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Mr. Heald: What figure does the hon. Gentleman put on the problem? What does he capitalise the cost as being?

Mr. Webb: It has been said that Ros Altmann and the pensions action group are more or less alone in coming up with figures, and I am pretty sure that the figure of 60,000 workers is broadly consistent with what they have come up with. A sum of £100 million per year has been mentioned as the long-term average cost. Essentially, when the pension protection fund comes in, no new liabilities will accrue under the regime. There will be a cap on the amount; it is not an open-ended commitment, because it will come to an end when the pension protection fund is introduced. In the first four or five years, there will probably be no cost to the Exchequer because the funds will already have money in them, and it is important that that money is not spent on poor value for money annuities. There are things that could be done very quickly, as the hon. Member for Havant (Mr. Willetts) has mentioned. That seems to be the order of magnitude that we are talking about.

To put this in perspective, at the start of the year, the Department for Work and Pensions had a line in its annual report for unallocated expenditure that will rise to £200 million next year. This is almost the spare cash that the Department has not yet decided what to do with.

Rob Marris: I would suggest that the hon. Gentleman looks again at the figures. If we are talking about 60,000 people, current annuity rates, and a very modest figure of £1,000 per year lost pension—although I am sure that it will be higher than that—that would result in a ball-park figure of £1.2 billion as a capital buy-out, not the few hundred that he is talking about.

Mr. Webb: The hon. Gentleman is confused on two counts. First, I am talking about the £100 million not as a one-off cost but as a recurring annual average cost over the lifetime of a scheme. Secondly, if we go for this sort of approach, we do not have to buy these grotty annuities; we can allow the capital that is left in the funds to go on appreciating. The sum does not therefore work out in the way that the hon. Gentleman suggests, but I am grateful to him for giving me the opportunity to clear up that point.

A number of us have paid tribute to the pensions action group and to Ros Altmann and the campaigners for getting this issue so high up the agenda and for being more or less the only people putting information into the public domain, perhaps until today. Is this not an issue for the Government? I am appalled to hear that we can do nothing about the injustice of long-serving workers getting next to nothing because the people who run the schemes do not even know how long the workers have been in them. Even the most basic record keeping seems not to have been carried out.

One might say that such record keeping would be another burden on the scheme, but it seems a pretty minimal burden to have to record when someone joined

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a scheme and put their money into it. We are talking about incredibly basic record keeping. We are also talking about public money; tax relief and national insurance rebates apply to these contributions, and there is tax relief on the fund. The situation is just horrifying, and I hope that the Minister will be able to tell us that there is to be better record keeping—as a minimum—in the future. The Government have been remiss in not obtaining the information on the numbers affected throughout all the time that this issue has been current. That has been a long time now. It is shocking that we cannot make good policy because of a complete lack of decent information.

The hon. Member for Havant raised the issue of the minimum funding requirement. I remember sitting on the relevant statutory instrument Committee for the second of the debates on the MFR. My initial reaction was to think, "This is undermining people's protection", but the Government said that their actuaries had advised them that the measure was appropriate. The Conservative members of the Committee then said that they did not want to put burdens on occupational schemes. That was the other argument: they did not want to overdo minimum funding requirements, because people would shut the schemes. The Conservative members of the Committee—whom I shall not name—then nodded the provision through.

I was determined not to be partisan, so I had better stop at this point. We must all stop using this issue to say, "Let's get one over on the Government" or "Let's get one over on the Tories". I hope that we are all serious about doing something about this issue, as I believe that the Secretary of State is. I am not suggesting that the Liberal Democrats have a monopoly of virtue in this regard. I wonder, however, how long it will take to achieve. Now that we have a rough idea of the orders of magnitude involved, surely we need to crack on with it, and we need to do that in as non-partisan a way as possible. I therefore hope that we can look at the Pensions Bill in a collaborative way that will enable us to put something forward that is precise and that will give real hope—rather than false hope—to the people who have been affected by these issues. The onus is on all of us to do that, and I hope that today's debate—and perhaps my contribution to it—will have taken that agenda forward.

