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Mr. Frank Field (Birkenhead) (Lab): I cannot remember the last time when, in effect, we said goodbye to a Bill to send it to the Lords that was such good news both for our supporters and for the country in general. I would not want that fact to go amiss, but to be personal about those on the Treasury Bench, while that is good news for the country, it is a good day for the Ministers who have seen the Bill through. Their names are attached to the Bill, and I am sure that they will look back in future years to the significance of their contribution to the development of safe pensions in this country.

Ministers have worked hard, and so, too, has the Bill team. Any Bill puts a fair amount of pressure on civil servants, but if it becomes akin to a roller towel—seemingly endless—their work is made trebly difficult. I am sure that over the drinks this evening, the Secretary of State will convey the thanks of the House for the extraordinary effort that the Bill team has made.

Three red lights are beginning to be seen in the Bill. Two years ago, several Labour Members tried to introduce a modest pensions Bill, which might have played a small role in shaping the Government's proposals. One of our ideas was to have a much fairer winding-up order, so that the formula would reflect significant contributions that people had made over the years. The most worrying—to me—piece of information that emerged from the debate was the industry's claim that membership records were such that it would be unable to give the Government people's contract years so that their eligibility under a years-based contribution formula could be worked out. If that is typical of the whole industry, a mega-problem looms in relation to the records that govern people's eligibility for occupational pensions.

The second red light has been mentioned by my hon. Friend the Member for Hamilton, South (Mr. Tynan). I suppose that I am the only Labour Member who is not especially happy that £400 million of taxpayers' money has been found to fund compensation—help, assistance, whatever one wants to call it—under new clause 34. In retirement our nation is divided into two groups: the most privileged, who have occupational pensions, and—generally speaking—the rest. The Government, for reasons best known to themselves, have decided to put in a further £400 million of taxpayers' money to the sector that already draws most taxpayers' assistance and those pensioners who—generally speaking—are most well placed to face retirement. However, like other hon. Members, I believe that the fund will not be adequate. We want the Treasury not to put its hand deeper into our tax-paying constituents' pockets, but to look to unclaimed assets to make good any shortfall.
 
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My hon. Friend also mentioned the third and final red light: eligibility. Before the Government let the guillotine fall on the eligibility date, which will determine who is in the scheme and who is not, will they prepare for the House a detailed note on how many people they think would be brought within the scheme for each year that the eligibility date was moved back? I believe that the number of people in addition to the 60,000 who would be brought in from past years is quite small. The danger in relation to new clause 34 comes from employers who might find a way to dump their pension liabilities on to the scheme, not from those who have already done so.

Gregory Barker: Will the right hon. Gentleman give way?

Mr. Field: No, because many others want to speak.

Those are my three red lights. I end with a question: what does it say about our procedure for consulting on, drafting and introducing Bills in Parliament when perhaps the most popular part of the Bill did not appear on the printed page at Second Reading? There must be lessons in that to be learned by a Government who, rightly, say that they listen.

4.29 pm

Mr. Fallon: As I made clear to the House on Tuesday, I have substantial reservations about the Bill, including the £400 million size of the fund, on which the right hon. Member for Birkenhead (Mr. Field) signalled a red light. There does not appear to be a rational explanation for that figure. The Secretary of State again suggested that £400 million would be enough to last 20 years, but I very much doubt that. I am happy to wager with him, but I do not think that it will last two years, given the scale of the problem and the speed with which cases could be submitted. Either the levy will be accelerated, advanced or intensified, or the Government must come back to the House, or the Secretary of State must go back to the Treasury, for an additional sum. If that is the case, it would be more honest to admit it now, or at least substantiate the choice of the figure of £400 million. I certainly caution shadow spokesmen against suggesting that the Government should back the fund, as that would be a contingent liability, about which we complain but which ought to be properly scored, if accepted, in the Red Book. That contingent liability would quickly turn into a real one.

