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20 Jan 2003 : Column 71—continued
Maria Eagle: While the hon. Gentleman is right about that, does he accept that the regulator was saying that a determined fraudster or criminal could get round most of the rules that anybody could devise?
Mr. Webb: That is absolutely true. Indeed, the Maxwell case showed how an imaginative fraudster could get money out of a pension fund. My hon. Friend the Member for Newbury was pointing out, however, that we need to do more to ensure that there is proper scrutiny of funds before things get out of hand. That means prevention rather than cure; it means amber lights, warnings and trigger mechanisms. That is what I am driving at. There needs to be a much more effective system of spotting problems before things go wrong. Today's debate, however, is essentially about how we bail things out when they have gone wrong.
A further key issue is how we ensure that, once we have this pot of money, a bigger proportion of it goes to the pensioners and workers, and a smaller proportion to the financial institutions that wind up the schemes. We have heard of cases in which independent trustees of the company who are put in to wind a scheme up have charged £100 to answer the inquiries of The Daily Telegraph. It is outrageous to charge £100 to deal with a media inquiry. The Minister described himself as a socialist the other day. I wonder whether he has ever thought of nationalising this process.
Lynne Jones: Will the hon. Gentleman give way?
Mr. Webb: I will not, because I have nearly used up all the time that I had planned to take.
Mr. Alistair Carmichael (Orkney and Shetland): She is the other one.
Mr. Webb: The other socialist, yes.
There is clearly a serious issue here. Once we have reached the stage at which there is not enough money in the pot, the money must not—for goodness' sake—go to pay the financial people. It must go to the pensioners.
Some schemes take decades to wind up. For example, I have known pension schemes to take 30 years or more to be wound up. That is totally unacceptable. What are the Government doing to make wind-ups a great deal quicker? In our view, scrapping contracting out would make the whole process a good deal easier. What are the Government doing about that?
The scope of the motion is extremely limited. It is about carving up an inadequate pot more fairly. We do not have a problem with that, but that is only a small part of the process. My biggest concern is that the Government have produced yet another Green Paper that will further delay any effective action in relation to the much wider canvas that I have painted.
I shall cite one example of just how slow and indecisive the Government have been. Back in 1993, when the Goode committee was examining these issues,
it considered what is called a central discontinuance fund—the idea involves a pot of money that can be dipped into when a fund goes wrong—but decided that that did not represent a viable solution. In September 2000, the Department responsible for social security implemented a consultation to consider a central discontinuance fund. In March 2001, the response to the consultation found that
- "very few were attracted to the idea"
- "an alternative approach would be to introduce an insurance scheme, perhaps a central discontinuance fund, providing pensioners and non-pensioners with greater protection"
- "we would welcome views on these options".
Mr. Deputy Speaker (Sir Alan Haselhurst): Order. May I say to the House that, if hon. Members impose on themselves a voluntary limit of about eight minutes, it might be possible for me to call everyone who is seeking to catch my eye.
6.18 pm
Mr. Frank Field (Birkenhead): I also wish to add a sense of urgency to today's debate. All hon. Members have been lobbied by steelworkers who have recently lost not merely their jobs and the prospect of a decent pension but, often, their homes as well, in that they will have inadequate income to complete their mortgages. They, and many others among our constituents who have recently been affected by the closure of their pension schemes, are looking to this debate to see what action the Government might introduce in the short term to abate the suffering that they are experiencing.
If the parliamentary answer that my right hon. Friend the Minister for Pensions gave me the other day is accurate, it is clear that, since we came to power in 1997, a large number of our constituents have already been affected by the closure of their pension scheme. It would be a foolish person who thought that the situation was going to become easier over the next few years, rather than the opposite. Of course, one applauds the way in which my right hon. Friend has approached this debate, as well as his enthusiasm for the whole issue of pensions and his keenness for consultation, but I hope that he will take back to his colleagues the fact that the House does not think that consultation alone is going to be adequate. There comes a point at which the consultation has to cease and action has to begin.
