Viscount Younger of Leckie (Con)

My Lords, this is a busy group and I shall not detain the Committee by speaking to all the amendments therein, but I do want to welcome the amendments that have been tabled by other noble Lords, which will allow us to have a detailed and, I hope, fruitful debate and discussion on these important matters. Amendment 89 is a probing amendment. It would leave out new subsection (1B), which allows the Secretary of State, by regulations, to exempt descriptions of relevant master trusts from the approval requirements in conditions 1 and 2, covering both the scale default arrangement and the asset allocation approvals. The purpose here is to understand the intended scope of this power and the safeguards that will govern its use. As drafted, new subsection (1B) is very broad: it permits exemptions for “any description of relevant Master Trusts” and gives examples, including schemes designed to meet the needs of those with protected characteristics and hybrid schemes. I have three straightforward questions for the Minister at the outset. First, why is it necessary to take such wide exemption powers in the Bill, rather than tightly defining the circumstances in which exemptions may be granted? Secondly, how will the Government ensure that exemptions do not create a route by which schemes can avoid the central policy intent of this chapter: namely, improving outcomes through scale and an appropriate approach to asset allocation? Thirdly, can the Minister clarify whether these exemption powers are intended, in whole or in part, to apply to collective defined contribution schemes, or other non-standard money purchase arrangements? If so, what is the rationale; and if not, will she put that clearly on the record? I am mindful of the recent debate that we had in this Room on the CDCs. I hope the Minister can respond to those points. I know that the noble Baroness, Lady Bowles, will set out her reasoning for Amendment 92, so I do not wish to pre-empt or emulate what I know will be a very well-reasoned and informative set of remarks. But, as I have added my name to the amendment, I will briefly say that I welcome this proposal. It would put in the Bill a clear signal that a trust which provides “exceptional” value for money—as assessed by the regulator under its VFM framework—could be a legitimate basis for exemption from the new approval requirements. It seems sensible that trusts that already provide exceptional value for money should be trusted to carry on their good work under the established framework in which they are already operating. Amendment 100, in my name and supported by the noble Baroness, Lady Altmann, to whom I am grateful, seeks to provide helpful clarity, not to weaken regulation, by making clear that schemes offering genuinely specialist or innovative services can demonstrate that they meet the exemption. This is important because innovation in pensions does not always mean novel technology alone; it can include specialist provision for particular workforces, new approaches to member engagement or delivery models that better serve groups who might otherwise be poorly catered for. Without clarity, there is a risk that worthwhile innovation is discouraged simply because schemes are uncertain about how the exemption will be interpreted. The amendment also gives the Secretary of State the power, through regulations, to define “specialist or innovative services”. That provides appropriate flexibility, allowing the definition to evolve over time, while ensuring proper scrutiny and regulatory oversight. The amendment supports innovation without undermining member protection, and it gives both trustees and regulators greater certainty about how the exemption is intended to operate. I therefore hope the Minister will look favourably on it and speak to the point that is raises. Amendments 105 and 107 are intended to ensure that group personal pension schemes are treated fairly and proportionately under the new scale requirements in Clause 40. We are clear that scale alone is not always a reliable proxy for quality or value. There are group personal pension schemes that are smaller by design yet provide highly specialist or innovative services, for example, to particular sectors, workforces or member needs, and that deliver good outcomes despite not meeting a blunt asset threshold. Amendment 105 creates an additional route for relevant GPPs to meet the quality requirement, by allowing those that satisfy an innovation exemption not to be automatically required to meet the scale requirement. Amendment 107 provides the necessary framework for that exemption. It allows a GPP to demonstrate that it offers specialist or innovative services, and gives the Secretary of State the power, through regulations, to define what those terms mean. That ensures flexibility as the market evolves, while retaining appropriate regulatory and parliamentary oversight. I hope the Minister will see these amendments as a constructive way of balancing scale with innovation, competition and member outcomes, and I look forward to her response. Amendment 135 would revert the eligibility test for new entrant pathway relief under Clause 40 to the simpler principle-based formulation contained in the Bill as introduced. The purpose of the new entrant pathway is clear: to ensure that credible, innovative schemes are not locked out of the market simply because they are new and have not yet had the opportunity to build scale. As the Bill is currently drafted, that test has become more prescriptive, with a risk that genuinely innovative entrants could struggle to qualify despite having strong growth potential. By refocusing the test on whether a scheme can demonstrate strong potential for growth and an ability to innovate, this amendment would restore the original balance between safeguarding member outcomes and allowing healthy competition and innovation in the market. This amendment would simply ensure that the pathway for new entrants remains realistic and proportionate and is aligned with the policy intent. Finally, Amendments 165 and 166 are probing amendments about parliamentary scrutiny—back to that subject. Clause 41 gives the Secretary of State the power to make regulations setting out how the Pensions Regulator will assess whether master trusts meet the scale requirement and have sufficient investment capability. These assessments will have a direct bearing on which schemes can operate, which must consolidate and how the market develops over time. As drafted, the Bill provides that the first set of regulations is subject to the affirmative procedure, but all subsequent regulations may be made under the negative procedure. I think we have heard this before. Amendments 165 and 166 would remove that distinction, so that any regulations in this area would require affirmative approval. The question that these amendments pose is simple: if the initial framework is considered significant enough to warrant full parliamentary scrutiny, why should later changes, potentially just as consequential, receive a lower level of oversight? These regulations are not mere technical updates; they go to the heart of how scale and capability are judged, and therefore to the structure of the pensions market itself. It therefore seems reasonable that Parliament should retain the guaranteed opportunity to debate and approve changes of that kind whenever they are made. I look forward to the Minister’s explanation of why the negative procedure is considered sufficient for subsequent regulations and whether there is scope to strengthen ongoing parliamentary scrutiny in this area. I look forward to contributions from other Members of the Committee and particularly to the Minister’s response. I beg to move.