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Kevin Brennan: I accept that it is not possible to say that full compensation will be paid, and I have never used those words—as the hon. Gentleman, who listens carefully, knows. I am satisfied that the measure is a major breakthrough that will provide significant sums to pay substantial compensation. If that compensation is cleverly combined with the available assets, a significant level of assistance—I should not use the word, "compensation"—should be available. If someone had offered my constituents significant assistance when we started the campaign two years ago, my constituents would have bitten their arm off. I accept that a lot of detail must be worked out, and people are understandably anxious because they want to know what they will get.

The measure is not about fobbing off people, buying off people or fooling people. Indeed, such an approach would not work because workers, other hon. Members and I would return to the issue, and the trade unions would pursue their legal case under the European insolvency directive—that possibility remains if substantial assistance is not made available. I believe that substantial assistance will be made available, although I accept that a lot of the detail must be worked
 
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out. The possible legal obligation on the Government under European Union law to protect pensions is one of the three reasons why the measure is right.

The moral obligation to act has been discussed in great detail, and it is not good enough to argue that the matter concerns hard luck. If someone pays into a defined benefit scheme, the scheme's nature means that a pension promise has been made. It is not good enough to say, "We can all walk away. Hard luck if you have worked for 40 years in a company and your pension is taken away from you at the last minute."

It is in the public interest to make the Bill a success. As the Minister says, a cloud has hung over the Bill, which is, incidentally, among the most progressive pieces of legislation to pass through this House for many years. The Bill is about security. The Labour party was invented to provide social security for working people, and that is its fundamental purpose.

The Bill is in the public interest, because some 60,000 people—we will not know the true figure until people come forward—will not go round saying, "Don't believe that the Government will help to protect your occupational pension. Don't believe that your pension is safe, because look what happened to us." If we assist those people, they will say, "We were worried that we would lose our pension, but, at the end of the day, the Government"—in this case the Labour Government—"would not permit that to happen."

We have discussed in detail the difference between occupational pensions and cases such as Equitable Life. One can sympathise with people whose expectations are disappointed, but that is very different from a pension promise backed up both by the permission of compulsion by the state and by the fact that the state, through its agencies, told people that their pensions were secure and guaranteed. When someone chooses to invest in a company, their expectations might be disappointed, but they have not lost a guaranteed pension that they thought would be based on their final salary.

Some questions of detail must be settled, and I am pleased that the Minister set out a clear timetable to resolve some of those issues. I am sure that hon. Members want to raise questions such as the exact point at which the assistance starts, and my right hon. Friend the Member for Birkenhead and my hon. Friend the Member for Ellesmere Port and Neston (Mr. Miller) are particularly concerned about that point. I am happy with the Minister's comments on that issue: he has not said that the point at which assistance starts is written in stone and, importantly, he is prepared to consult.

3.45 pm

The various definitions of insolvency raise some issues, and we should make it clear that no one should be left out because of a technicality. We must ensure that we help the people who need assistance.

Mr. Miller: I congratulate my hon. Friend on his sterling work. In supporting new clause 34, does he agree that our party's history, which he mentioned, is one of protecting people who are disadvantaged by an
 
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outside body, in this case, pension funds, which is why schemes such as the HH Robertson scheme should be included?

Kevin Brennan: My hon. Friend makes the point eloquently—he has also made it in private meetings with Ministers—and I am sure that his comments have been heard.

Other issues must be clarified. It is vital that the trade unions are involved in the consultations and the setting up and fashioning of the scheme. We must do everything that we can to maximise the value of the remaining assets in the pension schemes that have been wound up or are winding up. We must ensure that the three-year review, which is a key part of the measure, takes place, and the review must act if it finds that the scheme is inadequate and is not providing substantial help.

I do not want to discuss exact percentages today, and the Government are right not to do so. We all know what 100 per cent. of nothing equals—the phrase is too impolite to say in this House—but that is what some workers faced. We must ensure that those affected, especially those who have contributed for many years and who are close to retirement, receive a substantial pension. We all have a duty to help those affected, and I pay tribute to all hon. Members, particularly to those on the Government Front Bench, for their contributions. Most of all, I pay tribute to the workers who have campaigned on the issue.

