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20 Jan 2003 : Column 60continued
Mr. James Arbuthnot (North-East Hampshire): The right hon. Gentleman has always taken a close interest in pension issues. I remember that he did so when I was pensions Minister. What points along those lines did he make when those regulations were introduced?
Mr. McCartney: I do not believe that I ever discussed those regulations[Interruption.] I was in fact on the Opposition Front Bench talking about fiddled figures and unemployment. I talked about fat cats when the Tories did not want to introduce the national minimum wage and refused to do anything about youth unemployment. My gaze was therefore on another set of big issues that the Government, thank goodness, have put right.
One thing is quite clear. Even if the Opposition's decisions were well intended, they were an abysmal failure, and it is the present Government's watch to resolve that problem. At the outset, the hon. Member for North-East Hertfordshire said that he wanted consensus. If he took a bit of responsibility for the problem, I would take the consensus thing a bit more seriously.
Mr. Heald: Is the right hon. Gentleman seriously denying that the cost of securing pensions has become far more expensive under his Government as yields have fallen? There is far less money to pay for pensions as the Chancellor has taken £5 billion a year in tax, but the right hon. Gentleman is saying that we should leave things as they are and not change them at all. The
Mr. McCartney: I thought that the hon. Gentleman was going to make an incisive point, but he made the same point during his opening remarks and on previous occasions. The abolition of the dividend tax credit, he said, was part of an overall package of reforms. He failed to answer when asked about that, so may I advise him of what the hon. Member for Havant said when asked whether he would reintroduce the dividend credit at the end of last year? In The Observer on 24 November, he said:
There will be a wide-ranging consultation on the Green Paper with employers, industry experts and the unions, who will be asked about the themes of extending working lives, tax and savings, and the new regulatory approach. In addition, my colleagues and I will hold seminars on a number of specific issues in the Green Paper. There will be technical workshops at which officials and pensions experts will discuss in detail specific changes, and there will be regional events in England, Scotland, Wales and Northern Ireland at which grassroots views will be sought.
Mr. Webb: Much has been said about consensus. At those workshops, it would be useful on a technical level to engage all the Opposition parties. Is the right hon. Gentleman willing to extend that invitation to us?
Mr. McCartney: My right hon. Friend the Secretary of State will write to Opposition parties about that, because it is important that we get this right. There is nothing to be gained either intellectually or politically in not involving Opposition parties as far as possible in these complex issues. Having given that commitment, correspondence from my right hon. Friend will be forthcoming.
Chris Grayling: Will the Minister give the House an assurance that while that process is taking place, he will make representations to the Treasury to ensure that the Inland Revenue does not continue the process of looking at the specific rules that apply to pension funds and pension providers? That has been revealed in the media on a number of occasions in recent weeks, and the suggestion has clearly been that the Revenue is looking for more, rather than fewer, ways to raise money from pension schemes and pension providers.
When we came to power, fewer than 2 per cent. of pensions mis-selling cases had been satisfactorily resolved. We immediately sought to accelerate the process by naming and shaming the worst industry performers. By the end of last year, more than 99 per cent. of consumers with mis-selling claims had been compensated. Total compensation has reached £11 billion, and tough disciplinary action against laggard performers has resulted in £11 million of fines. Not a moment was spent by the Conservative party in supporting that activity or protecting pensioners ripped off by the policies of the last Tory Government.
Mr. Heald: On a point of order, Mr. Deputy Speaker. Was it in order for the right hon. Gentleman to criticise me for not speaking about the mis-selling of pensions from the 1980s, when the subject of the debate is winding-up arrangements?
Mr. McCartney: I am interested to discover that the hon. Member for North-East Hertfordshire is so sensitive. I was not speaking just about today. I was speaking about our attempts since 1997 to resolve the debacle. We got no support from the Opposition, even though it was they who created it in the first place.
