| Previous Section | Index | Home Page |
Mr. Fallon: What my hon. Friend says applies even more widely. Suppose a company is in difficulty and another wishes to come to its aid, take it over and put funding into it, and neither has a pension fund that is in difficulty. In circumstances where there is a third associated subsidiary company in the group, the directors and investors of the second company will be personally liable if that third company runs into difficulties with its pension fund.
Mr. Waterson: My hon. Friend makes an excellent point. Those are the kind of issues that one would have hoped would be hammered out at an early stage, before the Bill was even published. One wonders what the Government have been doing in the past couple of years, as the pensions crisis has mounted.
Let me turn to the question of the assistance package—that seems to be the term that has stuck on both sides of the House—for the 60,000 people who have already lost pension rights. I had the impression towards the end of the Secretary of State's speech that he was throttling back a little on the rhetoric, as he finally alighted on the phrase, "significant help". What that significant help will turn out to be is the real issue that we must address. Understandably, this entire Bill—the good parts and the bad—has from the beginning been overshadowed by the plight of those 60,000 people. We heard some details of that package yesterday, but there is much that remains to be seen. In fairness, the Secretary of State made that clear. One or two hon. Members described the scheme yesterday as a breakthrough, and I hope that it is. There was even a reference to "teutonic plates", which I think was intended to be a reference to tectonic plates. That is of course the sort of term that the Deputy Prime Minister uses as the small change of conversation.
I pay tribute to Members who have represented their constituents so valiantly. It is invidious to single anyone out, but I mention in particular the hon. Members for Cardiff, West (Kevin Brennan) and for Sittingbourne and Sheppey (Mr. Wyatt) and the right hon. Member for Birkenhead (Mr. Field), who has a distinguished track record. The trade unions, especially the steel union, have played a significant role. I also pay tribute to the Pensions Action Group—I believe that Mr. Andrew Parr is its doughty webmaster—and various groups such as Kalamazoo whose representatives have been to see many of us over a long period. Then there is the formidable Dr. Ros Altmann, whom we have all come to know as part of the process. Last but by no means least, there is my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard),
20 May 2004 : Column 1162
who seems to have been—if I may mix my metaphors—the final catalyst that made the tectonic plates start shifting.
We know from a no less authoritative source than The Times that after Prime Minister's questions a week ago, the Prime Minister stormed out and demanded to know why there had been so little progress on this issue. It seems fairly clear that at one point the DWP was taken out of the loop and the Prime Minister intervened directly with the Chancellor.
Let us be in no doubt that this package is nothing to do with principle; it is all about politics. It is another U-turn, negotiated at the very last minute by a Government who were staring defeat in the House of Commons in the face. A cross-party campaign had been welded together that would have defeated the Government had they not done something. They have done something, but is it enough?
The Secretary of State made a virtue of the fact that many of the details were simply not yet there, and said that new clause 34, which we debated yesterday, was very wide and general. The one detail that is absolutely clear and set in stone is the £400 million figure. The Government seem to have begun with the answer, and are now going to work out how to get there. It is no earthly good their saying that they are gathering data, as the Minister said yesterday. Why did they not start the process ages ago?
I remember that some months ago, at Question Time, Ministers refused a request from the hon. Member for Sittingbourne and Sheppey for an independent inquiry into the size of the problem. Eventually—and only after pressure from Conservative Members—the Secretary of State adopted the figure of 60,000. The work could and should have been done only by the Government. Why was it left to Dr. Altmann to produce her figures? They may be right and they may be wrong; I am not in a position to judge. Conservative Members simply do not have resources of that kind. But why have the Government so recently signed up to the notion that they should be in the business of finding out the scale of the problem? [Interruption.]
Mr. Deputy Speaker: Order. I think we have had enough of these continuous sedentary interventions.
Gregory Barker: My hon. Friend has considerably more experience in this place than I have. Can he think of another instance in which a Government of either colour have come up with such a neat, round-figure solution as the £400 million in answer to such an extraordinarily complex and difficult question, without even knowing at the outset what the question is?
Mr. Waterson:
My hon. Friend makes the central point. How was it possible to produce a figure without knowing the extent of the problem? The 60,000 figure has been bandied around for some time. It will presumably go up rather than down as other people get into pensions difficulties. But no matter what actuarial tables are used, dividing £400 million by 60,000 over 20 years does not produce a very satisfactory set of figures.
