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House of Commons

Monday 12 January 2004

The House met at half-past Two o'clock


[Mr. Speaker in the Chair]

Oral Answers to Questions


The Secretary of State was asked—

New Deal

1. Mr. John Grogan (Selby) (Lab): If he will make a statement on the future of the new deal programme. [146781]

The Secretary of State for Work and Pensions (Mr. Andrew Smith): The new deals have helped cut long-term unemployment by three quarters and guided nearly 1 million people into work, including 1,180 in my hon. Friend's constituency. We will build on the success of the new deals so that those who are unemployed or economically inactive receive the help that they need to get into a job, which will help Britain to achieve full employment in every region.

Mr. Grogan : Will my right hon. Friend continue to develop the new deal programme, especially for lone parents and older people? In North Yorkshire, it has become the mark of a civilised society, helping to find jobs for almost all the county's long-term unemployed youth, many of whom previously thought that they had few prospects and little contribution to make.

Mr. Smith: Indeed we shall develop the new deal. As my hon. Friend says, it is the mark of a civilised society, not only in North Yorkshire, where it has helped nearly 9,000 people into work, but throughout Great Britain. For the future, we need to ensure that it works even more effectively. We are therefore examining how we can introduce more consistent criteria for entry across different groups, more flexibility and responsiveness to the varying needs of individuals, and even closer partnership with the private and voluntary sectors locally, as well as introducing a new deal for skills by investing in employability and working closely with Business Link and the Learning and Skills Council.

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Mr. George Osborne (Tatton) (Con): If the Secretary of State is right when he says that the new deal for young people has been such a success, why has the number of economically inactive young people—those who are neither working nor studying—risen in the five years since it was introduced?

Mr. Smith: Our contention is that all the new deals have been a success. All those young people helped into jobs had wasted lives under the disastrous policies of the Conservatives, and to abandon the new deal would damage the lives of people who need help, harm the economy and bring back all the social ills of mass unemployment that the new deals and this Government's policies for economic stability have put behind us. The Conservatives should support those measures, including those to help inactive younger—and older—people.

Mr. Roger Berry (Kingswood) (Lab): I warmly welcome the comments of my right hon. Friend. He will no doubt be aware that 920 people in my constituency would be unemployed without the new deal. Is not the Tories' suggestion of scrapping the new deal a kick in the teeth for young people, lone parents and disabled people, and should not that policy be given that verdict in the strongest possible terms at every opportunity?

Mr. Smith: Any proposal to abandon the new deal would be disastrous, not only for my hon. Friend's constituents but for the whole of our society. The programme has brought real benefits to individuals and to whole communities, so that we can put behind us the culture of hopelessness and welfare dependency that the Conservatives did so much to deepen—and as they would do again.

Miss Anne McIntosh (Vale of York) (Con): I tabled a question on this issue last month and was told that the figures were available from the Library. I now have the figures and, from the inception of the new deal to September 2003, start-ups numbered 926,190. Of those, only 328,140 ended up in unsubsidised, sustained employment. How can the Secretary of State justify the new deal on those figures?

Mr. Smith: The hon. Lady belittles the considerable success that the figures that she quoted reveal. Of course, the programme has a wider and more enduring impact, including on those people who start a job and then leave it. The evidence shows that they are subsequently more likely to take another job. The National Institute of Economic and Social Research showed that the new deal saves the country £500 million a year in benefits to the economy and that the new deal for young people saves the Exchequer £40 million a year. As well as the human costs that the hon. Lady and her party would impose, their policies would have an economic cost for the country.

Occupational Pension Schemes

2. Derek Wyatt (Sittingbourne and Sheppey) (Lab): If he will establish a public inquiry to assess the overall debts in occupational pension schemes; and if he will make a statement. [146782]

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The Secretary of State for Work and Pensions (Mr. Andrew Smith): I am, of course, listening to the case made by my hon. Friend and other hon. Members who are campaigning energetically on behalf of their constituents. At present, however, I am not persuaded that a public inquiry would add to the extensive consultation on occupational pensions that has already been undertaken, including meeting those people affected by insolvent wind-up. As my hon. Friend knows, the Government are carefully considering the plight of those affected, while taking care not to raise false hope. We are taking action for the future by introducing new measures, such as the pension protection fund, to ensure that a pension promise made is a pension promise honoured.