The scheme is the right way forward. It was always going to be better for the Government to introduce their own proposals, which they have done. I welcome their proposals, and we should all support new clause 34.

Mr. Redwood: I remind the House of my interests, including the fact that I am a pension trustee, but I am not speaking on behalf of that pension trust in this debate.

Those hon. Members who, like me, were involved in past lives with the pensions industry, will know that final salary pension schemes are a great idea if they combine a generous employer with a well-funded scheme. Such schemes can offer extremely good pensions, but we also know that on too many occasions the employer either is not generous or is unable to be generous because of pressures or strains in the business. Despite the formidable array of regulatory controls, interventions and actuarial advice, on occasions the funds in schemes are woefully inadequate to cover future liabilities.

In recent years in particular, when regulation has been intensified, Governments and their regulators have been wrong to give people the impression that final salary schemes are secure and that they are the best way to fund one's pension in all cases. Final salary schemes entirely depend on the generosity of the employer and how much the employer can afford to pay, and many people have been misled. It is ironic that the pensions crisis has developed severely in recent years while the regulatory effort and cost in the system have massively increased. One can waste an awful lot of money on regulation and not tackle the underlying problem, which is the inadequacy of pension payments and of the funds with which to pay them.
 
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Andrew Selous: Does my right hon. Friend agree that there is an unsatisfactory inconsistency in the fact that whenever a member of the public may be about to buy equities there is a warning that the value of those equities could go up and down, whereas that is not the case with pensions? When the chief operating officer of the Financial Services Authority wrote to me in March, he said that he accepted that the risks of a scheme and employer insolvency are not dealt with in every publication about pensions. Does my right hon. Friend agree that people were misled in thinking that such schemes were guaranteed?

Mr. Redwood: They were grossly misled. That is a great tragedy, as is the fact that many of their decisions were made as a result of that.

David Taylor: The right hon. Gentleman assented to his hon. Friend's comments on advice given to those about to invest in a pension scheme. Does he therefore assent to yet more regulation in a speech that is, one presumes, in favour of pruning it back?

Mr. Redwood: I am not assenting to more regulation, but saying that it can be a waste of money and time if it does not address the underlying questions of whether enough money was going into the funds in the first place, whether that money was well managed in such a way as to combat the very real risks in financial markets, and whether there was the right relationship between the employee, the company and the trustees in each case. Clearly, that was not so—the regulators either did not know or did not care.

It would not be possible to design a faultless system that guaranteed, through regulatory devices alone, that people could live in a world where final salary pension promises could be made and always met. We simply do not live in that sort of world. We have to explain honestly to people that there are limits to what one can offer and guarantee, and that there is a range of difficult choices in this field, as in many others, given that we lead our lives subject to risk. Just as one can buy the wrong house in the wrong area and the price can go down, so one can buy the wrong pension. It is unforgivable that regulators should have intervened in those judgments by giving bogus and wrong advice suggesting that a final salary guarantee is a real guarantee that can be met in all circumstances. Any sensible person would know that that is wrong. We have now lived through a series of circumstances in which many well-intentioned companies could not meet that guarantee, let alone those that may not have been so well intentioned and have also been hit by events in the markets.

The purpose of the Government's new clause is wholly admirable. It is a cross-party wish—Members on both sides of the House have made these points powerfully and often—to see something done for the people who have fallen by the wayside because they had been given final salary promises that could not be met, and are going to be broken in a very material way. I am delighted that the Government are proposing to remedy that. However, as other Members have said, £20 million a year is a very small sum of money in relation to the magnitude of the crisis. My hon. Friend the Member for Havant (Mr. Willetts) pointed out that it equates to an average of £6,700 per person. It might buy an annuity of
 
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£500 a year for a person who does not want to index it, so he would have a progressively smaller pension in terms of purchasing power over the years, or £350 a year with increases in line with prices. That is roughly what current actuarial tables would show.

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