I do not think that £400 million will be adequate. To his credit, the Secretary of State said that it was not tea and sympathy but, equally, it was not compensation. It was a sum that he had set aside for a predicted number of cases—the kindest way of putting it is that it was his best stab. The sum will not, in fact, be adequate, and the fund's address will become one of the better known addresses in our city.

Gregory Barker: Does my hon. Friend share my view that the Minister is in a predicament partly because he was not party to the decisions that produced the figure in the first place? It was not calculated in a great arithmetical exercise by his Department and civil
 
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servants, but was dreamt up in a private meeting following much arm-twisting between the Prime Minister and the Chancellor of the Exchequer.

Mr. Fallon: My hon. Friend is right. If the figure was a proper one, it would be included in the Bill, and there would be a memorandum explaining, analysing and justifying it to the House. However, it was not, and was clearly cobbled together at the last moment.

Mr. Andrew Smith: Will the hon. Gentleman accept from me that the premise of the intervention by his hon. Friend the Member for Bexhill and Battle (Gregory Barker) was inaccurate and untrue?

Mr. Fallon: I am not sure that I want to go down that route, as I have no way of knowing whether it was inaccurate or untrue. Certainly, the figure of £400 million seemed to emerge at rather a late stage, and is easily divisible by the figure 20. Leaving that aside, however, my next major reservation, which I voiced in the House on Tuesday, is an unfashionable one. Everyone in the House wishes the Government well in tackling well-publicised and obvious abuses, but it is worth pointing out that the powers that they are taking, particularly in clauses 35 to 46, are extremely draconian and are likely to damage business and investment in it.

I shall give the House three brief examples of how wide the regulator's powers are. Under clause 39, it is for the regulator to decide whether or not an employer "is insufficiently resourced". Various definitions of that phrase are given in clause 40, but it is for the regulator to decide whether an employer is insufficiently resourced, and whether somebody else—it does not have to be a director, and could be a shareholder, an investor or an associate of the director—could make up the deficit. That is far too flimsy a basis on which the regulator can take action. The liabilities are described in an incredibly vague way. In clause 41, the employer's pension liabilities are defined as

"the liabilities for any amounts payable . . . and . . . the liabilities for any debt which is or may become due . . . or otherwise."

I do not know what "or otherwise" means. It could mean almost anything.

Thirdly, as we discussed briefly on Tuesday evening, the powers given to the regulator to pursue people for their personal assets are incredibly wide ranging. The regulator can seize the assets—the personal assets, the homes and the wealth—of directors, of shareholders, of investors, of associates and even of friends of the directors of the particular company. That is simply a matter for the regulator to decide. It is left to his opinion. It was the hon. Member for Cardiff, West (Kevin Brennan), I think, who said there need not be an appeal provision because that can be judicially reviewed. He and I disagree about that.

I think the power is too wide and it should be limited in the Bill and subject to some kind of appeal mechanism. If it is not, the effect of the clauses will be damaging in two respects. First, we can predict that on the day the Act comes into force, a large number of companies will be placed in receivership. If the Secretary of State does not believe that, I must ask him whether he really thinks that directors, shareholders, investors and even associates of directors will put at risk their own
 
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homes and assets, rather than put companies immediately into receivership if they are concerned about potential pension fund liabilities. That is a profound mistake.

Secondly, if that is true, it follows necessarily that exactly the kind of people whom we are encouraging to invest in our companies will be less likely to do so. In an intervention, I gave the example where an investor from company B may be deciding to invest in company A. Neither of those companies has any connection with a pension fund, but it transpires that company A is associated with company C, which happens to have some potential difficulty with its pension fund. That, of course, will discourage precisely the kind of business investment that everybody wants.

I am not entirely convinced that the Secretary of State intends it, but I assure him that those are likely to be the effects. In his defence, I suppose it can be said that the provisions that I am describing—clause 35 onwards—have been rushed. They were added to the Bill at a very late stage, right at the end of the Standing Committee proceedings. They were only briefly considered by the House and even then, all bundled together, on Tuesday evening. That is a bad way to legislate, and I suggest to the House that those clauses need re-examining in another place.

4.37 pm

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