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To withdraw immediately.

Reasons for disagreeing to certain Lords amendments reported, and agreed to; to be communicated to the Lords.

15 Nov 2004 : Column 1058

Pensions Bill [Ways and Means]

5.21 pm

The Minister for Pensions (Malcolm Wicks): I beg to move,

The Bill provides for the Secretary of State to appoint an ombudsman for the pension protection fund. This is a new office which is being set up to provide an independent forum for dealing with PPF disputes.

Mr. Nigel Waterson (Eastbourne) (Con) rose—

Malcolm Wicks: I have not got to the very exciting bit yet, but will happily give way if the hon. Gentleman cannot contain himself.

Mr. Waterson: I am grateful to the Minister, and I do not want him to get too excited too early in his speech. Will he confirm that it is still the Government's thinking, as emerged in Committee, that at least to begin with the self-same person will be both the pensions ombudsman and the PPF ombudsman?

Malcolm Wicks: Yes, I am happy to confirm that. Clearly, in the early months of the pension protection fund—perhaps the first year or so—there should be little demand on the ombudsman. We therefore think it important that the same individual—the same man in this case—should undertake both roles. [Interruption.] I can deal with this matter relatively briefly, Mr. Deputy Speaker. Whether the House can is out of my hands.

When we debated the clauses on the pension protection fund ombudsman in this House on 20 April, the Bill made provision for the costs of the ombudsman and his office and staff to be provided by grant-in-aid by the Secretary of State. That would require the general taxpayer to foot the bill.

On reflection, we introduced an amendment in the other place allowing regulations to be made to allow the grant-in-aid to be recouped by a levy on pension schemes. That brings the funding of the PPF ombudsman into line with the approach already in place for organisations such as the pensions ombudsman, the PPF board and the pensions regulator. [Interruption.] I know that the hon. Member for West Derbyshire (Mr. McLoughlin) follows such things with great interest.

Mr. Michael Fallon (Sevenoaks) (Con): I am grateful to the Minister for giving way so early. Can we just be clear about what he is saying? When he refers to the levying of a charge, what he actually means is a stealth tax on business.

Malcolm Wicks: We think that as this measure is of benefit to people in, to use the jargon, final salary schemes or defined benefit schemes, and not to the general public or even to the general body of all people
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in personal pensions, it is not unreasonable that that group rather than the general body of taxpayers should pay the cost.

Mr. John Bercow (Buckingham) (Con): Will the Minister give way?

Malcolm Wicks: Let me make a little more progress; the hon. Gentleman can polish his question even further if I give him a few more seconds. [Laughter.] Well, I have heard him before, and a little more polish always helps.

This measure brings the funding of the PPF ombudsman into line with the approach already in place for similar organisations. We do not envisage that the costs involved will be major. For example, the total costs of the existing pensions ombudsman in 2002–03 were under £1.5 million, which covered all the disputes and complaints referred to him. By contrast, the PPF ombudsman's remit covers just the pension protection fund, so we do not expect substantial costs.

Mr. Bercow: It is always a pleasure to listen to the Minister's mellifluous tones, but none of us would want him to proceed at an excessive pace. He referred a moment ago to regulations. Will those regulations be subject to the negative procedure or to its affirmative counterpart?

Malcolm Wicks: That is an extremely good question, and I thought that I might deal with that point very shortly. I am bound to say that it is always useful to give the one-nation tendency in the Conservative party— I think that the hon. Gentleman is still a member of that group—an opportunity. [Interruption.] I can now reply in the affirmative: the regulations will be subject to the affirmative procedure.

While the costs will be payable by all eligible—[Interruption.] There is a certain degree of end-of-term amusement on the Opposition Benches, which is slightly premature at this point. Opposition Members have obviously read the jokes that I took out of my speech. While the costs will be payable by all eligible pension schemes, the PPF ombudsman will be independent, because he will be appointed by the Secretary of State and not the PPF board. Although I have been urged by the left wing of the Tory party not to rush my remarks on this important matter, I shall do so on this occasion, and I therefore commend the motion to the House.

