For the potato salad: 1) Put the potatoes in a large steamer basket over boiling water and steam for 20 minutes, or until they are cooked though, but the skins remain intact. Set them aside until they are cool enough to handle.
2) Quarter the potatoes and put them in a large bowl. Add the peppers and the pesto and toss gently to combine. Season with salt and pepper, to taste, and chill.
For the basil pesto: 1) Toast the pine nuts in a dry pan over a medium heat until fragrant and golden brown, stirring frequently, about 3 minutes.
2) In a food processor, process the pine nuts and the garlic until minced. Add the basil, parmesan cheese and lemon juice and process until finely minced. With processor on, slowly pour the oil down the food chute. Process until well blended. Season with salt and pepper, to taste.
Cook's note: This recipe leaves you with extra pesto. I like to freeze leftovers in an ice cube tray.