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6.30 pm

Mr. Andrew Mitchell (Sutton Coldfield): I cannot quite bring myself to congratulate the Liberal Democrats on the motion, but the hon. Member for Northavon (Mr. Webb) is owed some credit for the way in which he opened the debate. I draw the House's attention to my entry in the Register of Members' Interests.

Many of us are so concerned about the current pension crisis that we have even considered deploying the arcane parliamentary procedure of tabling a motion, to be debated on the Floor of the House that would allow us to cut the salary of the Minister for Pensions. As there is no Minister for Pensions, however, that would be otiose.

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For 60 days there has been no such Minister. As was pointed out by my hon. Friend the Member for North-East Hertfordshire (Mr. Heald), Labour's priorities are clearly revealed by the fact that, having replaced the chairman of the party immediately, after 60 days it still does not think the replacement of the Minister for Pensions is important, despite the present circumstances. The Prime Minister is obviously as paralysed when it comes to appointing a Minister as he is when it comes to implementing a proper pension policy. He clearly needs advice.

I can tell the Prime Minister that there is significant talent, even on the Labour Benches, among members of the Select Committee on Work and Pensions. Several of the Committee's members could easily replace the Minister for Pensions if he had a mind to appoint one of them. I do not want to damage the career of the hon. Member for Stalybridge and Hyde (James Purnell), but it is rumoured that he is about to take on the task. That would certainly be better than an empty chair.

But the real answer may be to bring back the right hon. Member for Birkenhead (Mr. Field), whom it is a pleasure to follow. I mean no disrespect to the Minister who will wind up the debate, but I am sure that every Member would welcome the right hon. Gentleman's reappearance at the Dispatch Box. He would bring some sanity to pension policy.

The handling of the issue of why there is no Minister for Pensions, and has been no such Minister for 60 days, is symptomatic of the chaos of the Government's pension policy. There have been three reports on what has happened in the world of pensions, but there has been nothing from the Government except the Green Paper. In their amendment, the Government pray in aid the Select Committee's report. My hon. Friend the Member for Wycombe (Mr. Goodman) accurately warned them about their selective quotation.

I hope that the Under-Secretary of State for Work and Pensions, the hon. Member for Liverpool, Garston (Maria Eagle), will listen to this. In the amendment, the Government quote the Select Committee thus:

The Under-Secretary included that quotation in her opening speech. The full wording, however, is this:

The Government, who we understood were trying to lay off some of the spin, have deliberately taken a quotation out of context and stuck it in the motion. They should at least have the integrity to acknowledge that.

While we are on the subject of the Committee's report, let me add that only two of our 29 recommendations are supportive of the Government. I am delighted to see that the Committee's Chairman is present: he will substantiate that if Ministers require him to do so. All the other recommendations call on the Government to do something. The report speaks of a lack of clarity, and, as my hon. Friend the Member for Wycombe pointed out, if the Government cannot understand that it is for the Government sector first and foremost to provide clarity, the private sector will be able to do nothing.

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Before I leave the subject of the report that the Government have so iniquitously misquoted, let me draw their attention to paragraph 130, which deals with the state second pension. It says:

—that is, a recommendation in an earlier report—

The previous report had a three-month time scale. In the report I have just quoted, we asked the Government to respond within two months. Those two months have elapsed and the Government have said nothing. Not only is there no Minister for Pensions but we are not getting a proper response to questions on pensions.

As most people apart from the Government know, there is a crisis in the pensions industry and in the pensions community. It is not all the Government's fault, as my hon. Friend the Member for North-East Hertfordshire said, but the £5 billion change cannot have helped. My right hon. Friend the Member for Wokingham (Mr. Redwood), who is after all a banker of some repute, said that the net present value of that change was no less than £105 billion. That is the scale of it. It may have looked like a small change to the Government, but not to anyone else.

The difficulties of the pension credit have been well advertised in the debate. There will be serious difficulties in implementation. If Ministers do not realise that, they soon will. I visited the pensions office that serves my constituents in Sutton Coldfield. It is clear that the colossal increase in the prospective work load will be extremely difficult to handle.

The Government stand condemned by almost everyone, not least the right hon. Member for Birkenhead, for their approach to means-testing. Sometimes, I think that the Government will not be happy until every pensioner is on some form of means-testing. It is the wrong approach. It enshrines dependency. The Government give with one hand and take away with the other and that is wrong.

