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6.30 pm

Mr. Henry Bellingham (North-West Norfolk) (Con): Unlike some Labour Members, I enjoyed listening to my hon. Friend—and near neighbour—the Member for Grantham and Stamford (Mr. Davies), who rightly pointed out that barely a week goes by without an announcement of a company closing down a final salary scheme. Last September, the Confederation of British Industry published a survey of 551 companies. It showed that half of employers had a final salary scheme that closed last year and that only 27 per cent. of firms continue to offer a final salary scheme—the figure last year was 43 per cent. The position is therefore serious, as my hon. Friend pointed out. John Cridland, deputy director general of the CBI, said the other day:

My hon. Friend the Member for Havant (Mr. Willetts) made an excellent and impressive opening speech. As he pointed out, our recent position was not only the envy of the world but extremely stable and exceptionally robust. Although Labour Members derided his words, he was right to point out that the Chancellor's smash-and-grab raid on pensions—£5 billion a year—started the rot. The hon. Member for Coventry, South (Mr. Cunningham) said that there were strong, logical tax reasons for the change to advance corporation tax at the time. That may be true. The stock market was booming and many companies were taking pension holidays. However, the stock market subsequently went into decline and many schemes started to lose substantial amounts of capital value. Surely that was the time to reverse the policy. What was right in the Chancellor's first Budget was wrong two, three or four years later. The policy has taken a huge amount of money out of pension funds.

My hon. Friend the Member for Havant also pointed out that minimum funding requirements were lowered by 10 per cent. in June 1998 and subsequently by a further 8 per cent. The position is therefore bleak. Today, we have heard about several companies, including Allied Steel and Wire workers and Dexion, about which The Mail on Sunday wrote recently. I want to bring to hon. Members' attention a company in my constituency. Its parent company went into liquidation and the subsidiary company in my constituency is called Fisher Frozen Foods.

The Albert Fisher Group went bust in May 2002. There were 1,000 employees in the scheme—many in my constituency and that of my right hon. Friend the

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Member for South-West Norfolk (Mrs. Shephard). Although the scheme was under some pressure, the directors took a pension holiday as recently as four years ago. At the time, the fund was in surplus, but, as some hon. Members have pointed out, the tax regime bore down on the funds that were in surplus and getting too big. There was a tax disincentive, which was another big mistake.

The scheme suffered a shortfall two and a half years ago. New trustees tried to make it up by raising contributions from 10 per cent. to 20 per cent. The parent company, Albert Fisher Group plc, then went into liquidation. The deficit on the pension scheme was £35 million, which works out at roughly £35,000 per employee.

That figure, however, is distorted. I have several constituents who were middle managers for Fisher Frozen Foods, and I spoke this afternoon to one who was with that company for about 20 years. Over that period, he invested 5 per cent. of his salary in his pension, while the company contributed 10 per cent., and his pot was in the region of £300,000. He has lost 90 per cent. of that pot. It is not surprising that, along with the employees of Allied Steel and Wire workers, Dexion and the many other companies that my hon. Friend the Member for Havant mentioned in his opening speech, my constituent and others like him are very angry indeed. As he pointed out to me, he is particularly angry and upset because a number of younger people took early retirement from Fisher Frozen Foods literally weeks before the Albert Fisher Group went into liquidation. They received their full entitlement, but those who stayed with the company, even those who were substantially older than that cohort, will receive 10 per cent. if they are lucky, as 90 per cent. of the value is being lost.

Pinguin, the Belgian company that took over Albert Fisher's Fisher Frozen Foods subsidiary, refused to honour the final salary pension scheme. That was understandable, because Pinguin bought the company from the receiver when it had many serious problems, and not surprisingly, it refused to top up the pension fund.

Kevin Brennan: Will the hon. Gentleman acknowledge two points? First, one reason why employees on the cusp of retirement cannot access their full pension fund is because of the Pension Act 1995 and the regulations that it introduced. Secondly, in most such cases, including that of the Allied Steel and Wire workers from Cardiff, we are not talking about large pensions. We are talking about people who, after working for 30 or 40 years, might expect a maximum pension of £13,000. Therefore, if there were to be compensation, it could be capped at a reasonable level.

Mr. Bellingham: The hon. Gentleman has done much work on this subject, and he and I were at the meeting of the all-party group on occupational pensions two or three months ago. I shall come back to his points in a moment when I mention retrospective compensation.

As my constituent said to me today, to lose money that the company has paid into his pension scheme is one thing, but in his view—hardly surprisingly—to lose

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what he himself has paid in is pretty outrageous, especially when he looks at neighbours who are receiving their full pension and enjoying a happy retirement, even though they are younger than him.

My hon. Friend the Member for Havant dealt very well with retrospective compensation. We badly need substantially more data. How can we commit ourselves to that retrospective compensation until we have those data? Can the Minister tell the House why those data are not in place? That seems extraordinary when there have been so many parliamentary questions on the issue.

Will the Minister tell the House his views on the proposals made by Ros Altmann from the London school of economics, who came to the meeting organised by the all-party group on occupational pensions four or five months ago? She made it quite clear that because of the huge cost of buying annuities, to which my hon. Friend the Member for Grantham and Stamford alluded—the market for annuities is extremely difficult for buyers at the moment—if changes were made to the regime, the ongoing cost to the Government of retrospective compensation would be about £100 million.That cost is a fraction of the cost of the dome, a fraction of the cost of the increased bureaucracy involved in running Whitehall since 1997, a fraction of the cost of an asylum system in chronic meltdown and less than the cost of the proposed devolved assemblies that no one wants.

