| Previous Section | Index | Home Page |
Mr. Watts: The Government have made it quite clear that the scheme does not offer compensation. They have resisted the notion of liability and have proposed a hardship fund. Do the hon. Gentleman's comments not make it more difficult to try to convince the Government to do something similar in future, because everyone will line up trying to find criteria to extend the help given to a particular group?
Mr. Webb:
I do not accept that. We need to ensure that justice is done, but we will not do people who have suffered an injustice any favours if we ask them not to make a fuss about their case because that may prevent other people who have suffered an injustice from getting handouts. That is not a basis on which to draw up a scheme. The Government have asserted that the scheme
19 May 2004 : Column 1009
is effectively a hardship fund, but payment should be made on a basis that dictates certain things about the level and structure of payments.
Mr. Miller: I would like to correct the hon. Gentleman, as the Pensions Act did not come into force in April 1997. It came into force in part when Royal Assent was given on 19 July 1995. "Butterworths" has 26 pages on the detailed provisions that came into force then. There are arguments for drawing a line at any one of those 26 pages, but I would urge the hon. Gentleman to agree with my analysis that either there should be no cut-off date, or it should be the date when Royal Assent was given.
Mr. Webb: I understand why the hon. Gentleman has made that point. The Government chose 1997 as the cut-off date because the changes in the order of priorities on the winding-up of schemes came into force then. It was in 1997 that trustees lost the discretion to divide an inadequate pot more fairly, but it was Government who changed the rules. However, I know where the hon. Gentleman is coming from, and I have a lot of sympathy with the amendment tabled by the right hon. Member for Birkenhead specifying an earlier date.
In 1997, statutory instruments removed employers' obligation to warn of insolvency risks. Because the 1995 Act had been introduced and there was a minimum funding requirement, employers' obligation to tell their workers that the pension fund was at risk when the company was in danger of becoming insolvent was removed by Government. A trail of responsibility starts to emerge, so this is about more than having sympathy for those employees—it is about justice, which is a key distinction.
The hon. Member for Cardiff, West mentioned the Financial Services Authority, which was set up by Government. In a guide to pensions headed "Reasons for joining an occupational scheme if you can" it said:
"In a final salary scheme you know broadly how much pension you'll get. This makes it easier to plan for retirement".
The Green Paper that the Government produced in December 2002 said on page 55:
"Accrued rights . . . are clearly protected under pensions legislation and this will remain the case".
Some people are getting nothing, when the Government were telling people only 18 months ago that their rights were protected.
"Occupational Pensions: Your Guide", a document produced in 2003 by the Pensions Service for the Department for Work and Pensions, told people who wanted to know how they could be sure that their money was safe that they were
"protected by a number of laws"
"act quickly to protect your interests".
Successive Governments do not have clean hands on this issue. The regulator, set up by the previous Government in the 1995 Act, issued a guide to trustees which has since been withdrawn. However, it said that the Act
"was intended to increase the security of members' benefits".
It talked about the minimum funding requirement and said that it was
"the minimum amount . . . that should be in the scheme at any one time . . . to meet the scheme's liabilities if it were to be discontinued".
However, schemes that met that requirement did not have enough money to meet those liabilities. The regulator was issuing erroneous information to trustees, and the Government, too, are not completely blameless.
The National Association of Pension Funds is not part of Government, but it issued documentation saying that the schemes were safe. It is reasonable to claim that as Government are part of the problem, more than just charity is required.
Mr. Waterson: I am following the hon. Gentleman's arguments closely. Does he share my surprise that in cobbling together a deal the Government have not obtained a firm undertaking that the European Court case will be withdrawn? Does that not mean that in due course they could put this package in place, the detail of which is still sadly lacking, but end up paying much more if they lose that case in the European Court?
Mr. Webb: I do not share the hon. Gentleman's view. Because this is about justice, if the unions' claim is tried in the courts and they are successful they have every right to pursue it, and should not bought off by this package. I am not suggesting that they were asked to give up their claim, but I do not believe that they should do so.
There are the hands of successive Governments all over this issue. Many of us have had to rely for information on the press, who were briefed by the Department, and the workers. Last night, I went across the road to meet the Dexion workers who were holding a vigil by candlelight. They asked me how much they would get, as it is still far from clear what they will receive. We have queried the difference between the £400 million fund offered by the Government and the cost of full cover, which is estimated to be more than £2 billion. In the Financial Times today, a Government spokesman said that
"we are not in the business of paying full compensation. What we are talking about is assistance. We are not guaranteeing anything."
That last sentence is critical. Even today, the Government cannot say what sums are available, so people do not know where they stand.
There is a big gap between the figure of £400 million to be paid over 20 years, equivalent to £20 million a year, that the Government have come up with and Dr. Altmann's estimate of £76 million to be paid over 30 years, or £2 billion in total. We do not know the precise figures, but there is clearly a big shortfall, giving rise to problems of timing, cover and level, the subjects of our three amendments. Amendment (a) deals with timing and says that payments should be
"made within six months of the coming into force of this Act".
We tabled the amendment last week to try to get the Government to say something on the record and stop the date drifting. We have received some reassurances from the Minister, who said that a scheme would be in place this time next year. If things are ready to roll then,
19 May 2004 : Column 1011
it would be about six months after the measure comes into force, so we shall not seek to press amendment (a) to a vote.
Cover is a problem, though. If the true cost of covering the 60,000 workers is £2 billion-plus, but the Government are offering only £400 million, there must be big exclusions, including people who work for solvent companies. The Government have prevented that problem from arising in future, because they have introduced provisions which, from last June, mean that solvent employers cannot close a scheme unless there is enough money in it. I hope that amendment (b), which the right hon. Member for Birkenhead tabled to our amendment, is not necessary, but there are cases historically in which people have been members of schemes closed by a solvent employer, where the minimum funding requirement was satisfied but there was not enough money in the fund to pay people full pensions. Those workers are as unfortunate as people who work for a company that goes bust, and should have the same rights as them. If people work for a solvent employer and the scheme is closed against their will, they have not suffered less injustice than people whose scheme is closed because the employer goes out of business.
Mr. Frank Field: The hon. Gentleman says that he hopes my amendment will be unnecessary and will not be pressed. Will he put that question to the Government, to ensure that his interpretation is the same as the Government's interpretation of what the law will be, which will make my amendment unnecessary? If the Government cannot give that assurance, he may think my amendment is necessary.
3.30 pm
Mr. Webb: Yes. To sum up on that point, my understanding is that no new solvent employer can now close an underfunded pension scheme because of what the Government legislated back to 11 June, so if we include solvent employers in the financial assistance scheme, there is no danger that new solvent employers will close their schemes, as the Government have separate provisions to prevent that from happening. That is my understanding of the implications of our amendment. It would be helpful if the Minister could confirm that when he responds.
| Next Section | Index | Home Page |