The hon. Member for Northavon (Mr. Webb), who spoke for the Liberal Democrats, was right to point out that some ideas in the recent Green Paper go back at least to the Goode committee, and many of the others, which are presented as a novelty, were in the 1998 pensions or general welfare reform Green Paper. So, merely to say that one is consulting on them is clearly not adequate, but neither is the Opposition stance.
I suggested to the Conservatives that, if they are serious about the plight of those who find themselves in pension schemes that they were made to join but which they see winding up, they could be the first Opposition in the history of this Parliament to dispense with show debates and demonstrating a great deal of anger about the Government's lack of action, and introduce legislation themselves. In place of a further debate on the serious decline of occupational pensions, might they not consider introducing legislation? If they are interested in introducing legislation on winding-up arrangements, may I describe to them the Bill that my hon. Friends and I have already introduced?
Mr. Brazier: The right hon. Gentleman knows the considerable respect in which he is held by the House and, indeed, by the Opposition. He will recall that in the previous Session we tried to assist him with every possible co-operation on his measure to take housing benefit from unruly, antisocial neighbours, but his colleagues on the Front Bench wrung their hands while the Liberal Democrats talked it out.
Mr. Field: The good thing about today's debate is that, this time, the Liberal Democrats want to support a Bill that goes beyond merely dividing up the sums. In the three minutes that I have left, may I describe to the House the Bill that my hon. Friends the Members for Cardiff, West (Kevin Brennan) and for Sittingbourne and Sheppey (Mr. Wyatt) and I have introduced?
First, while we accept the Liberal Democrats' point that the current way of dividing funds is inadequate, there ought to be greater weighting to the contributory years that people put in a scheme rather than to their age. Of course there must be protection for pensioners, but clearly it is not right that those who have been in a scheme for 30, 35 or 40 years are pushed down the list by somebody who may have been in it for only five, but who is retired and so begins to scoop their whole pension entitlement.
So, the Bill's first aim is to have a winding-up formula based on contributory years rather than age. Its second aim is to deal with those legal and professional advisers who milk such schemes. All of us know examples involving our constituents or those of other Members in which the professional fees have taken a fifth of the pension savings. We cannot allow that to continue.
Lynne Jones: Will my right hon. Friend give way?
Mr. Field: No, no. We all want to get into the debate.
The Bill's third clause says that while we may have proposals to protect funds in the future, some of our constituents have been badly affected already. What are we going to offer them? The Bill proposes that we introduce a gentle levy on orphan funds, which are funds that the insurance companies have built up,
sometimes over 200 years, involving people who had policies, but died without claiming. Surely those who, as the hon. Member for Northavon said, were made to join pension schemes should have some stake in those unowned assets, which we should not allow to be of book value in the insurance companies.Looking to the future, the Bill's fourth clause would introduce an insurance scheme for those who do everything required of the pension scheme to pay their contribution, but find that the funds are not there to pay that entitlement. On that, we need to act collectively, hence the clause. Clause 5 asks the Secretary of State and his colleague the Minister to introduce within a time scale a measure on where we should put the pension debt as against a company's other debts.
Although my hon. Friend the Member for Brent, North (Mr. Gardiner) has left the Chamber, we might say that putting pensioners up the list of debtors would, for example, make the banks close companies more quickly. My view is that, as in the recent closure of the steel fund, the banks make a careful calculation. They had recently lent to the company, and they thought, "If we push it out of business now, we will get all our money back. We don't want to continue to take a risk." In fact, had the banks been pushed down the list, that company might not have been pushed into liquidation.
I make a plea to my right hon. Friend the Minister for Pensions and to the Opposition: there are many issues in the Green Paper and we need detailed discussion, but increasingly, over the next couple of years in the run-up to the general election, many more of our constituents will be affected by the closure of their pension scheme, and we could legislate this year.
Our Bill is coming back to the House in early March, and it would be wonderful if the Government took it over and rewrote part or even lots of it. Let us have fewer crocodile tears from the Opposition. Let them say that they will use their time to give a Second Reading to the Bill, which my hon. Friends have already introduced. Most of the people affected so far come from constituencies represented by Conservative Members, so most of the Bill's supporters are Conservative Members.
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