The complexity with which the Government have approached these tasks is noteworthy. It is almost impossible for an independent financial adviser to give advice with confidence without understanding what the Government will do with state provision. The stakeholder pension has been a complete flop. Not only, as the hon. Member for Northavon said, does the ABI dismiss it, but it has managed to hit practically none of the target group. I think I am right in saying that nine out of 10 of the shell stakeholder pensions set up by companies remain exactly that—shells. No one is putting any money into them.

When my party left Government in 1997, our pensions were the envy of Europe. Under this Government, it is a litany of confusion, complexity and failure. Their noble attempt at the start of their time in government to reverse the ratio of funded to unfunded pension provision, which was 40:60, has failed. The Government will have to make some decisions on pensions. The sooner they make them for the benefit of current pensioners and pensioners to come, the better.

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6.37 pm

Kevin Brennan (Cardiff, West): It is coming up to the first anniversary of Allied Steel and Wire in Cardiff and in Sheerness going bust; hence my keener interest in occupational pensions. I was utterly gobsmacked when I discovered that those workers were originally employed by a nationalised industry—although some were employed by a private steel company—that they were compelled as part of their employment contract to participate in an occupational pension scheme and paid into that scheme for decades but then, when the company went bust at the end of that period, they faced the prospect of losing most—80 per cent. or more—of their pension. I was gobsmacked that that could be the legal position in this country in the 21st century, but it is.

I welcome today's announcement—I am sure all hon. Members do—that Celsa, the Spanish steel company, has announced that it will reopen the Allied Steel and Wire plant in Cardiff with 400 of the 800 posts; I hope that many of those who previously had jobs there will again be employed. I commend the National Assembly for Wales, the Government and the local council for helping that to happen.

Nevertheless, many of those workers still see the complex issue of pensions in pretty stark and simple terms. They see that if there is a shortfall in the occupational pension scheme for people who are council employees, it is underwritten by the council tax payer. They see Members of Parliament and Members of the National Assembly having extra sums paid into their pension schemes and having their schemes potentially underwritten by the taxpayer. In contrast, how is the loyalty of Allied Steel and Wire workers repaid? Many of those workers will have worked loyally for the company over many years, and did not take early retirement or early redundancy, often because they were the best of the work force. When the company goes under because the pension scheme and the stock market happen to be at a low ebb, they are left to pay the price and bear the risk.

I welcome the fact that the Government have introduced the Green Paper and that they have been listening on this issue, particularly in the past six months. I want to tell them what I would like to be included in the forthcoming announcement. I want the pension insurance scheme to be introduced, with the Government standing behind it, on the basis of the US Pension Benefit Guaranty Corporation, as suggested in press reports in yesterday's Financial Times and elsewhere.

There are those who talk about moral hazard, but that can be overcome. There can be safeguards in such a scheme. For example, a cap can be put on, so that fat-cat pensions do not get paid out of it. It is also possible to have a system whereby 90 per cent. of the pension, say, is met, rather than 100 per cent. Let us forget moral hazard and other theoretical economic arguments; that system would overcome the immoral hazard that workers face when they pay into pension schemes that at the end of the day, through no fault of their own, are not worth the paper they are written on.

We must take care to understand what happened when the United States set up the Pension Benefit Guaranty Corporation in the 1970s, in terms of existing funds that had yet to be wound up. The US made sure

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that workers who suffered as a result of the wind-up of those schemes after the companies had gone into insolvency were protected. That is what should happen now, and it is not retrospection. There are schemes, such as the Allied Steel and Wire pension scheme, that have yet to be finally wound up. If the Government are going to legislate in this area to create a body like the PBGC, and if such legislation takes time to introduce—I accept that it does—in the meantime the Government should stand behind those schemes and meet at least the majority of obligations in respect of those that have yet to be wound up. That is a quantifiable proposal that could be costed and met. We have a moral obligation to look seriously into doing that, and I should like the Government to say that they will.

I shall wind up now, because time is very short and I want to hear what the Minister has to say. The issue of pensions—particularly occupational pensions, and the question of whose side we are on—is a key test. Are we on the side of the workers or the fat cats, and who carries the risk when companies go bust? In this case it is the workers who have carried the risk. That is morally wrong, and a Labour Government should be, and I hope will be, prepared to do something about it.

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