Mr. Wyatt: I thank my right hon. Friend for that answer, but I must tell him that more than 120 Members have between 60,000 and 80,000 constituents whose occupational pensions are currently in deficit or in administration and, if we are not to have a public inquiry to find out the exact debt, how else are we to proceed? That is how we proceeded with the miners and the asbestos workers; that is how we do these things. Please, will my right hon. Friend think again?

Mr. Smith: As I said, I am listening carefully to what my hon. Friend and others campaigning on the issue are saying. We are dealing with formidable and complex issues: how to differentiate those who might be eligible for help and those who are not; whether it is right to use the money of taxpayers, many of whom are not in occupational pension schemes, to help some who have lost out due to savings and occupational pension failures, but not others; the risk of raising expectations that the taxpayer is the ultimate guarantor of private pension and savings arrangements; and prejudging the outcome of legal action that has already been taken by some of those affected. Notwithstanding all that, we are looking at the issue carefully and I believe that to continue meeting those who are affected, including hon. Members, is the best way to proceed and, of course, the pensions Bill will be introduced.

Mr. Tim Boswell (Daventry) (Con): Is not the reality that the pensions industry is so finely balanced financially, despite the welcome recovery in the stock market, that there is a danger that the pension protection that the Government have in mind will take away assets from existing viable schemes and damage their viability without meeting the obligations of schemes that are, sadly, already insolvent?

Mr. Smith: No, I do not accept that. By setting up arrangements that are a building block for greater security for the future, we are taking one step to rebuild confidence in pensions; there are a number of others that we need to take, and are taking. Without the same basis of insurance that operates everywhere else, we should be condemned—more important, workers in this country would be condemned—to repeat the awful experience at Allied Steel and Wire and of the other workers who have seen their schemes go under, which my hon. Friend the Member for Sittingbourne and Sheppey (Mr. Wyatt) was talking about.

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Kevin Brennan (Cardiff, West) (Lab): I thank my right hon. Friend for mentioning ASW. Is he aware that early-day motion 200, in my name, has already attracted 180—as they say in darts—signatures? I am sure that, as more and more Members become aware of the motion, more and more of them will sign it, so is not it time for him to consider freezing all pension scheme wind-ups and requiring that those funds are used to pay pensions as they fall due, prior to the institution of a compensation scheme?

Mr. Smith: I am not convinced that the course of action that my hon. Friend recommends is the right one. There is extensive concern, not merely in the House but throughout the country, especially among those suffering the awful anxiety of not knowing how they are to obtain their pension. My Department, my ministerial colleagues and I realise that there is an important responsibility, which is why we are looking at the matter very carefully indeed. However, it is only right that on each occasion that it is raised I point out that until or unless we can see a solution it would be wrong to raise false hope. We must all be able to look those workers in the eye so that they know that we have been honest with them all the way through.

Mr. David Willetts (Havant) (Con): The Secretary of State says that he is not raising false hope, but he is raising no hope at all for anyone. Those people have lost all their savings; their pensions have been lost, as companies have had to wind up insolvent schemes. Does he accept that he has made the problems worse through his policies of taxing pensions, cutting the value of the minimum funding requirement twice and providing no legislation for compensation? Does he understand that that is why so many people who have lost everything in this crisis are so angry with him? Why will he not at least do as the hon. Member for Sittingbourne and Sheppey (Mr. Wyatt) requested and hold an inquiry so that we can establish the scale of the crisis and the cost of any measures necessary to tackle it?

Mr. Smith: If I had proposed an inquiry today, I am sure that the hon. Gentleman would attack me for kicking the issue into the long grass rather than taking action. I do not accept his assertion that the tax changes or the other steps that the Government have taken have made the situation worse. Responsibility for any failure in the legal or regulatory environment affecting such schemes lies with those who drafted and produced the Pensions Act 1995, and he should own up to that. Moreover, he attacked the abolition of the dividend tax credit. The Conservative party do not propose to reinstate it. Although he has indicated—I am grateful to him for this—that there could be a basis for all-party support for taking action, as have the Liberal Democrats, we have seen no specific proposals from him that would present an alternative to the course that the Government are pursuing.

Mr. Willetts: The Government have cut the value of the minimum funding requirement twice, first by 10 per cent. and then by 8 per cent. The Secretary of State talked about kicking the ball into the long grass. Is he aware that the Government produced "Strengthening the Pensions Framework: a Consultation Document" in

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December 1998, since when nothing has been done? Can he think of any other example, even under this Government, of a policy area where, five years after the consultation exercise was launched, still absolutely nothing has been done?

