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Mr. Andrew Miller (Ellesmere Port and Neston) (Lab): My right hon. Friend is aware of the plight of the HH Robertson pensioners in my constituency, which dates back to just before the 1997 general election. Will he consider carefully the issues I raised with him in a parliamentary question, the reply to which can be found in column 697W of yesterday's Hansard? Without proper research into the background information, it would be extremely difficult to develop a cogent system to support workers whose schemes have already gone down. Will my right hon. Friend undertake such research?
Mr. Smith: It is already being undertaken, and I shall report to the House on the outcome when I am able to do so.
I agree with my hon. Friend that the current data on insolvency wind-ups leave much to be desired. What is available is collected by the pension schemes registry, but it is lacking in three key respects. It does not record whether a scheme in wind-up has a solvent or an insolvent sponsoring company, it does not record the level of funding that a scheme has on wind-up, and it does not record the make-up of a scheme in terms of how many members are pensioners and how many are deferred. We are exploring with industry representatives the basis on which we can establish, given the available evidence, the extent of the problem, the number affected—as I have said, I think that 60,000 is a good rough estimate—and the potential scale of losses. I shall report further when I am able to do so.
Sandra Osborne (Ayr) (Lab): I am glad that the research is being done, and I am grateful to my right hon. Friend for the time he has devoted to meeting my constituents, the former UEF workers who have been so badly afflicted by this problem. What is his current response to the proposals of Dr. Ros Altmann, who, as he knows, has done a great deal of work on this and has suggested a possible solution?
Mr. Smith: I do not want to prejudge any conclusions that we might reach, but I think that there are weaknesses in Dr. Altmann's proposition. We must examine carefully, for instance, the idea that schemes could simply be allowed to run on with no requirement for annuitisation, with the Government being left to pick up some unspecified and uncosted liability somewhere along the track. I have heard Dr. Altmann and others say rather casually—perhaps that is unfair, but it is the impression I have had from some interviews—that this would cost "only" £100 million a year. That is a not inconsequential sum.
Any Government must examine liabilities very carefully, not just in relation to the specific workers whom Members think should be helped—and I understand the case they are making—but in terms of the potential read-across to others who might form a queue at the Government's door asking for similar assistance. There must be a clear set of principles informing any decision to assist some who have been
hard done by, and not to assist others. I should also point out, as I did in last week's debate, that legal action against the Government on this matter is outstanding.
Annabelle Ewing (Perth) (SNP): The UK Government have been in office for nearly seven years. Why are they coming so late in the day to an examination of the plight of the thousands of people who, through no fault of their own, have lost out in their pension entitlement? Surely the Bill should be used to bring that sorry saga to a close?
Mr. Smith: The hon. Lady will know that there have been a number of inquiries over the years. For example, the Goode committee evaluated the establishment of what was then called a central discontinuance fund, and recommended that such a fund would not be operable and or necessary. In more recent years, it is clear that the pressures on funds have changed, thanks to the decline in the stock market and to FRS 17. Moreover, the rather belated realisation by some actuaries that we are all living longer is also placing demands on schemes.
As I have explained to the House before, one question has struck me since I began looking at this matter, and at the dreadful plight of the workers affected—why on earth was no protection in place for pension schemes run by insolvent employers? After all, there is protection for people who book their holidays through travel agents belonging to the Association of British Travel Agents, and people quite properly expect their motor insurance to remain intact even if their insurance companies go bust.
We need to get the PPF up and running. That is why we need to get on and put the Bill into effect.
Mr. David Willetts (Havant) (Con): Will the Secretary of State give way?
Mr. Smith: I shall give way to the hon. Gentleman. I look forward to hearing from him whether the Conservative party will support the PPF.
Mr. Willetts: We support the principle of pension insurance, but we are asking about the problem of pension wind-ups. That problem led us to call last week's debate, and it has caused people to protest again today. The Secretary of State has dismissed the Ros Altmann proposal, but will he consider the proposal from the right hon. Member for Birkenhead (Mr. Field)? He suggests using the unclaimed assets of banks and insurance companies as the basis for endowing a fund to help people who have lost out because their pensions have been wound up. Would not that be an imaginative approach? It is a great pity that the Government opposed the right hon. Gentleman's private Member's Bill last year. Is there any prospect of them looking at that proposal in a fresh light?
