Government austerity to hit Nest and regulator

The pensions minister told PW any proposals Paul Johnson, Adrian Boulding and David Yealand come up with need to be affordable within the Department for Work and Pensions’ (DWP) short-term saving targets.

He added he would fight for the suggested reform package to go ahead if he is convinced any of the measures could provide significant future savings, even for an initial expenditure at odds with the Whitehall cuts programme.

But he warned he was not “outsourcing responsibility for policy-making” and would reject any of the panel’s recommendations he believes are too expensive, especially in light of the savings regime.

“A lot of our reform is about simplification,” he said. “Reform doesn’t have to cost more money. The terms of reference of the review are that it has to give value for money for taxpayers.

“But the Treasury does have a concept of ‘spend to save’. Spending on some things, like certain IT projects for example, can make them better and save money, and that’s something that we will look at.”

The Pensions Regulator is also set to have its budget reduced, despite an acceptance by Webb it is struggling to meet the costs of its existing responsibilities. It is also set to take on a portion of the work currently done by the soon-to-be-disbanded Financial Services Authority.

He also admitted he receives frequent complaints from schemes about the regulator’s dealings with them, but backed its way of working.

“People write to me a lot to say it [the regulator] has been really tough on them, but I’d be more worried if I never got those types of letter,” he said.

“Its role is protecting the interest of the Pension Protection Fund (PPF), and more schemes in the PPF means the industry ends up footing the bill,” he added.

“But all public bodies, including the regulator, will be facing demands for efficiency and we will be trying to square that circle.”