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Mr. Andrew Smith: The hon. Gentleman speculates that it will be 2009 before the levy is up and running for all companies, but he is able to arrive at that position only by virtue of the allowances that we have made in respect of triennial valuations. In terms of minimising the very regulatory burdens on business about which he would otherwise be complaining, it makes sense to allow some who have a valuation at the end of the period in question to have a valuation at the time. This is a
 
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sensible way to introduce the provision. It minimises the extra cost and regulatory burden on businesses and their schemes.

Mr. Waterson: With respect, the Secretary of State is explaining why we have this delay, rather than whether it is a good thing. [Interruption.] The Minister for Pensions asks what we think, and I shall come to that in a moment. I understand the point about the triennial cycle. In Committee, we suggested a stop-gap approach—I do not expect the Minister to remember; none of us has a memory that good—based on the recommendations of actuaries. As a temporary measure, one could rely on the old minimum funding requirement system. But what is clear is that it will be extremely bad news if the risk-based levy is not up and running by day one, or very close to it.

One of the unanswered questions in Committee was whether the PPF constitutes an insurance scheme or a pension fund. The Minister has memorably said that it is neither, but the answer makes an important difference to its investment strategy. Mr. Kandarian touched on this issue in his lecture, which the Minister unfortunately missed as he had other things to deal with. Of course, before leaving the PBGC, Mr. Kandarian changed its investment strategy in respect of equities and bonds. He likened the situation to a fund being set up to insure owners of Atlantic coast seafront properties against hurricanes and floods, only for the fund itself to invest its assets in such properties. There is a real danger in this regard, and we fail to listen to Mr. Kandarian at our peril.

The central issue is what people out there believe they will receive under the legislation. There is a danger of them running away with the idea that they are being given a full safety net or a full guarantee, whereas the reality is very different. If the Bill is a lifeboat, it is, for several reasons, a leaking lifeboat.

The first is the cap that is built into the Bill. Another is the 90 per cent. rate for people who are not retired, which we debated earlier today and yesterday. Another is indexation and the 1997 cut-off date. Organisations such as Age Concern have expressed concern that some pensioners might receive only 70 or 80 per cent. of what they had expected. There is also the Government's retained power to reduce benefits in what the Minister calls "extreme circumstances". As I said yesterday, extreme circumstances are likely to be when the fund does not have enough money. Finally, there is the Government's unwillingness to stand behind the PPF. For the average punter, the Government's willingness to do so would be the critical factor for establishing confidence in an occupational pension scheme.

Mr. Smith: Is the hon. Gentleman saying that a Conservative Government would stand behind the PPF? He has been telling us all how bad the Bill is, so is he going to repeat Conservative voting on Second Reading by voting against it on Third Reading?

Mr. Waterson: Well, we did not vote against the Bill on Second Reading and I will come on to Third Reading in a moment. [Interruption.] I am not in a position to commit the next Conservative Government to standing behind the PPF, but the Government should not have dismissed that option so lightly. I wonder whether
 
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Ministers met the same people and heard the same things as I did when I was in Washington. I did not meet a single person who dissented from the view that, if it came to it, the Federal Government would have to stand behind the PPF.

Our concern is that we want the Bill to work properly because we will have to inherit the problems that are built into it. The Minister for Pensions was right when, in a moment of revealing candour yesterday, he talked about rough justice. That is exactly what we are talking about. Clearly, the Bill does not necessarily provide full compensation—or anything like it.

Will the Bill achieve its central aim, which must be to restore confidence in the pension system? That is the cross-party aspiration. The Association of Consulting Actuaries has conducted a survey of employers since the Bill was published. It found that the majority of firms felt that the measures would decrease occupational pension scheme coverage. Fewer than one in 10 firms felt that the measure would improve pension coverage. About 64 per cent. thought that £15 for the levy per defined benefit scheme member would be too much; and more than three-quarters said that the new knowledge and understanding requirement placed on trustees would deter individuals from wishing to be trustees. Not much encouraging news there.

Only rarely do Governments have the opportunity to amend pensions law. I should know, because I served in Committee on the Pensions Act 1995. Faced with an unprecedented pensions crisis and a halving of savings in this country, the prsent Government have simply not risen to the challenge. They have produced legislation that is confused, complex and bureaucratic. They also failed to tackle the problem of the 60,000 people who have lost pensions—a problem crying out to be dealt with—until they were forced to in a panic through a last-minute assistance scheme. The Government have failed to do a single thing to encourage new defined benefit schemes or to keep existing ones open. Nothing in this flawed Bill will restore public confidence in the pensions system. In short, they have blown it.

We will not vote against the Bill on Third Reading any more than we voted against it on Second Reading. However, we hope that their lordships will improve the measure beyond recognition.

4.4 pm

Mr. Tynan: First, I am grateful for the opportunity to speak today. I was going to make this speech yesterday, but I have managed to hold on to it until today. I was very happy about new clause 34 yesterday, but I am concerned about the nuts and bolts of it. The proposals put before the House yesterday still cause me concern, as I made clear in an intervention earlier.

