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Amendment (c) to the proposed new clause, line 73, at end add—
'( ) Assistance from the financial assistance scheme shall be at least sufficient to provide total benefits to qualifying members as they would have received had their scheme fallen within the scope of the Pension Protection Fund.'.
Amendment No. 212, in page 76, line 27 Clause 113, leave out subsection (2).
Government amendments Nos. 216 to 218.
Malcolm Wicks: Nothing will prevent the Pensions Bill from passing into law.
The pension protection fund is a major social policy advance that will bring protection and security to more than 10 million pension scheme members and their families. We hope that it will start in April next year, subject to the will of Parliament. I believe that one day it will be viewed as a substantial achievement of the Labour Government, but it is overshadowed by a cloud—the plight of the tens of thousands of workers who have already lost their pension rights or a large percentage of them, which is debilitating for those affected and undermines confidence in the idea of saving for a pension.
The Secretary of State, other Ministers and I have been considering for some time whether something could be done to alleviate the situation. We have been assisted by the representations of many hon. Members, including my hon. Friends the Members for Cardiff, West (Kevin Brennan), for Sittingbourne and Sheppey (Mr. Wyatt), for St. Helens, North (Mr. Watts), for Ayr (Sandra Osborne), for Hemel Hempstead (Mr. McWalter) and many others. All have expressed deep concern, which we share, about the position of their constituents. I should add that my right hon. Friend the Member for Birkenhead (Mr. Field) has been a stern social security saint, judging our stewardship of this vital issue. [Interruption.] It is those in front of me from whom I have nothing to fear. The Secretary of State, other Ministers and I have met a number of members of affected schemes. I cannot mention all the schemes, but Allied Steel and Wire, Ravenhead Glass and Dexion come to mind. Most of those people expect to receive a much reduced pension. I have been deeply moved, as we all have, by the distress and bewilderment of many people who, after long years of paying into a pension scheme, have been told that, after all, the pension they are relying on, and which they have paid for, will not be there.
Mr. Douglas Hogg (Sleaford and North Hykeham) (Con): Will the hon. Gentleman tell the House how, as we are establishing a precedent in the new clause, we can guard against having to pay compensation in absence of fault? That troubles one very much, because one does not wish to establish such a precedent.
Malcolm Wicks: Although one might use a variety of terms in English usage, this is not compensation, and there is no legal liability. We are proposing an assistance scheme.
Alan Howarth (Newport, East) (Lab):
My hon. Friend said that the Government do not have a legal obligation. When my right hon. Friend the Secretary of
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State for Work and Pensions spoke on the radio at the weekend about the plight of workers who have lost much of their pensions in defined benefit schemes, he said, "My goodness they've got a human case." On the basis of humanity, why should the Minister not respond with equal generosity to people who, through no fault of their own, have lost out in defined contribution schemes, which they were required to join as a condition of employment? In fairness, why would he not then extend help to pension policyholders in Equitable Life, where the Government's duty of care was certainly no less?
Madam Deputy Speaker: Order. That is a rather lengthy intervention.
Malcolm Wicks: There is general acceptance of the argument that there is a genuine difference between the situation described by my right hon. Friend and that facing this group of workers, some of whom had to join their pension schemes and are now in difficulty. As I describe our proposals, some of those issues may become clearer.
Malcolm Wicks: I should like to describe the progress we have made, because hon. Members may wish to question me about some of the details. First, however, I shall give way to my hon. Friend the Member for St. Helens, North.
Mr. David Watts (St. Helens, North) (Lab): I thank my hon. Friend for his comments. I urge him to ignore the beliefs of some of my hon. Friends, as we very much welcome the decision, which, we understand, was difficult and involved the Treasury, the Prime Minister and the Secretary of State for Work and Pensions. Firewalls have had to be built in, but we welcome and support the proposals.
Malcolm Wicks: I thank my hon. Friend for those remarks.
Malcolm Wicks: I think it would help the House if I made some progress; there will be plenty of time for dialogue and debate later.
Many people—ordinary, hard-working people—are being left with their legitimate expectations of a comfortable retirement in tatters. That cannot be right. One of the many people whom I have met was distraught that her plan to retire this year on an expected two thirds of her final salary has been wrecked as a result of her employer's insolvency. Coming up to her 60s, after 18 years of service in the company and 18 years of contribution, she has had to decide to continue working. It would be a hard heart that was not moved by the plight of such shattered individuals.
In the meetings that I have had—I know my ministerial colleagues would echo this—I was touched by the remarkable restraint and quiet dignity of many of those people as they modestly explained their plight. I asked what it meant for them, and their stories are in my mind, such as that of the man who, in his early 60s, had
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to return to rather backbreaking work at an airport, lifting luggage. People told me—reluctantly—about the effect on their family, their marriage, their health and their mental state. When I met these people, the phrase "proper people" always came to my mind. They are proper people, hard working, who have taken on their responsibilities, not least for their own pensions futures.
The Government have been clear all along that if we could do something to help such people, that would be the right thing to do. That is why I am so pleased—indeed, honoured—to be at the Dispatch Box to move new clause 34. It will assist people who have lost out severely as a result of the winding-up of their pension scheme as a consequence of the employer's insolvency.
Mrs. Iris Robinson (Strangford) (DUP): Will the measure close the loophole in the case of companies that do not declare insolvency, but decide to uproot and move to other parts of the world, leaving a deficit in the pension scheme? Will people be protected in such cases?
Malcolm Wicks: I may be able to cover some of those issues in a moment. The scheme is very much for the insolvent employer. It cannot be about any disappointments in a range of pension schemes. Where an employer is solvent, the responsibility rests with that employer.
Over the past few months we have been clear with the House that a potential action for the group I was describing raises a number of complex issues. In particular, we have been clear, and I am sure the House will understand, that we cannot accept liability for private pension losses in general. Indeed, it would be quite wrong to do so, and would mean the taxpayer writing a blank cheque. No Government can undertake to nationalise financial risk. While we do not accept any Government legal liability, we do accept that the situation is very serious. It is right that the Government take action to provide some assistance.
The new clause requires the Secretary of State to establish a financial assistance scheme for people who are in underfunded occupational pension schemes that have begun winding up before the pension protection fund is set up. The Government have put forward £400 million over 20 years to help address the serious losses that some now face. It is open to industry to offer further support. We hope that that support will be forthcoming. This money will not cover everyone who feels aggrieved, nor will it give those it does help everything they might want, but it represents significant help to those who have lost the most.
Mr. Steve Webb (Northavon) (LD) rose—
Mr. Jim Cunningham (Coventry, South) (Lab) rose—
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