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Mr. Stephen Dorrell (Charnwood) (Con): The Minister passed over the passage in his speech that dealt with the pension protection fund. Will he tackle the question that my hon. Friend the Member for Havant asked: does the pension protection fund constitute a guarantee to members of funds whose employers find themselves in financial difficulties? Is there a guarantee or does the fund have the power to vary liabilities? If the latter, in what circumstances does the Minister believe that the fund may use the powers?

Malcolm Wicks: Our firm intention, as the shadow Secretary of State rightly said, is that if a final salary scheme cannot fulfil its duties through the pension protection fund by taking in and investing the scheme's assets, which are often considerable, and through the levy, which we believe will average £20 a year per member—perhaps less than insuring a summer holiday—we shall have the funds to enable us to pay existing pensioners 100 per cent. and workers and scheme members 90 per cent.

We have learned lessons from the Pension Benefit Guaranty Corporation in Washington. To raise the levy there, the PBGC needs to return to Congress. It is not for me to comment on American politics, but that is a more complex process. We, albeit with a cap, will enable the board of the pension protection fund—a board that is deliberately at arm's length from the Government; it is not a Department for Work and Pensions agency—to raise the levy if necessary.

We have an in-extremis provision because in an extraordinary economic or business situation, in which perhaps several FTSE 100 companies went bust, there
 
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might not be funds even after raising the levy. In that case, the board, with the Secretary of State's permission, could cut benefits. The right hon. Member for Charnwood (Mr. Dorrell) is right in that respect but such a provision would apply only in extremis. Calamities can happen in any economy, which would mean that specific things could not be done. However, we have set out the provision in the Pensions Bill and we have discussed it in Committee. We have costed the provision carefully and I am certain that, allowing for even a large company to go bust, we will fulfil our commitments. That is why I, as a lay person, use the term "guarantee."

Mr. Dorrell: The Minister gave a long answer; the issue is complex and I want to crystallise his reply: the pension of the American worker to whom he referred is guaranteed, the British equivalent would not be.

Malcolm Wicks: It is a different situation in the States. We have learned important lessons from the States but any reasonable person who examines the position and understands how to fund the provision, allowing for one big company to go bust from time to time, could use the term "guarantee". I believe that that is reasonable vocabulary. If a meteorite hits Britain, the provision obviously cannot be guaranteed. I am confident that, in 10 or 20 years, we shall look back and appreciate that the provision has been successful. I apologise to the right hon. Gentleman for giving a proper and detailed answer; I shall try to be shorter next time.

Mr. Lilley: Does the Minister agree that, if a levy of around £20 per member of private pension funds, which are not guaranteed by the state, is to be made, it should be extended to members of public sector pension funds, which are guaranteed by the state, including hon. Members? In all fairness, we should not be exempt from making a contribution towards underwriting funds if members of private sector funds have to make such a contribution or have it made for them.

Malcolm Wicks: The right hon. Gentleman is an expert in the matter, but with all due respect, I believe that that is more of a debating point than a substantive point. Clearly, the state ultimately stands behind most public sector pension schemes and we are making reforms to those schemes. For example, we believe that we should no longer have a position whereby one can draw a pension, albeit reduced, at the age of 50. We contend that, in future, that should not happen until the age of 55. That will be discussed with the professions and the unions. Several such developments are occurring. That is the way to tackle issues about funding in the public sector, not the way that the right hon. Gentleman described.

Mr. Djanogly: The Minister is speculating about what may happen in the future. Can he extend his guarantee to those people who are already in such a predicament, for example, the members of the Samuel Jones scheme in my constituency? They are currently left in an insolvent scheme and are consequently suffering.

Malcolm Wicks: Let me make some progress because I think that that would be helpful. In the previous
 
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Opposition Day debate on the subject in February, Opposition Members attacked the Government again, on that occasion for not promising assistance to those for whom the pension protection fund was going to be too late. I puzzled about that. They declined to give the Pensions Bill a Second Reading and then wanted to make it retrospective. Nevertheless, my hon. Friend the Member for Cardiff, West (Kevin Brennan), with several other parliamentary colleagues, admirably led calls to act.

