Viscount Thurso (LD)

My Lords, I am not entirely certain that I am wholly in favour of the concept of a clause at the beginning of a Bill that sets out its purpose in the way that the noble Viscount has set down, but I appreciate the opportunity to speak to one of the points that it makes. First, I am not sure whether it is a declarable interest but I will declare it anyway: I am a trustee of the Parliamentary Contributory Pension Fund, for which I do not get remunerated—none of us does. As far as I am aware, nothing in the Bill affects that scheme, and therefore I am declaring it just in case. Secondly, I apologise for not having been here at Second Reading. I had to attend something extraordinarily rare: a hospital appointment in Inverness. I am afraid that not even I could get from Inverness to here in the required time for the Second Reading. I apologise for that, but I have read the Second Reading debate and was very taken by what was said. The specific point that I want to come to is the point that the noble Viscount makes in proposed new subsection (1)(h) and his reference to “responsible and innovative use of pension scheme surplus”. What does he mean by an innovative use of the surplus? When the Minister comes to respond, will she say what the Government’s purpose was behind what they are doing on surpluses? I know we will come to that in much greater detail later on. It seems to me that two things are behind this. One is doing something with a surplus, which begs the question: how much of a surplus should actually be taken? Also, how is that surplus calculated, bearing in mind that a range of actuarial factors—including the strength of the employer covenant, the level of risk of the investment, the actuarial factors regarding life and death, and so on—go into making up a surplus? All those factors can, at each valuation, move the surplus considerably. Therefore, how much is considered surplus surplus, as it were, as opposed to prudent management by the trustees? The second thing is, I think, the underlying thought that the money given back to the employer will be used for investment. I see no evidence to suspect that will be the case. I have a horrible suspicion that, although we might have a desire to have more money for companies to invest, with the best will in the world, it is more likely that they will take the money, run it through the P&L and use it to pay dividends. Those are the two issues I am looking at: the quantum of surplus and, in general terms, the principle behind that; and, secondly, the extent to which the Government expect it to be used for investment. If they do expect it to be used for investment, how do they hope that will happen?