---

20 Jan 2003 : Column 56—continued

Mr. Heald: The point is that the NAPF came forward with these ideas and, on this particular subject, stressed the urgency of this reform. It is true that the Government are consulting on this and several other reforms relating to wind-up, which they are entitled to do, as they are of some complexity. This issue, however, is one of injustice: what happened at ASW needs to be tackled.

20 Jan 2003 : Column 57

The Opposition are acting constructively. We are promising full support to the Government on this issue. Our motion deplores the lack of action on the issue. We are trying to spur on the Government on behalf of people in this country who have suffered already, and on behalf of those who will suffer if we do not make this change. We want a commitment to action today. I appeal to all hon. Members who care about this issue—and who have seen what happened in the cases of ASW, British Federal and others—for their support to get the Government to act. Let us urge them to action, with no more delays. We want this change now.

5.31 pm

The Minister for Pensions (Mr. Ian McCartney): I beg to move, To leave out from "House" to end and to add instead thereof:

"acknowledges the crucial contribution of the UK tradition of occupational pension provision; welcomes the range of measures in the recent Green Paper to strengthen that tradition and to renew the pensions partnership between employers, employees, the financial services industry and Government; supports, in particular, the promotion of occupational pensions as a means to recruit and to retain good staff through the employer task force and other measures; notes the proposal to give employees the right to be consulted on changes to an employer's pension scheme; further notes the Government's consideration of a range of options to bolster member protection in cases where schemes are wound up, including options for a fairer sharing of assets when schemes close, with more priority for workers closer to retirement or those with more years of contributions; believes that there should be 100 per cent. protection in cases of fraud; supports the appointment of a new proactive regulator to investigate fraud and maladministration; further notes the proposed £150–£200 million administrative savings which will encourage firms to open new schemes and keep existing schemes running; and further welcomes the establishment of the independent Pension Commission to assess how effectively the current voluntarist approach is developing and to make recommendations to the Secretary of State for Work and Pensions on whether there is a case for moving beyond that approach."

We welcome the opportunity to debate the extremely important issue of security in retirement for working men and women. The Government are already consulting widely about proposals in the Green Paper, "Simplicity, Security and Choice: Working and Saving for Retirement", published on 17 December 2002, on which there was a statement in the House. The Green Paper makes it completely clear that, as a Government, we are alert to and concerned about the difficulties that individuals face when their schemes are wound up, either because their employer becomes insolvent or because their employer decides to wind up their pension scheme voluntarily. As part of the process of developing the Green Paper, as the hon. Member for North-East Hertfordshire (Mr. Heald) acknowledged, I met a range of employees—and sometimes employees and management—in relation to a variety of schemes, which helped my deliberations in advance of preparing for the Green Paper.

I also welcome the belated acknowledgement by Opposition Members of the need for some form of consensus on pension policy. I am not sure that the hon. Member for North-East Hertfordshire will promote a general consensus, but there has certainly been a move forward in respect of some items raised today, which is to be welcomed. The shadow Secretary of State, the hon. Member for Havant (Mr. Willetts) wrote to my right hon. Friend the Secretary of State, and I confirm receipt

20 Jan 2003 : Column 58

of the letter. I am not sure that it arrived before it reached the press, but we have got it. I thank the hon. Gentleman for providing it, and my right hon. Friend will respond in due course. We welcome the capacity of Members to seek consensus on some of these issues.

Perhaps we will also have an opportunity in this debate to explore issues in relation to security in retirement, which we will deal with in some detail. At the same time, I should like to deal in detail with some of the issues in relation to consensus, as that gives the hon. Member for North-East Hertfordshire and his colleagues the opportunity to provide some insight as to where they will stand in the debate on the Green Paper.

Mr. Heald: Will the Minister give way?

Mr. McCartney: The hon. Gentleman has not heard what I have to say.

Mr. Heald: This is a two-and-a-half-hour debate about the winding-up arrangements. Is the Minister seriously suggesting that we will not have a full day's debate on the Green Paper?

Mr. McCartney: Do not be so silly. I have made it absolutely clear that I welcome debates in the House. The Government are committed to respond at the end of the consultation process and to provide opportunities for debate. In the context of the Green Paper, we welcome debate in the House with our colleagues and with Opposition Members. We want as much consensus as possible. Difficult as that may be on occasions, that is what drives us forward in terms of the Green Paper, and, I hope, its eventual outcome and the measures that flow from it.