Mr. McCartney: I have dealt with that. By the end of my remarks, the hon. Gentleman will find that our proposals for consideration are far more comprehensive than what he has to offer. He raised issues about genuine protections, and I shall deal with those.
The new kind of regulator will be an important step forward. As good as Occupational Pensions Regulatory Authority wasit was introduced by the previous Governmentin many cases it was not sufficiently proactive and merely reacted to situations. Following the quinquennial review and the Green Paper, we decided to introduce a new regulator that would be risk-focused and flexible, that would target resources on schemes and weaknesses causing the greatest stress to scheme members, and that would produce quality advice and guidance to whistleblowers to help to identify materially significant breaches. We wanted to change its role so that it would be proactive rather than reactive.
We will introduce new rights to information and consultation. When changes to pension schemes are proposed, we want to ensure that better information is available so that employees' choices are easier to understand. We are setting up an employers taskforce to actively involve employers and encourage them to highlight the value of the pensions that they provide. We are encouraging all employers to provide better information to help to extend pension provision and take-up by employees.
Mr. Weir: I am interested in what the Minister is saying about information. That may be at the core of the problem. The pensions mis-selling scandal, the Equitable Life debacle and various other matters have seriously undermined the public's belief in pensions. Do the Government have specific proposals to rebuild that faith in the pension system? Without that, we will get nowhere in reforming the system.
Mr. McCartney: I could not agree more with the hon. Gentleman. That is why we established the Penrose inquiry into Equitable Life. The Government will study its report closely. That was also the purpose of the Green Paper. One of the key elements in restoring faith in the pension system is improving the protections offered by the system that we inherited. The fair sharing of assets
Mr. McCartney: I hope the hon. Gentleman will not mind if I do not give way. Numerous colleagues want to speak. We will have many opportunities to debate these matters, and I have given way six or seven times.
We want to ensure that when a scheme winds up, the assets are divided among scheme members as fairly as possible. I met my hon. Friends the Members for Cardiff, West (Kevin Brennan) and for Sittingbourne and Sheppey (Mr. Wyatt) and their constituents who have been affected by the winding up of the Allied Steel and Wire pension scheme. I know that the statutory priority order introduced by the Pensions Act 1995 and associated regulations are inadequate. We deal with that issue in proposals set out in the Green Paper. For the record, it was the hon. Member for North-East Hertfordshire who was the Minister who introduced the regulations.
In the Green Paper, we are consulting on whether people who are approaching retirement age should be given higher priority when a scheme's assets are distributed on wind-up or whether those who have been members of their pension scheme for a number of years should be given higher prioritya proposal that my right hon. Friend the Member for Birkenhead (Mr. Field) has been promoting. We are also consulting on whether there should be fairer sharing of assets between those with larger and smaller pensions when a scheme winds up. That might involve setting a cap on the level of pension that those with the highest pensions might receive if limited assets are available in the scheme. That deals with one of the points made about fat cats who try to use short-term gain to get bigger access to the assets of the scheme to the detriment of the workers.
However, we recognise that, while changes to the priority order could mean that some people get more protection, that would be to the cost of others who receive less. We will therefore carefully consider the responses to the consultation. Only then will we decide what changes to implement and when. I am due to meet members of the all-party group on steel to discuss recent developments in pension provision in the steel industry and their concerns about protection of scheme members' rights. I look forward to hearing their views.
The statutory priority order can be modified by secondary legislation and we will consider how best to implement any proposals in that regard. On fairer sharing of assets and amending the priority order of creditors, when pension schemes such as those of Allied Steel and Wire or United Engineering Forgings are wound up because their sponsoring employer becomes insolvent, they are categorised along with unsecured creditors at the bottom of the list of creditors that can make a claim on an insolvent employer's estate. We are considering moving pension schemes up the order of priority for payment, possibly by creating a new a category of creditor that would give pension schemes higher priority than they have at present. That is another recognition of what was said in the discussions that I had before the Green Paper's publication.