5.26 pm

Mr. Nigel Waterson (Eastbourne) (Con): The key words in this apparently harmless piece of verbiage are "the levying of charges". Of course, the Minister, in his habitual fashion, has tried, with honeyed words, to suggest that that is the right and sensible thing to be doing. However, it is nothing of the sort. As my hon. Friend the Member for Sevenoaks (Mr. Fallon) pointed out, this is yet another stealth tax on business.

The Minister was good enough to establish one point, which arose out of a proposal made by our side in Committee, which is that we should draw on the experience and wisdom of the existing ombudsman, so
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that—at least to begin with—Mr. Laverick will be both the pensions ombudsman and the PPF ombudsman. Sadly for Mr. Laverick, I do not think that that dual role will require two salaries, but I suspect that it will mean extra staff, so we should not allow the Minister to persuade the House that no extra cost is built into this part of the elaborate bureaucracy that the Bill has set up.

The real issue is the switching of the burden of this new office, and its back-up staff, to business and industry. Only a few days ago, the Department sneaked out a written statement, very quietly and without fanfare, that made it clear that the pension protection fund would, in some respects, be retrospective and might take into account companies such as Turner and Newell, if their pension schemes got into difficulties between now and when the Pensions Bill comes into effect. Of course, one can see the motivation for that. It is becoming apparent, almost day by day, that the Government's financial assistance scheme is woefully inadequate for its purpose of compensating people— I should say, of assisting people. The Secretary of State has made a distinction between compensation and assistance. The latter is a handout of only a tiny fraction of the benefits that would have been available to the people involved if they had been lucky enough to qualify under the PPF after April next year.

The boundaries have been blurred—we will no doubt debate the point at greater length tomorrow—between the pension protection fund and the financial assistance scheme. However, the point is that the PPF will be financed by a levy on business. Because of the slowness in introducing a risk-based levy, that levy will be a flat rate for a significant period, reflecting no risk and not distinguishing between good schemes and bad schemes, well run schemes and badly run schemes, or schemes with poor investments and schemes with better investments. The result, of course, will be that the good will subsidise the bad, and the measure that we are asked to approve today is an example of that. The Government's default position throughout the Bill has been, wherever possible, to heap more burdens on business, and the motion is another clear example of that.

Malcolm Wicks: Is the hon. Gentleman's position on behalf of the Conservative party that the taxpayer should pay? As I recall, in Committee the Conservative Opposition supported the idea of an ombudsman, for perfectly sensible reasons. That position has to be paid for. How does the hon. Gentleman think it should be paid for?

Mr. Waterson: The Conservatives resist attempts to heap more taxation on people. The reality is that we suggested—in fairness, I must add that the Minister took up the suggestion—that a new person was not needed to carry out the job of the new ombudsman. We hoped that there would be some saving, because the same person would be involved. We are trying to make the point that—[Interruption.] If the Minister stops chuntering, he may learn something. Well run companies with decently run pension schemes will already face a flat-rate levy from the start of the pension protection fund. That will be a significant burden on them, and yet another reason for the decline of defined benefit schemes.
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Following the Minister's announcement the other day, we now know that, on top of that, the PPF may well open its doors with a substantial deficit caused by schemes swept up prior to April next year. Incidentally, that announcement was not adverted to at all either in the debate in the House of Lords, or during departmental questions on the same day.

Leaving that aside, there is already a significant burden on business. That may explain, in part, why the Minister's rather naive hopes that industry would come forward voluntarily with money to boost the financial assistance scheme seems not to have borne any fruit. As I said, the motion will mean yet another burden on companies that support the PPF from April next year, because of the flat-rate levy that they will be paying. There will be no option for the better companies to pay less because they are better organised and run better pension schemes; the motion will simply add to the levy that they will already be paying.

As I have made clear, the Conservatives regret the fact that the Government continue to regard British business as merely a milch cow from which they can draw ever greater contributions to help pay for this flawed layer of bureaucracy that they are setting up, to try to deal with a pensions crisis that they have done so much to create.

5.33 pm

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