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4.35 pm
Adam Price (East Carmarthen and Dinefwr) (PC): It is an honour to follow the hon. Member for Sittingbourne and Sheppey (Mr. Wyatt), who with characteristic modesty has downplayed his role in the campaign to get justice for former workers at ASW Sheerness. He has played an important role in deftly co-ordinating some of the parliamentary co-operation that has gone on so far—some more choreography may yet be needed in the weeks and months ahead. I am grateful to him for the role that he has played.
I say on behalf of Plaid Cymru and the Scottish National party that we welcome the Government's change of heart on the issue of pensions insurance. There may or may not have been a change of heart on the part of those on the Opposition Front Bench as well, but the Government's position is greatly to be welcomed. It is a major step forward for the Government, and for any Government, to accept such an important principle, however belated that acceptance may be. It is clear that the Bill is the only game in town for anyone who wants to achieve justice for 60,000 workers. On that basis I shall be proud to vote for the Bill on Second Reading so that it can be amended in Committee.
It is important that we approach the debate with a touch of humility. The reason that we are debating the Bill and the reason why we have been lobbied today by 60,000 families whose lives have been devastated is that the House, the Government and previous Governments got pensions policy so badly wrong on so many previous occasions.
The Government refuse to accept complete responsibility, as Governments often do, for the genesis of the crisis. It is said that no one could reasonably have foreseen or forestalled the current crisis. I am not sure that that claim bears scrutiny of the facts. The Government knew that there was a problem as early as June 1998, when they considered the minimum funding requirement. They instituted what was effectively a quick fix in terms of the reduction in MFR liabilities, but they knew that there was a problem. Over the next few years, as we have heard, there has been a rash of Green Papers, reviews and consultations, ending up where we are now, with the Bill.
Four times in four years the Government examined specifically the idea of some form of mutual insurance or discontinuance fund.
Sir John Butterfill: I am following the hon. Gentleman intently. To be far more realistic, on two separate occasions it was not the components of the MFR that were reviewed; given the decline in bond yields, the requirements for MFR were progressively reduced on two occasions. That was entirely the wrong thing to do. The right approach would have been to maintain value while changing the components. That is what the Government significantly failed to do on two occasions.
Adam Price: I certainly could not compete with the hon. Gentleman given his expertise on these matters.
A rash of mistakes have been made over a fairly short period, and, specifically on insolvency insurance, the Government explicitly rejected their current approach as an option in what were, effectively, four separate policy pronouncements over four years. It is remarkable, therefore, that such insurance should now be embraced as a core principle of Government policy.
John Robertson: Does the hon. Gentleman agree that the European Insolvency Directive 1980 has saved some companies, and certainly saved some pensions? To say that everything has happened in a short space of time is not strictly true.
Adam Price: I was coming on to the previous Administration's responsibilities, but the hon. Gentleman is quite right. I have not seen counsel's advice to Amicus and the ISTC, and we do not want to tread on that territory too much. There is a case to answer, as article 8 of the directive makes plain. In other European jurisdictions—there may be a question mark over the Netherlands and the safety net in situ there—there is a pensions safety net, which is why, in the case of Irish Fertiliser Industries, there is such a discrepancy between the experience of employees in Belfast and employees in the Republic of Ireland, which has transposed article 8. I have met the official in the European Commission responsible for the directive,
and he said that if the Government's legal argument relies on the fact that in 1995 the Commission gave the UK a clean bill of health, that would be a weak defence. The Commission has written to the UK Government asking for clarification of the way in which the directive has been transposed in UK law, so it obviously has doubts about the matter.Those difficulties could have been avoided if the directive had been transposed in 1983. Clearly, there were serious problems with Conservative policy, as we have heard, including the Pensions Act 1995, particularly section 73, which does not take account of the age or length of service of a member when determining the priority of his pension rights. A pensioner with three years' service could be paid in full, whereas an active pensioner with 30 years' service could receive little or nothing. That is not right or proper, nor is it fair to treat people aged 64 with pension benefits worth many thousands of pounds, in the same way as people aged 26 with pension benefits worth only a few hundred pounds.
The legislation was therefore seriously flawed. The Secretary of State referred to the Goode committee. I am not sure how good it was, but two proposals for a central discontinuance fund were subsequently presented, including one from the Government Actuary, to the pension law review committee. Unfortunately, the Government did not see fit to act. We should remember that when the Labour party were in opposition they tabled an amendment to the 1995 Act to create a central discontinuance fund. Unfortunately, however, they have not instituted such action until now.
As for non-feasance by the present and previous Governments, we need to consider the issue of retrospection, which has been used as an argument against intervention. When it suits Governments, they act retrospectively. For example, the House had a free vote in 1996 on its own pension fund arrangements. It overturned the recommendation of the Senior Salaries Review Body and backdated a 26 per cent. pay rise for pension purposes to MPs who left the House before the pay rise came into effect. There may have been good and honourable reason why that was done in respect of Members who would retire at the subsequent election, but it was a clear example of retrospection and backdating, and seven current Cabinet Ministers voted in favour of it.If retrospection can apply to our pension fund, surely we should not argue that the principle of non-retrospection prevents us from providing justice for workers at ASW and other companies. It is vital for the reputation of the House and our democracy that we are seen to be scrupulously applying the same standards.
There are other examples. On 11 June last year, when the Government announced the proposal for a pension protection fund, the Secretary of State also announced that to prevent solvent employers from winding up their pension funds and walking away from the schemes, as in the case of Maersk, he would require them to buy out in full. I support that, but the statutory instrument in question, the deficiency on winding up regulations, was not laid before Parliament until 23 February this year,
and it will not come into force until 15 March, yet we read in article 2 of those regulations:
- "This regulation shall apply in the case of a scheme which begins to wind up on or after the 11th June 2003".
- "to consider whether the general public interest in the law not being changed retrospectively may be outweighed by any competing public interest."—[Official Report, 6 March 2002; Vol. 381, c. 410W.]
The Government have been forced by the sheer strength of the public outcry over the pension crisis finally to act, but if the Secretary of State will forgive me—I do not think it is his fault—there may be an accusation that they are trying to do so on the cheap. They need to appear to be doing something, but they are doing nothing to right past wrongs, and they may not be doing enough to prevent recurrence of the problems in the future. As we have heard, the model for the pension protection fund is the Pension Benefit Guaranty Corporation in the United States, which to all intents and purposes is a Government-sponsored enterprise, in the same way as is Fannie Mae—the Federal National Mortgage Association. It is essentially a Government agency. We realise that there are significant problems with the PBGC. In the last financial year, single employer insurance programmes went from a surplus of $7.7 billion to a deficit of $13.6 billion. In 2002, they received more claims than the total amount in their previous 28 years of existence. That is why both Houses of Congress passed a Pension Relief Bill to stave off what is seen as the inevitable bankruptcy of the guarantee corporation. People are asking whether this is going to be another Savings and Loan.
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