In relation to that consensus, the hon. Member for Havant wrote on 7 March last year to the hon. Member for Sutton Coldfield (Mr. Mitchell)—who was a Parliamentary Under-Secretary in the previous Government—asking for proposals to be brought forward that would mean the privatisation of the basic state pension. He said that he had asked for a short note to be prepared on these issues. I have asked both hon. Gentlemen if they are prepared to put that note in the public domain as part of the process. The hon. Member for Havant has not indicated that that will occur, and the hon. Member for Sutton Coldfield, who is a member of the Select Committee on Work and Pensions, has said that it is up to the Conservative Front Benchers to decide whether we can have this information. It would be useful if the hon. Member for North-East Hertfordshire could tell us before the day is out whether his and the Conservative party's review on the funded alternative to the basic state pension is in place. The hon. Member for Havant described in his letter to the hon. Member for Sutton Coldfield the case for that alternative as a

"powerful and compelling one which you and I share".

We have a right to know what Conservative Members mean.

The protection that people receive if their pension scheme is wound up is very important, and the Government understand why recent events have made the members of some pension schemes question whether that protection is adequate. The hon. Member for

20 Jan 2003 : Column 59

North-East Hertfordshire quoted from the letter that the hon. Member for Havant wrote last week to my right hon. Friend the Secretary of State. That letter calls for better protection, in particular through changing the priority order affecting pensioners and scheme members when an insolvent employer is forced to wind up a scheme. The hon. Member for North-East Hertfordshire is correct in thinking that such a change could be made by secondary legislation—as indeed could certain changes involving wind-ups by solvent employers, and that is an area where scheme members are more clearly being made to suffer by their employers. However, he has chosen not to mention that point in the debate so far.

My right hon. Friend will obviously reply to the letter in due course and he will deal with the issues. The hon. Member for North-East Hertfordshire and the shadow Secretary of State were leading members of the previous Government and they know how difficult the issues are and why they have arisen. Indeed, the previous Government introduced the current legislation on the minimum funding requirement for scheme funding protection, and they also introduced the current member priority order on wind-up. The problems that my right hon. Friend and I are currently dealing with were created by the hon. Member for North-East Hertfordshire, but he did not even say that he was involved in the process of establishing arrangements that he now says—and rightly so—are leading to many people being screwed by their employers. He is responsible for that.

Mr. Heald: Does the right hon. Gentleman not agree that, if circumstances change, one has to change the rules? Will he comment on the figures that I gave from Maersk that show that, in 1997, the minimum funding requirement would have provided between 80 and 95 per cent. funding for a continuing worker. Now the figure is less than 50 per cent.

Mr. McCartney: The hon. Gentleman fails to answer the question. He refers to fluctuations, but he designed the rules to protect workers. However, they have been totally inadequate and have failed to do that. Therefore, the Government have taken steps to start the process of repairing the hon. Gentleman's chronic mistakes.

I must emphasise that the agenda is currently the subject of widespread consultation. Sensible as it is to soften the current cliff edge of the priority order payments between actual and deferred pensioners, the change that the hon. Gentleman particularly proposes could create losers as well as gainers. We would divide up the same-sized pension fund as before, but in a different way. It might be a fairer way, but it would not give everybody priority treatment. Therefore, we as a Government need to think carefully about the issue and to take account of the views put to us in the consultation process before we act. Throughout the process so far on the minimum fund requirement, we have sought to get consensus from all those involved. That is important on such a complex issue.

The hon. Gentleman condemned the Government's proposals for the minimum fund requirement. [Interruption.] Yes, he did—he said that they had been

20 Jan 2003 : Column 60

criticised and he criticised them. I know that he has only recently been brought back to the Front Bench from the wilderness but, last May, the hon. Member for Daventry (Mr. Boswell) initiated a debate on the Occupational Pension Schemes (Minimum Funding Requirement and Miscellaneous Amendments) Regulations 2002. He said:

"we welcome this broadly relaxing set of regulations. I hope that that relaxes the Minister and other Labour Members.


I believe in giving credit where it is due. My contacts in the Engineering Employers Federation, with whom I have dealt on a number of industrial relations matters over the years, refer positively to the regulations, saying that MFR interim reforms are a 'shot in the arm' for defined-benefit schemes. They say that the reforms respond to most of their wishes for the interim consultation order and that they are pleased with them."—[Official Report, First Standing Committee on Delegated Legislation, 14 May 2002; c. 3.]

The Government have tried to sort out the complex muddle created by the hon. Member for North-East Hertfordshire and his friends, and we have taken industry with us. Last March, there were a number of changes, including extending the deficit correction periods within which scheme funding must be made good. That was important for employers, as it removed the requirement for annual recertification in schemes that are fully funded on a minimum fund requirement basis. That was important for the security of the fund, introducing stricter conditions when an employer decides to wind up a scheme voluntarily and improving protection for pension scheme members.

---