-money framework will be considered when we develop it. It is a very sketchy framework at the moment.
I take the point about the consultation, but I have a related question. The critical players in moving away from the idea of cost to value, when assessing the merits of any particular scheme being used for the workforce in auto-enrolment, will be the employee benefit consultants. They advise the employers that they currently simply use cost as their major recommendation metric. They are not, in any way, properly scrutinised or regulated. Having done all this work to develop a value-for-money framework, will any attention be given to ensure that the people advising the employers on whether a scheme should be used will properly use the value-for-money framework that we will devise?
Amendments 64 and 65, which are also probing amendments, specifically address the “intermediate” rating, which is designed to have many levels or gradations. However, it seems that all of them could lead to scheme closure. They will all certainly lead to significant costs for a scheme rated “intermediate” due to the extensive reports and explanations that need to be given. My amendments simply seek to avoid significant extra costs, or the risk of scheme disclosure, for schemes that receive an “intermediate” rating on a shorter-term basis. It seems that it is almost possible that a “not delivering” rating will have a similar outcome to an “intermediate” rating because of how the Bill is phrased.
My suggestion is—and it is, as I said, probing and open for discussion and change—that you have to have an intermediate rating every year for, say, four years before the extensive requirements of this section kick in, so that in cases of up to five years you would need to notify the employer if you have changed from a good value to intermediate and the scheme would need to explain why this rating has been given and what plans it has for improvements. That would not be an extensive report, but it would obviously be helpful and would focus the minds of the scheme without the draconian implications that seem implied by the consequences of the intermediate rating as specified in the Bill. That brings me briefly to my support for Amendment 69, tabled by the noble Viscount, Lord Younger, and the noble Baroness, Lady Stedman-Scott, which probes what the penalties are, how they have been assessed and whether they are appropriate. I beg to move Amendment 58.