Mr. Smith: As I told my hon. Friend the Member for Ayr (Sandra Osborne), in connection with the suggestion by Dr. Altmann—and without prejudging the Government's conclusions on this matter—we had several exchanges with my right hon. Friend the
Member for Birkenhead (Mr. Field) on the matter of unclaimed assets. The House should take careful note that the fact that assets are unclaimed does not mean that they do not belong to someone, and that it is becoming easier to trace assets. Secondly, if such a fund were to be established, does not the hon. Gentleman think that there would be a long queue of other people, also with compelling cases, who would seek access to it? There may be unclaimed assets, but it is not clear that that would establish the case for hypothecating them for the purpose of a fund.
Mr. David Watts (St. Helens, North) (Lab): I welcome this Bill, which is overdue. I am pleased that it will offer a level of protection to a range of workers who do not have it at present. I have two questions: are the Government prepared to pay for those workers who need some form of compensation, and what limits will be imposed? I understand that the Government want to erect a firewall to ensure that other claims are not made for similar compensation packages, but will my right hon. Friend write to the Opposition parties to ask for clarification of their positions? It would be helpful if we could achieve consensus among the political parties as to who would be entitled to compensation.
Mr. Smith: My hon. Friend makes some good points. I do not want to go over all the matters that we explored at some length in last week's debate, but the Conservative party has been long on regrets and condemnation, and short on specific proposals. I was pleased to hear what the hon. Member for Havant had to say. He could not bring himself to say that his party supported the establishment of the PPF, but he did say that he supported the principle of insurance in this area—or words to that effect. However, I remind the hon. Gentleman that the Opposition have tabled a so-called reasoned amendment that would deny this Bill a Second Reading. There would therefore be no PPF, nor any help in the future for those workers whom he claims to want to help because of what happened in the past.
Alan Howarth (Newport, East) (Lab): My right hon. Friend will have noted that the Leader of the Opposition is seeking to reposition the Conservative party so that it appears less fanatically right wing. However, was he not as startled as I to hear the hon. Member for Havant (Mr. Willetts) tell the House with a straight face that today's Conservative party believes that it is appropriate for the state to expropriate private assets without compensation? Is not it true that only new Labour now stands between the bourgeoisie and the revolution?
Mr. Smith: My right hon. Friend makes his point with his customary wit. It could be that, in trying to reposition themselves towards the centre, the Conservatives have overshot the mark a bit.
The final question in the letter from the hon. Member for Havant had to do with the replacement of the minimum funding requirement. As hon. Members will appreciate, the MFR proved to be an inflexible approach that increased the costs for some employers while not giving members the level of protection that they expected.
In part 3 of the Bill, we are replacing the one-size-fits-all approach of the MFR with funding arrangements that will allow schemes to adopt funding strategies
suited to their particular circumstances. Under the new scheme's funding arrangements, trustees and employers will work together to agree a funding strategy to reflect scheme-specific characteristics such as the trustees' investment policy, the age profile of members, staff turnover and life expectancy. That will mean that schemes with high liabilities will face tough standards. However, it will also give some schemes opportunities to save on funding by taking a longer-term approach to investments.The Bill will do much more besides establishing the PPF. Further measures will be introduced to provide increased security and confidence in the system.Clauses 1 to 80 provide for the establishment of a new, proactive pensions regulator. Its new powers will enable it to step in early where workers face real risks, and it will adopt a lighter-touch approach to well-run schemes that will make it easier for firms to get on and run those schemes.
Clauses 203 and 204 will extend TUPE-like protection to private sector transfers, for the first time. As the unions and other commentators have pointed out, takeovers have been used in the past as excuses to scrap pension contributions. That cannot be right. Addressing that problem is overdue, and the Bill will do so.
We will insist that, where there is a pension scheme in the original company, the new employer will have to keep the pension going or provide a worthwhile alternative. We will also table Government amendments that will provide security for a more mobile work force. We will help people to build up rights in short-stay jobs by enabling them, for the first time, to take the pension that they have built up with them to another scheme. On average, workers who take advantage of that opportunity will gain around £1,000 of extra pension rights to go towards their final pension pot. That will benefit many women workers in particular.
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