20 May 2004 : Column 1163
That is why we seem to be talking about assistance, not compensation. Even the hon. Member for Cardiff, West yesterday adopted the word "assistance", and the Minister for Pensions, too, has used it. We are talking not about full compensation, or perhaps anything like it, but about something to help the people affected. It will be more than tea and sympathy but less than compensation.
Why are solvent wind-ups not included? That point was made by the hon. Member for Northavon (Mr. Webb). I appreciate the Government's formal position, and as a lawyer, I understand why they have to have that kind of ex gratia arrangement. I shall come back to that in a moment. However, once we concede the moral case and decide to go beyond the legalities, how is the moral case of the pensioners who have lost out because of insolvent wind-ups any different in reality from that of those who have lost just as much, or possibly more, in solvent wind-ups? How can we make that distinction?
I mentioned the case in the European Court. It is rather odd, with the Government as the guardian of the taxpayers' interests, that as part of the deal that has been put together at short notice—not in the car park of the Loch Fyne oyster bar, but no doubt somewhere similar—no one thought to make it a term of everyone's signing up to the deal that that court case would be withdrawn. My understanding is that the unions think that they have a good case, and that they expect to win. Might the Government not therefore end up in a situation in which, having put together this package with the best of intentions—although we still have to hear much of the detail—they then find that there is a judgment against them for far more money in the European Court?
Another puzzling loose end to the package is the airy-fairy talk about contributions from industry and the pensions industry—about rattling the begging bowl to them to top up the amount. As the right hon. Member for Birkenhead, who obviously spends more time in the real world than some of the Ministers, said, why should industry do that? What possible argument is there for it to pay out money, particularly when it is gearing up to face the PPF and the levy?
The great unsolved mystery is the question of unclaimed assets. For month after month, Ministers' line and the Treasury line—of course, as I have said before, the DWP is a wholly owned subsidiary of the Treasury—has been that the fact that those assets are not claimed does not necessarily mean that they do not belong to someone. Suddenly, in the small print of the Red Book, those unclaimed assets, which were apparently previously unavailable for this purpose, are available to hand out to charities. That is very curious, and our line, as my hon. Friend the Member for Havant (Mr. Willetts) said yesterday, is that if there is a funding gap beyond the £400 million, that will be the moment to call on the unclaimed assets. Our preference, as the House knows, would be to start with the unclaimed assets from the beginning and to have a parallel fund to the PPF, under the same administration, which would be endowed not with retrospective use of the levy, because we accept the principle on that, but with the unclaimed assets.
20 May 2004 : Column 1164
That brings me to another curious question: why not entrust the administration of that separate scheme to the PPF itself? It sounds as if the time scale for that will be roughly the same as that for the PPF's coming into force, so why not just use the same people? That might be one option that is being considered, but it would certainly make sense to us.
I shall come in a moment to discuss compensation under the PPF, but one thing that is clear is that whatever compensation the 60,000—or some of them—will get will be significantly less than that which they would have received under the PPF arrangements. As I said, we have had very little detail. We will receive more, to which we look forward, but the Government still have to square the circle on how the £400 million will go round.
Finally—which with politicians generally means that they are roughly halfway through their remarks—I shall deal with the PPF itself, which will be the Bill's long-term legacy. Indeed, it is fair to say that it is the Bill's centrepiece. The Minister said in various speeches on Report that the Government have learned lessons from the American Pension Benefit Guaranty Corporation, which, I should remind him, has a current deficit well in excess of $11 billion. I have visited the United States to meet people such as Steve Kandarian—as has the Minister—although I need not have bothered, as he came to London to give a lecture only a couple of weeks ago. He has given up the burden of running the PBGC, and the advice that he gave in Washington and in his London lecture was based on the PBGC's 30-year track record. First, one must get things right at the outset; otherwise, the political pressures against making significant changes are too great later on.
Secondly, one must have a proper risk-based levy at the outset. Of course, although the PBGC was set up to deal with the collapse of the Studebaker car company, none of its workers ever received any compensation and it was several years before benefits were paid out. However, we now know—the Minister let the information slip in Committee—that it could be 2009 or 2010 before the full risk-based levy is up and running for all companies. That is extraordinary. It will lead to all the additional problems of moral hazard and to the good subsidising the bad, and it will make nonsense of the early years of the PPF. We have long taken the view that the PPF will be highly vulnerable in its early stages. It is widely believed throughout the industry that its estimated £300 million cost is understated, and there is plenty of anecdotal evidence of schemes waiting to collapse into the welcoming arms of the PPF once it is up and running. Indeed, it could well face some significant claims in its early days.
An interesting side issue is the PPF's investment strategy—
| Next Section | Index | Home Page |