Mr. Smith: It simply is not true to say that nothing has been done.

Mr. Willetts: What have the Government done?

Mr. Smith: Let me give a clear example. We have legislated so that there is a full buy-out requirement on those solvent companies who abandon their schemes. Not only have we undertaken the consultation to which the hon. Gentleman referred, but, as the Gracious Speech said, we will introduce legislation in this Session. I look forward to him and those in other parties supporting us constructively so that we build an enduring consensus for a new partnership, strongly supporting occupational pension provision and saving.

Mr. David Watts (St. Helens, North) (Lab): When the Ravenhead glass company went into liquidation, not only did people lose their jobs, they lost most of their pensions. That employer took a contribution holiday for three years. As part of any review, will my right hon. Friend look at the practice of companies taking contribution holidays to ensure that there are sufficient funds in pension schemes to deal with any downturn in the market?

Mr. Smith: Yes indeed. I acknowledge the strength with which my hon. Friend and other hon. Members have represented their constituents on these important matters, and we are examining all the issues. Moreover, we are working closely with the employer task force on pensions that we established—which includes not only employer but trade union and academic representation—and, of course, work is being undertaken by the independent Pension Commission as well.

Mr. Steve Webb (Northavon) (LD): The Secretary of State and his Ministers have told us for month after month that they do not want to raise false hope among workers who have lost out. Is that not precisely what they are doing? In fact, is it not true that the Government will do precisely nothing, and take many months to do it? Those workers are hoping for a last-minute announcement that the Government will come up with something for them. Would it not have been more honest and generated less false hope to have told them that at the start?

Mr. Smith: The hon. Gentleman's remarks amount to an accusation that we should not take serious time and trouble to engage with the representations that are being made to us and to examine these issues very carefully. I have been absolutely honest in what the Government have done about this and will continue so to be, and he should be more responsible if he really wants cross-party agreement on how to move forward.

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Mr. George Foulkes (Carrick, Cumnock and Doon Valley) (Lab/Co-op): May I confirm that the Secretary of State and, particularly, the Minister for Pensions have been very sympathetic in listening to my constituents from Stoddard's Carpets and United Engineering Forgings who are affected? But sympathy does not pay the bills or solve the problems. Labour Members are interested in a solution, not in making political capital out of people's hardship. May I suggest a solution that, with respect, does not involve a public inquiry? Could the Secretary of State have a word with his very good Friend, the Chancellor of the Exchequer—I know that they are very good friends—and say that, if we can afford billions of pounds to compensate the farmers, we can find £100 million for those pensioners?

Mr. Smith: I keep closely in touch with my right hon. Friend the Chancellor on these and other matters, and I assure my right hon. Friend the Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) that I appreciate the point that he makes. It is not sympathy that people want, but practical action. However, it would be folly to raise the expectation that we will be able to take that action until I am in a position to announce what it will be.

Mr. Douglas Hogg (Sleaford and North Hykeham) (Con): Does the right hon. Gentleman agree that, before the House can decide what, if any, assistance can be given, we need to know the extent of the problem and its likely cost? That requires an urgent inquiry into these matters, not least because we will address the issue in a few weeks when the pension Bill is discussed.

Mr. Smith: Those are precisely the issues that the Government have been looking into. When I am in a position to report to the House on the outcome of those inquiries and deliberations, I shall of course do so. However, I put it to the right hon. and learned Gentleman that if we came here to put forward some sort of public inquiry, he, or at least some of his colleagues, would certainly be on their feet saying that it was a device to delay and not to address the problems.

Mr. Harry Barnes (North-East Derbyshire) (Lab): When my right hon. Friend considers the important question of contribution holidays, will he also look into those firms that have been increasing their prices beyond inflation and check how much of those increases was required to try to sustain the pension funds that those firms are committed to operating? That point applies to the electricity and gas industries as well as to local government.

Mr. Smith: Yes, we can of course look at all these matters. However, those companies—whether they are utilities or firms operating in other sectors of the economy—that are taking action, and often difficult action involving difficult choices, to ensure that their occupational pension funds are properly provided for are taking action on behalf of the business community that we ought to commend. That is all the more the case when it is so often undertaken in consultation with the trade unions.

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