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Madam Deputy Speaker: Order. There is far too much noise in the Chamber.
Mr. Willetts: The new clause appears to have been cobbled together at the last possible moment, without answering any of the questions that the Secretary of State has told the House for the past 18 months had to be studied before he could take any action. The question before us now is why such a thin new clause has been tabled at such a late stage, and which does not answer any of the relevant questions.
Let me put to the Secretary of State some of the questions that he has told the House for the past 18 months that he has been busy studying. First, we have heard various suggestions that he will restrict his assistance to pension rights accrued pre-1988 and to people who joined pension schemes pre-1988, when it was indeed possible for companies to make membership of a pension scheme compulsory. That was changed in the Social Security Act 1986 and after 1988 no one had to be a member of their company pension scheme. People may not have realised that there had been that change because their contract of employment may have appeared still to require compulsion. Is the Secretary of State contemplating some restriction so that the provisions would apply only to those who were compelled to join schemes or who built up rights pre-1988? That issue has been discussed for a long time, so can we have some indication of the Government's thinking?
Secondly, what about the scale of the losses? Are the Government intending to provide more assistance for the people who lost most or are they thinking of targeting people with substantial losses? Will there be a minimum loss, below which people will not receive any
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assistance? That seems to me to be an elementary question to ask of any compensation scheme. Again, can Ministers please respond to that question?
Thirdly, what about the use of the pension protection fund itself? I do not believe that the Minister for Pensions fully captured the purpose of our amendment. It is not our intention to make the levy in the PPF the basis for funding the assistance retrospectively. We fully understand that the new insurance scheme has to operate for the future. Our point is different. An institution is being established, which will deal with the assets of insolvent pension funds. I presume that some expertise will be built up to help people whose pension funds have wound up.
The Minister referred to the obvious ways in which new help could be provided and mentioned the possibility of his Department setting up a separate institution. What he missed out from his list of possibilities was the most administratively simple way of proceeding—setting up a separate compartment within the overall structure of the PPF that would receive the Department's funding and take in the assets of the companies that are winding up their pension schemes, enabling them not to have to purchase annuities. We would like to hear more from the Minister about that. Such a body could then administer the assistance programme that he is announcing. I am genuinely baffled as to why Ministers are ruling out using an institution that is being set up by the Bill before us.
I do not know why it is all so difficult. Is it because the Secretary of State, in broadcast media interviews, appeared to rule out the PPF being used in that way and does not want to go back on it? Is there any rational reason for inventing yet another institution when the Bill is setting up one that could easily be used for the purpose? We would be grateful for the Minister's guidance on that question.
I would like more detail on the scale of the assistance. Let me offer the House some admittedly rough and ready or back-of-the-envelope figures. Here we go. The number of people affected is 60,000. That figure was first given officially by the Secretary of State in an Opposition debate on this matter earlier this year. The assistance to be provided amounts to £400 million. Dividing £400 million by 60,000 gives me a figure of slightly under £7,000 for every person affected.
I am sure that hon. Members of all parties have had people at their surgeries who have lost that amount every year from the pension that they expected.
Sandra Osborne (Ayr) (Lab) rose—
Mr. Willetts: I shall just finish this point, and then I shall give way to the hon. Lady, as I have given way to the hon. Gentleman already.
Each person will get slightly less than £7,000 in total over 20 years, but we know that many people have lost more than that every year. What sort of annuity would a capital sum of £7,000 buy? With luck, it might buy one worth £350 a year. That is nothing like the scale of financial loss faced by many people.
The advocates of early-day motion 200 were not satisfied with our early-day motion 66, but they campaigned for full compensation for the people who
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had lost out. Many Labour Members put their names to that demand. Do they consider the package before the House today, given the sort of figures that are being used, to be anything like the full compensation that they requested when they subscribed to early-day motion 200? Perhaps the hon. Member for Ayr (Sandra Osborne) will comment on that.
Sandra Osborne : Some of us will want to press the Minister about the percentage that people can expect. Does the hon. Gentleman recall that in the Opposition debates to which he referred, he was extremely reluctant to commit his party to public expenditure of any kind? Now that he appears to support a rescue package, where would the Opposition find the money for it—in the very unlikely event that they became the Government—given the cuts that they intend to make?
Mr. Willetts: The hon. Lady raises exactly the point to which I want to turn. The House, and those Labour Members who signed early-day motion 200, must accept that the Government are in a position of maximum political exposure. I think that they could have faced defeat in the House this afternoon, but they have come up with a package worth £20 million a year for 20 years, to be financed out of public expenditure. We can take it that that is the maximum amount that the Government are prepared to make available to help the people who have been affected. That falls a long way short of the amount of assistance that the announcement led many people to expect. I saw the photographs of ASW workers celebrating on Friday night. They raised their glasses to this great settlement, but I am afraid that, for many people, euphoria will turn to depression when they discover how modest the help is.
As a result, either we have to call for more public expenditure—and I do not believe that we should—or we must turn to the other proposal that is on the table. It is an option that the right hon. Member for Birkenhead (Mr. Field) has raised before, and it involves using the unclaimed assets of banks and building societies to make the amount on offer a useful sum. I am clear that the sum of money proposed at the moment will not match the scale of the financial distress that people face, but I do not believe that there is any reasonable prospect that the Government will put in any more money.
Mr. Bill Tynan (Hamilton, South) (Lab) The hon. Gentleman has been doing sums on the back of a fag packet. How much does he believe should be given in compensation or assistance to help the 60,000 people who have lost out? Will he clarify the Opposition's position with regard to retrospection? Does he believe that the Bill should contain a provision for retrospection?
Mr. Willetts:
The hon. Gentleman says that I am quoting figures that I have worked out on the back of a fag packet. I freely accept that they are rough and ready, but they are more detailed than anything that the Secretary of State has had to offer. The Department for Work and Pensions has worked on the problem for more than a year, but no practical evidence has yet been offered about the scale of the problem.
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It is very difficult for the Opposition to estimate the scale of the problem. We have been pressing Ministers about the 60,000 figure, which was offered by the Secretary of State when we asked him for an estimate of the number of people affected. Given that we have hit the limit for public expenditure on this matter, I believe that the only way forward is to increase the financial support for people who have lost out by using the unclaimed assets to which I referred. The Chancellor specifically referred to that in the Red Book this year. It states on page 116:
"Where assets and owners cannot be reunited, it is also right that the assets be reinvested in society, as long as the original owners' entitlements to reclaim are preserved."
The Chancellor has his eyes on that money, and the Irish Government have introduced reforms aimed ultimately at claiming unclaimed assets after 15 years.
The House faces a problem today that is as serious as the problem we faced before. In some ways the problem is worse, because many people think—as a result of the announcement and the amendment—that their problems have been solved. Their problems have not been solved. Therefore, either we need yet further public expenditure or we should use the unclaimed assets, and I favour the latter approach.
2.45 pm
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