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Unclaimed Assets

5. Mr. Andrew Robathan (Blaby) (Con): What recent assessment he has made of the possible use of unused orphan funds in bank and building society accounts to assist members of collapsed occupational pension schemes. [196319]

11. Mr. Peter Lilley (Hitchin and Harpenden) (Con): If he will use unclaimed assets to boost the funding of the financial assistance scheme. [196326]

The Secretary of State for Work and Pensions (Alan Johnson): I refer hon. and right hon. Members to the reply by my hon. Friend the Minister for Pensions on 4 July 2004. As my right hon. Friend the Chancellor made clear in the March Budget, we want as much as possible to reunite unclaimed assets with their rightful owners. Where the assets cannot be so reunited, they should be
 
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reinvested to benefit the whole of society. There are no plans to use such assets to provide assistance for people who have lost pensions.

Mr. Robathan: Apparently, there are some £15 billion-worth of unclaimed assets in dormant bank and building society accounts. As the Chancellor thinks that he can take the interest from such funds and give it to charities—which is sensible, assuming that the owners do not exist—will the Secretary of State not reconsider? Does he not realise that we all have constituents who have saved for all or part of their working lives yet, through no fault of their own, lost everything when their companies went bankrupt and their occupational pension schemes were lost? Is this not a good deserving case that the Minister should consider with some charity, for people in that desperate position?

Alan Johnson: We do not disagree about the problem faced by people who find their occupational pensions jeopardised, diluted or destroyed overnight. That is why we are introducing the pension protection fund and the financial assistance scheme. The hon. Gentleman is asking whether we should put the assets to which he referred into that scheme, and he mentioned a sum of £15 billion. That is disputed, particularly by the Building Societies Association, which summarised the problem when it described the policy of Her Majesty's official Opposition as follows:

"This is an uncosted policy, as no thorough work has ever been undertaken as to the full amount held in lost accounts."

To quote Adrian Coles, the director general of the BSA:

"At no point have we been consulted by the Conservative Party about this policy. We dispute the figures involved. We also strongly question the right of any organisation, government or otherwise"—

I think that the Conservative party falls under the description "otherwise"—

"to take money from building society members. In addition, it is not clear under existing law whether this is even possible. But, most importantly, to promise pensioners compensation on the basis of an uncosted policy proposal is misleading and unfair."

I completely agree with that statement.

Mr. Lilley : I welcome the Secretary of State's decision to set up the financial assistance scheme, but does he not realise that it is untenable to do so on a basis that is not fully funded and does not cover all the potential victims of collapsed pension funds? Is it not therefore essential that he make use of the funds, rather than ridiculing the Chancellor's policy of making use of orphan funds for other purposes? If they are available for charity, they are available to the Secretary of State.

Alan Johnson: That is the last thing I was doing; I was quoting the Building Societies Association ridiculing the policy of the Opposition—

Mr. Lilley: That is the same thing.

Alan Johnson: No, it is not. Government Members believe that, as my right hon. Friend the Chancellor said in this year's Budget speech, we should invest those moneys for the good of society as a whole. As for the money that we have available for the financial assistance scheme, for the reasons set out by my hon. Friend the
 
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Minister for Pensions in late June, we believe that we do have the opportunity to provide assistance. This is not compensation, and we do not accept any liability as a Government, but we are giving some assistance—not to the level that we are providing for the future, with the pension protection fund, but for the first time some help will be provided for those who have suffered in the past. The question is: should it come from the source that has been mentioned? We say no, it should not—and an awful lot of people who are politically neutral say the same thing.

Mr. Barry Sheerman (Huddersfield) (Lab/Co-op): Does my right hon. Friend agree that we have been talking about orphan funds for a very long time? I thought that our Government—the new Labour Government—were supposed to be a radical Government. If they are, why do we not get on and do the research, knock some heads together, talk to the Treasury and get this sorted, whatever we use the funds for? Personally, I would like it to go to the pensioners who have lost their pensions, and I do not consider that to be a party political matter. But whatever we use the money for, let us get on with it, rather than sitting and talking about it.

Alan Johnson: I accept that my hon. Friend, who asks us to be radical, holds very strong views, and work is continuing. However, this is not a matter for my Department, and I suggest that he turn up at Treasury questions; indeed, as I understand it various opportunities are coming up to question Treasury Ministers on how far they have got. As Adrian Coles of the Building Societies Association pointed out, we are talking about other people's money, and for us to blunder in without giving the matter the most adroit and careful consideration would be a huge mistake. We are moving as quickly as we can in such a complex area.

Sandra Osborne (Ayr) (Lab): Surely the important point is that the Government have promised substantial help for those who have lost their pensions. However, my constituents are getting understandably impatient to find out exactly what assistance they will receive. What is the time scale for hearing more details about the pension assistance fund, and will my right hon. Friend meet my constituents to discuss this issue?

Alan Johnson: I certainly will. We are exactly on course with the statement made by my right hon. Friend my predecessor to Parliament in May, and we are on track in terms of the comprehensive statement made to Parliament on 30 June. Looking back year by year at the liabilities and assets of pension funds and schemes is another really complex issue. We said that by the end of November, we will be able to start consulting on the detail, and we are still on course to do so. We are also on course to have a scheme up and running by next spring, so when I meet my hon. Friend and her constituents I will be able to reassure them that that timetable is still on track.

Mr. Nigel Waterson (Eastbourne) (Con): I will not be joining the Secretary of State in his unprovoked attack on the Chancellor, but what possible distinction can there be in principle or practice between using—with
 
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proper safeguards—unclaimed assets to assist charities, and using them to help people who have lost their pensions through no fault of their own? Can he see any reason at all in principle why people falling within his financial assistance scheme should not receive the same level of benefits as those covered by the PPF?

Alan Johnson: I find it amazing that the Conservatives are now saying how important this issue is, given that they voted against the Pensions Bill on Second Reading.

Mr. Waterson indicated dissent.

Alan Johnson: The hon. Gentleman shakes his head, but it is a matter of record. [Interruption.] I am told from a sedentary position that they declined to give the Pensions Bill a Second Reading; I am sorry if that is hugely different from their saying that they refused to back it. The simple fact is that we believe that the orphan funds should be used for the good of society as a whole, and we will proceed very carefully in that direction. We believe that people who have lost money in pension schemes in the past should be given some level of assistance; however, we do not think it viable or sensible for us to promise the same level of assistance in future, through a pension protection fund that is set up to generate funds to ensure that it meets its liabilities. In looking at the past and offering assistance rather than compensation, we should be absolutely clear that the pension protection fund will not be able to offer 100 per cent. and 90 per cent. coverage in the same way.

Mr. Peter Pike (Burnley) (Lab): I have had several occupational pension schemes go wrong in my constituency, including Bellings' scheme, which was swindled by fraud in 1992. Will my right hon. Friend recognise that one of the biggest concerns of all those involved in such schemes is that when something goes wrong, the administrators, lawyers and legal people make so much money that the funds diminish and they do not get the pensions that they want? In fact, in some instances a bad position gradually gets worse.

Alan Johnson: I accept that that is a problem, and similar difficulties have arisen with schemes in my own constituency. Of course, some changes have already been made and importantly, schemes that start to wind up after 10 May 2004 will benefit from a change in the priority order. The sector as a whole needs to look at this issue, and the pension protection fund needs to examine the issue of how much money is being spent and is being   taken away from pensioners, rather than being dedicated to them.

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