The Government found £400 million without breaking any of their other spending commitments. When I presented that to the House on Report, I outlined a clear set of steps and a timetable for action. Earlier this summer, I spoke at the consultation event and we remain very much on course with the timetable. I am proud that the Government are introducing the financial assistance scheme. As for the hon. Member for Havant, he used warm words but did not even sign the early-day motion tabled by my hon. Friend the Member for Cardiff, West.

I have been asked about the worrying situation at Federal Mogul or T and N—Turner and Newall. Obviously, we are aware of the terrible uncertainties faced by members of the T and N scheme. My colleagues in the Department have met a number of people connected with the scheme since July, including the trustees, the scheme lawyer and trade union representatives. In August, I met concerned Members of Parliament, including my hon. Friend the Member for Cardiff, West, who have an interest in the T and N scheme. I understand that discussions are still ongoing between Federal Mogul, the independent trustees and the administrators regarding the future of the UK pension scheme.

On issues of this kind, may I make a plea that many such cases relating to solvency or insolvency have an extraordinary complexity. Often, a foreign company has an involvement. In the case of T and N, an added complexity is that it faces huge cases relating to asbestos, which has affected the whole future of that company. Let us avoid the knee-jerk questioning about whether we will definitely spend taxpayer's money on this group or that group. It is far more complex than that. We are not yet absolutely sure what will happen to that company or its pension scheme. It is an ongoing issue. I assure everyone in the House that we are keeping the issue carefully under review.

We are on course with the steps that we are taking on the financial assistance scheme. We very much hope that the scheme will be in being by the spring of next year, and that payments will be made as soon as possible. The pensions challenge facing the Government, and Governments across the developed world, are very real. I make no attempt to hide that.

Mr. Willetts: Setting aside the case of Turner and Newall, does the Minister accept that the financial assistance scheme needs to cover all people who lose out from wind-ups until the point at which the pension protection fund comes into force?

Malcolm Wicks: We are acting for the future with the PPF, hence our determination that the Pensions Bill will be on the statute book. I hope that everyone in both
 
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Houses will help us with that, and I think that they will. We are faced with more immediate situations, which require the establishment of the financial assistance scheme, with £400 million of the public's money—not because the public were at fault but because it was an important contribution. We have also said that we feel that the pension industry should make a contribution. I am still hopeful about that, and we are still in discussions about it.

We are monitoring carefully any schemes that are now in difficulty. I am concerned about those affected. Given our track record of establishing the PPF and the assistance scheme, we have good intentions about trying to help people. I cannot, however, say more about particular schemes that are in different stages of wind-up.

Through the Pensions Bill, we have taken great strides in bolstering security and confidence in funded pensions. Alongside the pension protection fund, the new flexible and proactive pensions regulator will further bolster security by tackling the risks to members' benefits, while enabling well-administered and secure schemes to continue without unnecessary regulatory burden. While the Pensions Bill is a cornerstone of the Government's reforms, it is only one step on the road to our goal of enabling people to save adequately and confidently for their retirement. Our programme of informed choice measures will empower individuals to take greater control of their retirement planning. Our age discrimination legislation—as well as the improved options for state pension deferral in the Pensions Bill—will open doors to greater opportunity for working longer, breaking the cliff-edge between work and retirement.

I have spoken about the past—in particular, the legacy that this Government inherited on coming into office in 1997. I have spoken about the present and the action that this Government have taken, despite opposition along the way, to tackle the injustice of pensioner poverty and to bolster security and confidence in funded pensions. But what of the future?

First, this Government have had the courage and vision to see the value of independent expertise. We look forward to the first report of the independent Pensions Commission sometime next month and a report from the employer taskforce by the end of the year. The findings of those reports will be of immense value in informing the way that our policies develop to meet the challenges that lie ahead.

Finally, I would like hon. Members to imagine once more: a Britain where pensioner poverty is nothing more than an unpleasant chapter of history; where women no longer face disadvantage in the workplace or in saving for retirement; where the pension protection fund has been set up and is enabling people to look forward to the future with confidence; where individuals are empowered to take control of their retirement planning, and able to take informed decisions about how and when to save and work; and where everyone—employers, trade unions, Government and individuals—are working together to make the British pensions partnership the envy of the world.

That is the consensus that I want. That is our vision. This Government are acting and will continue to act to make that vision a concrete reality.
 
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