5.21 pm

Mr. Jim Cunningham (Coventry, South) (Lab): I welcome this debate, particularly in relation to occupational pension schemes. The workers involved have been referred to, and if we recall the early 1970s, we remember that the workers always saw contributions to their occupational pension schemes as part of their wage deals. That developed in the 1980s, and from about 1986 onwards we saw a hard sell at companies such as Rolls-Royce to encourage people to opt out of SERPS—the state earnings-related pension scheme—and to get into private pension schemes. Tax incentives were introduced, and some companies obviously used the employment regulations of the time to encourage people to be part of those schemes, or to make it compulsory. One way or another, elements of coercion were used to get people—certainly those working in factories—to

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join those schemes. Of course, they joined those schemes in good faith, and they thought that it was a step forward, because they would ultimately gain some sort of security in old age. We now find that that security was on shifting sands.

Hon. Members will remember that I said in an intervention that one thing that the Tory Front Bench spokesmen omitted to mention was the mis-selling of pension schemes. That was a calamity, and there were no calls from the then Government to do anything about it. All sorts of reasons were given why compensation could not be paid out at that time, which led this Government, when they came into office, to set up the Financial Services Authority. Any Back Bencher who has been involved in Treasury matters will know that these issues have been raised with the FSA on a number of occasions. For the House's information, it is not generally known that the financial services people have paid out in compensation something in the region of £2 billion to £5 billion as a result of the mis-selling of some of those schemes. Those are old figures, and there are probably more up-to-date ones. The idea that the Government have not done anything over the past six or seven years is therefore an illusion. The truth is that they have stated to do something through the FSA.

Compensation has been mentioned. Because people entered those schemes in good faith way back in the 1960s and 1970s and, obviously, in the 1980s, and because there was a hard sell, on which there has been a report, I am one of those who think that we should consider some form of compensation. We can debate what the figure should be, and work it out, but a heck of a lot of people are involved.

Kevin Brennan: My hon. Friend made an important point in the early part of his speech when he said that pension schemes are, in effect, deferred wages for many workers. In paying them compensation, therefore, all that we would be doing would be paying them the wages that they were promised.

Mr. Cunningham: To elaborate on that point, I can remember that when I was involved in negotiations many years ago people would accept 3 per cent. as opposed to 5 per cent. because it was a deferred wage, and most people understood that. Although I welcome the fact that the Secretary of State has not closed the door on compensation, I hope that he will give due weight to the views expressed on both sides of the House as it is a major issue. If it is not addressed, we will have perhaps 60,000 people on benefits who should not need to be in that position. That is the difference between the poverty line and a little bit of affluence. I hope that the Secretary of State will bear that in mind.

On the whole question of pensions, we would not be having this argument if the previous Government had not started their coercion, as I call it, in 1986. It goes without saying that we would not be debating it if we had a proper old age pension fixed at a reasonable level, possibly linked to earnings, although there may be other ways of doing it. The problem with linking it to earnings is the issue of what category of earnings should be chosen or what average, which can get us involved in all sorts of arguments. In the absence of a decent pension being paid, though, the argument about the link gains credibility. At some point, future Governments will

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have to address the question of what we call a decent pension. At the moment, while about 2.5 million pensioners have been taken out of poverty and given assistance, the number is not really diminished, because if we change the goalposts, we find that other people come into that category.

I was interested in the point made by the Opposition about the link. As I said in an intervention, they abolished the link when in Government, and I find it strange that they have suddenly gone populist. They must have discovered pensioners groups somewhere—they were always there, but the Tories did not know that when they were in Government. As a result of their conversion, the Opposition are formulating their policies on the Swiss concept—they consult the canton to decide what they are going to do. That is very interesting. They poked fun at us about the big conversation, but listening to what they were saying earlier, I think they have one heck of a conversation going on. I am interested that the Tories are suddenly becoming the listening party. They are having all sorts of consultations with all the pensioner groups whose existence they never acknowledged when they were in power; now that they are the Opposition, they suddenly find that those groups matter. We always knew that they did, which is why we continually raised pensioners' issues when we were in Opposition.

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