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Richard Burden (Birmingham, Northfield) (Lab): I understand the point that the hon. Gentleman is making on the priority order. However, I may have missed something, because I have still not heard what the Opposition would actually do to create the funds necessary to compensate workers who have already lost money. I want to see such compensation; what is his suggestion?
Mr. Willetts: Yesterday, I signed the early-day motion tabled by the right hon. Member for Birkenhead. When my hon. Friend the Member for North-East Hertfordshire (Mr. Heald) introduced his private Member's Bill last year, we supported it and voted for it on Second Reading. It was defeated on Second Reading because the Government talked it out.
Mr. George Osborne (Tatton) (Con): We know who did it.
Mr. Willetts: That is right; I remember the hon. Member who did it.
We have been trying to be constructive and have indicated a constructive way forward, and I accept the constructive approach put forward by the right hon. Member for Birkenhead. We voted for his proposals on Second Reading—what more can we do to show that we think that they are constructive? Of course, the matter requires further detailed work by the Government, who have had a long time to do it. Instead of long waits after consultations for straightforward matters such as the priority order to be tackled, it is about time that we had some practical assistance. Meanwhile, every time a pension scheme is wound up, there is no help for existing workers. Constituents, including a Ballast UK employee, have come to my surgery and discussed such cases. No hon. Member can tell constituents who face such financial distress, "I am sorry, there is absolutely nothing that can be done for you." That is why we had last week's debate.
Miss Anne Begg (Aberdeen, South) (Lab): Is the hon. Gentleman saying that he would not promise any Government money for any solution that his party proposes for those who have lost out because of insolvency in their pension funds?
Mr. Willetts: We could not support early-day motion 200 because it was an unconditional and retrospective commitment of public expenditure. The hon. Lady is smiling as if she has scored a great triumph. Some hon. Members are calling for everything to be done, but as a responsible Opposition we cannot say that. The Secretary of State has done nothing; all we say is that something—even if it is not perfect and even if it is not everything—should and can be done. We have proposals on the table to make that possible.
One of the reasons why we called last week's debate on the winding up of pension schemes was to give the House an opportunity to concentrate on that specific subject because of its importance. I recognise the subject's importance, which is why Labour Members
have intervened so often. However, I have other points to make on other aspects of the Bill that go beyond the winding-up crisis, and after I have taken an intervention from the Liberal Democrat spokesman, I hope to move on to other aspects of the Bill.
Mr. Webb: The hon. Gentleman says that its retrospective nature was one reason why he would not sign early-day motion 200. Two days ago, he was quoted in The Independent on Sunday:
- "We will be tabling an amendment to enable the pension protection levy to provide retrospective compensation".
Mr. Willetts: It is not possible to use the insurance levy collected by the fund to pay compensation retrospectively for funds that have already wound up. One constructive suggestion is that, when the administrative framework of the pension protection fund is set up, it should be possible to operate a levy on current employees for future security—setting up administrative arrangements is one of the Bill's main provisions. At the same time, it should be possible, for example, to endow a compartmentalised fund with some of the unclaimed assets after a suitable period has elapsed, and the administrative arrangements of the pension protection fund could then be used to help people who have lost out from the winding up of pension schemes in the past. A future levy could not be used to compensate people retrospectively. When the administrative arrangement is in place, I envisage that it will be possible to endow it with funds from the source suggested by the right hon. Member for Birkenhead in order to help tackle the problem. I apologise if the quotation in the press did not make that clear.
Mr. Watts: The hon. Gentleman has dealt with part of the problem because he is trying to identify where the resources may come from to set up such a fund. He has not involved himself in the question of who would be eligible to claim from that fund. It is difficult for the Government to sign up to that agenda until they know who will be eligible. It would help if his party introduced its own proposals on who would be entitled to compensation and how a firewall could be built.
Mr. Willetts: Conservative Members have introduced more proposals and have tried to be more constructive than the Secretary of State. All we ever get from him is, "No false hope," We heard it again today. We have been doing our best with the limited resources of opposition to contribute constructively.
One crucial problem, which the hon. Member for Sittingbourne and Sheppey mentioned, is how little information we have received. We established the 60,000 figure in a written answer only last week, when we had been asking for that information and tabling parliamentary questions for months, if not years—it is a bit like getting blood out of a stone. We have done our bit: we have made it clear that we recognise that there is a problem, we have offered cross-party support on the priority order; and we supported the proposal from the right hon. Member for Birkenhead on Second Reading. It is about time that the Secretary of State came forward with some ideas.
Sir John Butterfill: Does my hon. Friend agree that one of the problems that Dr. Altmann identified is that schemes are more heavily in deficit if they are required to buy annuities? There is merit in exploring alternatives to the purchase of annuities, and there may be other means of securing that capital more efficiently for those who are adversely affected, which is a point that I shall deal with later if I happen to catch your eye, Mr. Deputy Speaker.
Mr. Willetts: As always, my hon. Friend makes an important point, and I hope that he has an opportunity to develop his argument.
Will the Secretary of State provide more information about one aspect of the insurance scheme? He covered several aspects in responding to my letter, but I should like him to address the important question whether the Government stand behind the scheme; he mouths the word, "No". It is not a matter of what the Secretary of State says in the Commons but of the underlying reality of the arrangements. What matters is the substance, not the words. I remind him that the scheme is being created by a vote in the House of Commons. He will appoint the chairman of the scheme, fix a ceiling for the levy that the fund can charge and fix the value of the benefits covered by the scheme. Can he really say that it would have nothing to do with the Government if such a scheme were to fold? Would he dare to try to get away with saying that the insurance scheme had to fold in the only circumstances in which that might arise—if several large companies had seen their pension schemes collapse and been unable to meet their pension promises?
If the Secretary of State would be willing to walk away from the scheme in such circumstances, because it could not be guaranteed by the Government, why is it that the action plan he published last June stated:
- "The Government will improve the security of pensions by . . . introducing a Pensions Protection Fund to guarantee"—
- "members a specified minimum level of pension when the sponsoring employer becomes insolvent."?
Mr. Andrew Smith: I have made it clear that it would be the responsibility of the fund to meet its obligations and make good a decent pension for the people uncovered. The risk cannot be nationalised, and I suggest that it is not wise to nationalise it. The hon. Gentleman makes the case for underwriting. If the pension protection fund were established, with the approval of the House, would he commit a Conservative Government to underwriting it—yes or no?
Mr. Willetts: I am not talking about whether we say that it should be underwritten. I am asking the Secretary of State, who has to take responsibility for his own proposal, how he can promise people a guaranteed benefit at the same time as claiming that it will not be supported by the Government. That is the question that he needs to answer about his proposals.
Other proposals should have been in the Bill, but they are not. The Secretary of State gave a long list of such proposals when he identified several areas on which he would table amendments. A cause close to his heart is the so-called cliff-edge effect for people who retire and go from full-time employment to no employment. We all remember his soundbite—at least, his sound-nibble—on that, and I agreed with him. He made a fair point when he said that people should be able to go back to work part-time and also collect their pension. The Bill says nothing about that. What will he do about that proposal?
I welcome the fact that the Secretary of State said that section 68, which rationalises the treatment of accrued rights, would finally be tackled. It has been an issue for a long time and it is time that it was addressed. We look forward to seeing the further provisions when they are announced.
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