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Tom Levitt: As a group and as individual Members of Parliament we have made the case strongly to Ministers that for all sorts of reasons—short term, long term, political and personal—the pension fund should not be allowed to collapse in ruins. As I said in an intervention, it is principally the responsibility of the people who led
 
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the fund members to believe that there would be a pension at the end, because they were partners in creating that pension, to ensure that those pensions are paid. To talk about finding them a convenient and easy way out, which allows them to throw their hands up in the air and say, "Well, in that case we wash our hands of the pension scheme and will rely on the Government to bail us out", would not be a responsible approach.

I do not prejudge what will happen because I want the scheme to be rescued and, if at all possible, I want it to be rescued by those who were involved in making promises about the outcome of the scheme in the first place. Incidentally, those same people have awarded Federal Mogul a contributions holiday in 18 of the past 25 years. I do not know whether that was irresponsible or a result of complacency, based on the best possible financial advice, but I do know that when the pension fund trustees advised the company only a year ago that it should continue to make contributions, that advice was not heeded.

Mr. McWalter: Is my hon. Friend aware that such situations are not usually the result of company profligacy or meanness, but the result of the 105 per cent. rule introduced by the Conservative party? It meant that companies were not allowed to have assets to cover liabilities above 105 per cent. That is the main reason why most companies had to give themselves contributions holidays.

Tom Levitt: I understand that that may be the explanation and I would be interested to hear that confirmed for this specific case. However, the fund's investments were in stocks when stocks were falling, in gilts when gilts were not doing well and in bonds when they were not doing well. A report in the national press a few weeks ago said that because of a rising stock market and rising interest rates, typical pension funds this year are 25 per cent. better off than they were last year, but that does not apply to the Turner and Newall pension fund, which has not been sufficient for what is necessary to cover even normal expectations, let alone the worst-case scenario.

Some money is on the table from the Federal Mogul company in America, but it is not sufficient. There were meetings in the middle of August and at the beginning of September, and there will be further meetings between the trustees, the administrators and the trade unions. The Transport and General Workers Union and Amicus in particular have done a thorough, responsible and effective job in keeping the issues going to set the basis for a settlement on the grounds that I mentioned.

I wish those talks well. I understand that there are considerable assets in the company, and I am adamant that the first line of defence for those 40,000 members of the pension fund has got to be to ensure that this huge international company with significant assets throughout the world meets the moral obligations it had when it took on every single employee in the first place and agreed a deal under which a pension would be paid.

3.29 pm

Hywel Williams (Caernarfon) (PC): I would like to ground the debate in the experience of my constituents, many of whom depend on Turner and Newall pensions.
 
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There is a particularly acute circumstance in my constituency, in that people who used to work for Ferodo were persuaded to stay with the Turner and Newall scheme when the company was taken over by Friction Dynamics. Hon. Members on both sides of the House will be familiar with the long-running dispute at the Friction Dynamics plant at Caernarfon. It is particularly ironic and cruel that the workers at Friction Dynamics on strike—or locked out, if you will—for three years are now facing uncertainty, having won their industrial tribunal case, defeated the new employer, seen that company go into administration and been denied the compensation that they are due. I accept the point made by the hon. Member for High Peak (Tom Levitt) earlier that it is a question of uncertainty. I do not think that we are all doomed, and I do not want to contribute to such a picture.

My constituents joined the Turner and Newall scheme. They had to do so, and there were advised that it was very safe. Many of them deferred their pensions when Friction Dynamics took over, and they are now ruing their loss. I understand that the current deficiency in the Turner and Newall scheme is £875 million, which puts the offer of £400 million to the initial scheme referred to by the Prime Minister earlier in some context.

Tom Levitt: For the record, the figure the hon. Gentleman cited is the buy-out figure if the whole thing collapses. To keep the scheme running would involve significantly less than that, but it would still be a substantial figure, and more than the one currently on the table.

Hywel Williams: I thank the hon. Gentleman for that point. I accept that a substantial amount of money would still be required. I have received correspondence from several constituents, including Mr. Gerald Parry, who led the workers during the lockout. I shall not name the others owing to the pressure of time, but they are all pressing the Government to work with the trade unions and the company to resolve the matter, to ensure that the company administrator and the independent trustee take full account of their long-term needs, and to ensure that funds are provided for the pension assistance scheme if necessary.

I shall briefly quote another of my constituents, Mr. David Bartram of Y Groeslon. Perhaps this is the most significant thing I can add in my brief contribution. He says:

"The current situation has shaken everyone's faith in the pension industries' abilities to deliver the promised long term benefits."

That is a very significant statement, as it is indicative of the corrosion of people's faith in the system created by the whole affair. Significantly, he closes by saying:

"If I were now starting my working career, I would be taking a very different view of the pension industries or looking for a job in government/local authority service."

We do not want to encourage such attitudes in Caernarfon, where the public sector looms very large, and where there is a certain lack on entrepreneurship, or in the other objective 1 areas in Wales for that matter. My constituents are worried and concerned, and they are looking for help and reassurance.
 
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3.33 pm

Mr. Ian Liddell-Grainger (Bridgwater) (Con): I want to follow on where the hon. Member for High Peak (Tom Levitt) left off. There is a company in my constituency that used to be called Wellman, which became Turner and Newall, and ultimately Federal Mogul. Currently, 80 of my constituents are in the situation described by the hon. Gentleman as the company's ongoing situation.

The hon. Gentleman was being almost kind about the level of deficit we could be facing if things go wrong. I have looked into the matter, and the shortfall world wide is just under £1 billion, of which the deficit in this country is £300 million. The initial discussions that Amicus has had have been absolutely first class—the hon. Gentleman is right about that. The company has already offered to pay £65 million, which is woefully inadequate at any level. About £29 million a year will be needed for the next eight years, which adds up to a total of £232 million, to sustain the current level of the scheme.

Yet again, I urge the Minister to look at the problem, because unless the rules for the pension protection fund are changed, at least eighty of my constituents, and perhaps up to 400 people in my constituency and that of my hon. Friend the Member for Taunton (Mr. Flook), could be affected. I do not know exactly how many people who have taken earlier retirement or opted for other forms of retirement are involved, but I receive letters almost daily from individuals affected by the problem.

Will the Minister look at the issue as a matter of urgency, because 40,000 people—an awfully high number—will be affected? The company said that it was moving from my constituency to Poland, but in fact it had already filed for bankruptcy under chapter 11, although it did not make that clear. Many employees were given leaving packages before the company moved, and were removed from the company scheme. People who took early retirement are not angry, but perturbed and concerned. There is, however, obviously concern among pensioners.

Unusually for a Conservative MP, I represent an industrial town that is home to British Cellophane, Trig Engineering and many other multi-national or international companies. Many people wonder whether the current problem is the tip of the iceberg, as world wide there are a terrifying number of company wind-ups. I do not expect the Minister to give us an assurance now, but can he tell us in the next few months, or years if necessary, how many companies will be affected? Many people do not believe that their scheme is secure but, as has been argued eloquently by Members on both sides of the House, the Government cannot be blamed because the problem goes back many years. However, people would be grateful for an assurance that the Government will look at their schemes.

In conclusion, I urge the Government to look at the protection fund, as that is extremely important to many people who worked in good faith for a company which has filed for chapter 11 in America and will ultimately fall into administration.
 
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3.37 pm

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