So far as the Pensions Bill is concerned, the Government will be judged not just on their actions for people who will be affected by future schemes, and future meltdowns or wind-ups of schemes, but on what they do for people who are really suffering now. Those people have lost everything that they were looking forward to—a happy, prosperous, or even simply a bearable, retirement. That is how the Government will be judged, and I look forward to the Minister giving various answers when he winds up.

6.39 pm

Mr. Nigel Waterson (Eastbourne) (Con): This has been a very interesting debate. We have ranged far and wide, and all the enthusiasts gathered here can regard it as an aperitif to the debate next Tuesday on the Second Reading of the new Pensions Bill. The excitement in the Chamber is palpable as I remind Members of that.

I declare an interest as I have some private pension provision. We heard a good speech from the hon. Member for Coventry, South (Mr. Cunningham). I am delighted that he agrees with our policy of restoring the link. My hon. Friend the Member for Bournemouth, West (Sir John Butterfill) spoke with his usual massive authority on this subject, and I am delighted that our pensions are in his excellent and reliable hands. A fellow member of the Select Committee, the hon. Member for Wolverhampton, South-West (Rob Marris), understated the extent of the current pensions crisis, but if he returns on Tuesday, I will tell him a bit more about why I disagree with him, and vice versa. My hon. Friend the Member for Grantham and Stamford (Mr. Davies) provided an excellent analysis of many of the problems besetting pension schemes and provided some good ideas for solutions. My hon. Friend the Member for North-West Norfolk (Mr. Bellingham), who has taken a close interest not only in the specific case to which he referred of Fisher's but in the more general issues, made a welcome contribution.

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The hon. Member for Northavon (Mr. Webb) spoke knowledgeably. As I understand the policies of the Liberal Democrats, they have signed early-day motion 200 and would write a cheque tomorrow, or at least the day after. That is not, of course, what my party proposes at the moment, as my hon. Friend the Member for Havant (Mr. Willetts) explained.

This problem is gathering pace, even as we debate it. I noticed only today in The Independent a report that the insurance broker, Jardine Lloyd Thompson, announced yesterday that it is closing its final salary pension scheme to new entrants. It has injected £50 million of its own money to try to alleviate the £157 million pension deficit in its fund. It is not alone. It believes that that is the largest injection of any FTSE company relative to the size of its pension fund. Even companies that are trying to do the decent thing are struggling in the present climate.

I want to dwell in most detail on the Secretary of State's speech. We heard the usual mantra about not wanting to raise false hopes. While I understand the logic of putting that caveat into every speech that he and his colleagues make on this subject, it must become monotonous, not least to those who have already lost their pensions. A real danger exists—I say this in sorrow rather than in anger—of the Government becoming part of the problem, not the solution. As I said, the Pensions Bill has been published, and we will debate it in detail next week. It was published to a chorus of disapproval. I have yet to find a single comment from any organisation, serious newspaper or anyone involved in the pensions industry—except possibly the TUC—that did not criticise it, often for its timidity, and, of course, for the fact that it deals with problems in the future.

It was pretty clear, as my hon. Friend the Member for Havant pointed out in an intervention, that the Secretary of State had written his speech before he had taken account of what my hon. Friend had to say. Carrying out the role of a serious official Opposition, my hon. Friend set out a range of possibilities—[Interruption.] It is the Secretary of State and his colleagues who are meant to be in charge of this area of policy, yet on 12 January, in this Chamber, he declined the request of the hon. Member for Sittingbourne and Sheppey (Mr. Wyatt) that he set up an independent inquiry to find out the scale of the problem.We set out not our alternatives, as the Minister says from a sedentary position, but the obvious alternatives—those put forward by other people—which are the only ones anyone can come up with to solve this problem. We remain to be convinced that the Government are doing any serious thinking about the subject.

When pressed, the Secretary of State said that 60,000—the number of members of schemes who had lost most or all of their pensions—seemed to be the "right scale". So we have managed to nail down one corner of the tent. He then said that the Government were not in a position to estimate the figures arising from that 60,000 figure. What we do not know is what he or his Department are doing to work on those figures. What work is being done, by whom, with what purpose and on what time scale—if not by the right hon. Gentleman's Department, perhaps by the Treasury? As we know, the DWP is a wholly owned subsidiary of the Treasury in this Government.

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The right hon. Member for Birkenhead (Mr. Field) talked about drawing the boundaries. The Secretary of State seemed rather taken by that idea, as if it had never occurred to him before; but surely it, too, is part of the process. Throughout the debate, we have tried to tease out of the Secretary of State and his colleagues just how deeply the Government are and have been thinking about solutions to a problem that will not go away and will not be resolved by the Pensions Bill. I must say, with respect, that the Secretary of State seemed a little like a very well-meaning member of the public who had wandered in with a few thoughts about what might be the solution, rather than a Cabinet Minister with the resources of the entire civil service at his command. Surely there should be a battery of Wykehamists with double firsts working night and day on this problem. Perhaps there are; if there are, may we be told about it?

We were told that something would happen about the priority order in the near future. We have heard such expressions before—"soon", "in the near future" and the like. They could mean anything. They could mean "by the time the snow is falling next year". The point about the priority order is that it was always going to be an interim measure, applied until the Bill became an Act. What is happening, and when will it have happened?

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