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Mr. Miller: It is important that we understand where the Opposition are coming from. Is the hon. Gentleman saying that the Conservatives want to dismiss those two precise points, which were subject to discussion during the passage of the 1995 Pensions Bill, which became the Pension Act 1995, and that they have fundamentally changed their mind since the Committee stage of that Bill?
Mr. Willetts: I am trying to find out what has happened to the Secretary of State's thinking since he
took office, because 15 months ago he sent his Minister for Pensions to the House of Commons to explain about insurance and central discontinuance funds. The Minister said:
- "There is therefore no possibility at this stage of the Government acceding to such a request."
The right hon. Gentleman, who is now the chairman of the Labour party, said that
- "the issue of compulsory assurance arrangements raises the potential for abuse and a moral hazard. Some schemes may neglect their responsibilities and obligations to their members, in the knowledge that their liabilities will still be met in the event of insolvency."—[Official Report, 16 October 2002; Vol. 390, c. 441–42.]
Mr. Miller: Was the hon. Gentleman wrong in 1995?
Mr. Willetts: I have made it clear that we recognise and accept the principle of insurance. What has gone wrong—
Mr. Miller: It is the hon. Gentleman's fault.
Mr. Deputy Speaker (Sir Michael Lord): Order. There should not be interruptions from a sedentary position. The hon. Member is answering the question that the hon. Member for Ellesmere Port and Neston (Mr. Miller) put, and he should let him do so.
Mr. Willetts: I do not recall seeing the hon. Gentleman in the House last week when we debated pension wind-ups at some length. I explained clearly what I thought had happened since 1995.
Kevin Brennan: Will the hon. Gentleman give way?
Mr. Willetts: The hon. Member for Cardiff, West was present in the Chamber when the former Minister for Pensions made those comments, so I would be happy to accept his intervention.
Kevin Brennan: Is it not fruitless to pursue this line? It is a bit of debating fun, but the truth of the matter is that, like the Government, the Conservative party has changed its mind on this matter. The Government have been informed by events, and they consulted on their Green Paper and had a pretty clear answer. The moral hazard is present in all forms of insurance, but Governments should act on the immoral hazard of people losing their pensions.
Mr. Willetts: The hon. Gentleman says that I am raising debating points, but I am trying to find out what is going on within Government about this matter. The fact is that there has already been one significant change of course in the past few months. I always study The Scotsman carefully, but it particularly caught my eye when I saw the headline "Brown hit by revolt over Pensions Bill" in today's edition. The article says:
- "A source close to Mr. Smith said he was furious that a Bill which 'should have been a triumph for him personally and the government' was being blocked by someone who was supposedly his ally."
- "'Andrew is frustrated that his flagship piece of legislation is being overshadowed by a row over providing compensation for 60,000 people.'"
Mr. Andrew Smith: That story is utter rubbish. Further to the intervention of my hon. Friend the Member for Cardiff, West (Kevin Brennan), is not the truth of the matter that the Conservative party is changing its mind, and it is being dragged kicking and screaming in the direction that we have set, because we have shown leadership on this issue whereas the Tories showed none?
Mr. Willetts: No. The Secretary of State has shown followership: he has not shown any leadership. We are all trying to tackle the serious pension crisis in the light of changes, including the tax imposed by the Government and the reductions in the value of the minimum funding requirement.
I appreciate that the Secretary of State addressed some of the questions about insurance that I put to him in the letter that I sent him in advance of the debate. He did not answer all of them, but he referred to it, and I am grateful to him for that. I make it clear that we support the principle of insurance, because we think that it can bring security into this sensitive and important area. Does the Secretary of State recognise that, if it is mishandled, it can make a bad situation worse? That is why it is important that the design is right. A badly designed insurance scheme could make the situation even worse than it is now, which is saying something.
Sandra Osborne: I think that the hon. Gentleman has been referring to my Adjournment debate in Westminster Hall. I am pleased that the Government have changed their mind on this issue. Does the hon. Gentleman understand that there is an urgency about this situation? He says that he supports the principle of insurance, so why is he not supporting the Bill on Second Reading? Will he explain his party's position on how to ensure that workers who have already been deprived of their pensions get justice?
Mr. Willetts: I make it clear again that I strongly support the case put forward by the workers who have suffered in wind-ups. This is an important subject, and it is why we had a debate in Opposition time last week, when we raised a variety of points and put a variety of suggestions to the Secretary of State. One of the problems with the Bill, and one of the reasons why we think the Bill is defective, is that it does nothing to tackle the problem of wind-ups. For the record, the Adjournment debate from which I was quoting was initiated by the hon. Member for Sittingbourne and Sheppey (Mr. Wyatt). Hon. Members on both sides of the House are concerned about this subject.
I repeat what I said in the debate last week. A clear majority of Members have signed either early-day motion 66, to which I do not subscribe—sorry, I do
subscribe to early-day motion 66, as it is our EDM. It is early-day motion 200, tabled by the hon. Member for Cardiff, West to which I do not subscribe. I must get it round the right way—we were there first. By subscribing to one or other of those two EDMs, just about a majority of hon. Members are saying that we cannot leave those 60,000 people with nothing. I hope that the Secretary of State will take account of that widespread feeling on both sides of the House.
Mr. Watts: Many Labour Members will be pleased to hear that commitment to help to form some compensation package for the workers who have already lost a large chunk of their pensions. Will the hon. Gentleman set that out in writing? Will he send it to the Secretary of State and place a copy in the Library so that we can all be clear about his party's proposals to deal with this important issue?
Mr. Willetts: I am one of the Secretary of State's more regular correspondents. I am sure that he always enjoys receiving my letters. I wrote to him in January 2003 offering cross-party consultation on the specific point of the priority order in wind-ups. That does not magic any new money into existence: I do not claim that it does. However, it solves the cliff-edge problem of complete protection for pensioners and little, sometimes zero, protection for workers, however long they have been working for a company. I wrote to him in January 2003 saying that we would support measures to tackle that problem. It could have been done in an afternoon by amending regulations. It has still not been done. The right hon. Gentleman has tabled draft regulations, but we have still not been told when they will be implemented.
Mr. Willetts: If the right hon. Gentleman is about to tell us, I will welcome that.
Mr. Smith: On the priority order, I made it clear in last week's debate that we sought to pursue the solution originally advocated not by the hon. Gentleman but by my right hon. Friend the Member for Birkenhead (Mr. Field), which gave greater priority to those who had been in schemes for longer. After the consultation on the regulations, we found that the measure was not possible because such information does not exist for a significant proportion of schemes. We will introduce an amended priority order shortly that will give a higher priority to older members, and that is the truth.
Mr. Willetts: I am pleased that that will happen shortly, but I shall remind the Secretary of State of the history: I wrote to him in January 2003; the draft regulations appeared on 22 October; and the deadline for responses was 3 December. We have still not seen a response on the regulations, and meanwhile every time a pension scheme is wound up, the existing workers lose out as a result of the current priority order. I fully accept that the priority order must be changed—all hon. Members accept that it must be changed—but I do not understand why it is taking so long, because it does not require extra money.
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