This is a very serious matter, and the Bill allows us to make real progress on it. Six of my constituents have lost their pensions, as I wanted to put on the record yesterday. Three of them—James Gilmour, Robert Heggison and a Mr. Sam Stevenson—worked at Motherwell Bridge Holdings, a firm which had lasted for 100 years. The firm went into receivership and was then recreated as a new company. My constituents lost their pensions as a result of that revolving-door receivership. I am worried that they will get nothing from the proposed fund.
 
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Two other constituents, Mr. Japp and Mr. Kenneth Barrie, worked for Melville Dundas in Hamilton, and I do not expect that they will face any problems. However, Mr. Colin Preston worked for the Bradstock company, and he wrote to me about the difficulties that could arise with his pension.

I welcome this important Bill. My hon. Friends on the Front Bench and others put in much hard work in Standing Committee, for which I am grateful. Much had to be done, and an enormous number of amendments were tabled. The Bill has been turned into something that will make a real difference to the people of this country.

The Bill is badly needed, because people had lost confidence in the pensions industry. I hope that the Bill will restore their confidence, but as I said, there remains one tiny element that requires attention.

I turn now to the pension credit and means testing. I read a speech—I think that it was made by the hon. Member for Eastbourne (Mr. Waterson)—in which it was stated that people were being driven into poverty by means testing. However, my understanding is that means testing, as it is structured at present, lifts people out of poverty. It is therefore difficult to understand the claim made in the speech. The pension credit has helped pensioners enormously, and the Bill is another piece in the jigsaw puzzle.

John Robertson (Glasgow, Anniesland) (Lab): Would my hon. Friend be surprised to hear that 4,978 constituents of the hon. Member for Eastbourne (Mr. Waterson) have been made in excess of £39.11 a week better off by the pension credit?

Mr. Tynan: I thank my hon. Friend for that intervention. I am sure that the hon. Gentleman's constituents will look very closely at the Opposition's policy, especially if they endanger the real benefits accruing from the pension credit.

I hope that next year's Pensions Commission report will be the final piece of the puzzle, and that it will recommend some form of compulsion. Amendments tabled by my hon. Friend the Member for Glasgow, Anniesland (John Robertson) and me were not reached in the debate yesterday, but I hope that the proposals that they contain will be included in any future Bill.

This Bill has many excellent attributes. My right hon. Friend the Secretary of State deserves congratulations on introducing new clause 34 yesterday. He and my hon. Friend the Minister for Pensions, as well as the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Gravesham (Mr. Pond), tabled many amendments in Standing Committee, and they did so with good humour. Many hon. Members will agree that new clause 34 was the provision that we were all waiting for.

I still have concerns, however. In my earlier intervention I said that people will examine closely what was said in yesterday's debate, and that they will look very carefully at the responses from Ministers. I mean no disrespect to ASW workers, but if they receive payments from the fund when other workers do not, I
 
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can see that a campaign will build up that will destroy the good work that has been done. We must be mindful of that.

I did not get the opportunity to speak yesterday, but I want to congratulate my hon. Friend the Member for Cardiff, West (Kevin Brennan), who has done an enormous amount of work on this matter. I also wish to congratulate my hon. Friends the Members for Sittingbourne and Sheppey (Mr. Wyatt) and for Ayr (Sandra Osborne). The latter made an excellent contribution yesterday and she has fought doggedly for the people whom she represents.

No credit goes to the Opposition, however. The hon. Member for Eastbourne said today that this was a political issue. It should not be a political issue. The Government introduced the scheme because it is necessary, and it is unacceptable to play politics with people's pensions. People will see through the ploys of the official Opposition, who have not contributed in the right spirit to the Bill.

I sound a note of caution, because there are still many questions about the financial assistance scheme and what it will mean for the 60,000 who have lost their pensions. I look forward to seeing the draft regulations well before Royal Assent. Ministers have said that we should not hold out false hope, and I hope that that has not happened. Regardless of our opinion, individuals hear about a new scheme with £400 million of funds and they think that they will get a share of it. If they do not get that share, they will be disappointed.

The Bill has much more in it than the financial assistance scheme. We spent only one sitting out of 22 discussing that issue in Committee. We can welcome much else in the Bill, including the new regulator, the new TUPE arrangements, the consultation provisions and the PPF. Much depends on implementation. The Government need to consider how various aspects of the Bill will work in practice, including the consequence of the introduction of the levy and the savings from the streamlining of pensions administration. Employers need to recognise that pensions are part of pay and they need to provide pension schemes for their staff, just as they now need to pay the minimum wage.

The Bill is welcome and it will make a difference. I thank my hon. Friend the Minister and his colleagues and civil servants for all their hard work. I also thank Opposition Members—especially the hon. Member for Tatton (Mr. Osborne), in spite of what I have said—for making the Committee stage enlightening and enjoyable. No one can accuse the Government of not acting on the issue of pensions. I look forward to seeing the changes from next April, when the regulator and the PPF come into force. I also look forward to many of my constituents now having a better life.

4.12 pm

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