§ 298 Clause 168, leave out Clause 168 and insert the following new Clause—
§ "Amounts to be raised by the pension protection levies
§ (1) Before determining the pension protection levies for any financial year after the initial period, the Board must estimate an amount which will reimburse as nearly as possible its total costs of administration and must determine the rate of scheme-based pension protection levy to raise that amount.
§ (2) The Board must also estimate the further amount to be raised by the risk-based pension protection levy it intends to impose.
§ (3) The Board must impose levies for a financial year in a form which it estimates will raise an amount not exceeding the levy ceiling for the financial year.
§ (4) The risk-based pension protection levy must amount to at least 80% of the total amounts estimated to be raised by both levies.
§ (5) The Board must notify the Secretary of State of its estimates and the levies it intends to impose at least three months before the beginning of each financial year in which those levies are to be imposed.
§ (6) In order to vary these proposed levies, the Secretary of State must lay regulations before Parliament before the start of the relevant financial year.
§ (7) For the first financial year after the initial period, regulations may modify subsection (3) so as to provide that the reference to the levy ceiling for the financial year is to be read as a reference to such lower amount as is prescribed.
§ (8) For the second year after the initial period and for any subsequent financial year, the Board must impose pension protection levies in a form which it estimates will raise an amount which does not exceed by more than 25% the aggregate of the amounts estimated under subsections (1) and (2) in respect of the pension protection levies imposed for the previous financial year.
§ (9) The Secretary of State may by order substitute a different percentage for the percentage for the time being specified in subsection (8).
§ (10) Before making an order under subsection (9), the Secretary of State must consult such persons as he considers appropriate.
§ (11) Regulations under subsection (7), or an order under subsection (9), may be made only with the approval of the Treasury.
§ (12) In this section "risk-based pension protection levy" and "scheme-based pension protection levy" are to be construed in accordance with section 166."
§ 298A The Commons disagree with the Lords in their Amendment but propose the following Amendments in lieu—
§ Page 116, line 17, leave out "levy or"
§ 298B Page 116, line 19, leave out "levy or"
§ 298C Page 116, line 20, leave out "a levy or"
§ 298D Page 116, line 23, leave out from "The" to end of line 24 and insert "pension protection levies imposed for a financial year must be"
§ 298E Page 116, line 25, leave out "50%" and insert "80%"
§ 298F Page 116, line 28, leave out subsection (4)
§ 298G Page 116, line 32, leave out "subsections (2) and (4)" and insert "subsection (2)"1534
§ 298H Page 116, line 36, leave out "a pension protection levy or"
§ 298I Page 116, line 39, leave out "levy or"
§ 298J Page 116, line 42, leave out paragraph (a)
§ 298K Page 118, line 38, leave out "and (4)"
§ Baroness Hollis of Heigham
My Lords, I beg to move that the House do not insist on its Amendment No. 298 to which the Commons have disagreed and do agree with the Commons in their Amendments Nos. 298A to 298K in lieu thereof.
The other place was concerned, first, that the intention of Amendment No. 298, proposed by the noble Lord, Lord Higgins, seemed to be that the scheme-based pension protection levy should be used to collect administration costs of the PPF. We considered it essential that a clear distinction was drawn between the PPF income used to pay compensation and that used to cover administration costs. That approach is in accordance with the funding principles of other non-departmental public bodies.
Secondly, the amendment required the Secretary of State to lay regulations before Parliament before any changes were made over the proposed levies that the PPF board should collect in any given year. We do not think it right that Parliament should have to approve changes to the amount collected through the levies. It is important that the PPF operates at arm's length, as we see from the experience of the problems faced in the States.
Thirdly, the original amendment brought forward the restrictions on the levy ceiling and the 25 per cent rule controlling the amount collected, so it would have applied during the transitional period. Had the hoard been constrained in that way, its only option might have been to collect more than necessary to meet its liabilities for that year, in order that it was able to collect enough to meet its liabilities in subsequent years.
In addition to those provisions, the new clause inserted by Amendment No. 298 also required that the amount to be collected by the board via the risk-based levy be raised to 80 per cent of the estimated total to be raised. That was the only aspect that we fully debated. We agree that risk is very important in setting the levies. We acknowledge the concerns raised on Report. As a result, the other place has agreed an amendment in lieu that meets the concerns of Opposition Peers that the board still be required to collect at least 80 per cent of the levies through the risk-based pension protection levy.
I hope that we have now responded appropriately to noble Lords' concerns, and that they will not insist on the original Amendment No. 298, except in terms of the amendments in lieu, which meet the substantive point raised but clear up some of the minor and highly undesirable consequences.
Moved, that the House do not insist on its Amendment No. 298 to which the Commons have disagreed and do agree with the Commons in their Amendments Nos. 298A to 298K in lieu thereof.—(Baroness Hollis of Heigham.)
§ 6.15 p.m.
§ Lord Higgins
My Lords, we debated the issue at very considerable length at earlier stages of the Bill. The core of our concerns—it has had widespread support outside—was that the risk-based element of the way in which the levy was raised should he at least 80 per cent, subject of course to the amendment that we discussed a moment ago on small companies. We also felt that there were a number of other issues, such as to what extent the Secretary of State should be involved in the maximum amount of the levy.
I am very glad that the essential item, on which we voted—the 80 per cent argument—has been accepted by the Government. In turn, I am prepared to accept the amendment agreed in another place to eliminate the other parts of the proposals, to which the Government objected. On reflection, they were probably right. I again welcome the fact that we have made progress in improving the Bill.
§ Lord Oakeshott of Seagrove Bay
My Lords, I am again delighted that the Government have responded to the concerns expressed from these Benches and the industry, and that we have an agreed and, I hope, workable solution.
§ On Question, Motion agreed to.