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Mr. Webb: I am grateful for the support of the hon. Members for Eastbourne (Mr. Waterson) and for Sevenoaks (Mr. Fallon), and it is only right that I respond briefly to some of the questions that have been raised about the amendment and clarify what it will and will not achieve.
The hon. Member for Eastbourne asked about my noble Friend Lord Oakeshott, who pointed out in another place that the effect of the risk-based levy on small schemes was not a reason for rejecting an 80 per cent. risk-based levy. That point has been missed. Baroness Hollis has used the effect on small schemes as a reason for not having such a levy at all. That reason has now gone, because the Government have now said that they will accept the 80 per cent. rule. We can therefore modify it to deal with the legitimate concerns
16 Nov 2004 : Column 1211
that she raised. It was not a fatal objection, but it needs addressing.
I listened to the Minister's response, and I am now puzzled. He said that the Government propose that every tiny scheme will have a risk-based levy based only on the underfunding and not the insolvency risk. That means, however, that every small scheme might have a unique level of risk-based premium. Such a proposal is vastly more complex than it needs to be. Every scheme will have to have an individually assessed risk that is based, admittedly, on information that will presumably be gathered anyway. However, if we are to do the job properly and assess the level of risk in a particular scheme based on the position of the fund—I shall be interested in the thoughts of the hon. Member for Bournemouth, West (Sir John Butterfill) on this—we do not necessarily need precisely the same information to assess the level of underfunding as we do to assess the risk arising from that underfunding. For example, there may be a given level of underfunding on a particular definition at a particular point in time, but the likelihood of two schemes with identical levels of funding at a snapshot making a claim on the scheme may vary greatly depending on the asset mix or something like that.
Assuming that we fail with this amendment, the PPF board will have to make an individual calculation for every single—even one-member—occupational scheme and the PPF will not just need the information that it collects anyway. I am happy to take an intervention from the Minister on that point, because it is important. As I understand it, for the PPF board to work out the risk-based levy on small schemes even just based on the funding in the fund will require more than the information that it collects anyway. To do the job properly, there is the realistic prospect that it will require further information, such as information about the asset mix. That could create serious administrative burdens on small schemes.
Sir John Butterfill: The hon. Gentleman makes a valuable point; he is entirely correct. The question that I raised earlier was how far we go in pursuit of the information. How do we assess the viability of small firms without the benefit of international credit ratings to assist us? A detailed examination of the accounts and the current state of play of individual employers may be required. The amount of work involved in that is huge.
Mr. Webb: I greatly respect the hon. Gentleman's knowledge of such matters. As he says, it would be difficult to assess the insolvency risk of such small firms. To be fair to the Government, as I often am, the thrust of Government amendment (a) to Lords amendment No. 283 is the exemption of small schemes from the need for a calculation of insolvency risk. However, even a risk-based element that is based on the funding of the PPF will put an unnecessary burden on small schemes.
The Minister pointed out what appeared to be a paradox in the amendment's wording, although I hope that I have reassured him about that. To go back to the point that the hon. Member for Sevenoaks made, we would exempt small schemes from a risk-based element, so we would not change the balance between the overall burdens on smaller and larger schemes.
16 Nov 2004 : Column 1212
The Minister asked how we would work out what small schemes would have paid as a risk-based premium if we did not make individual calculations for each scheme and suggested that that would create the problem that we were trying to avoid. However, if I may draw an analogy with car insurance, it is perfectly possible for Direct Line to work out the average risk of Ford Escort drivers without calculating the risk of each individual Ford Escort driver, which will vary. The company knows the average risk for the group, so it does not have to work out each person's risk. It would not be a problem to work out the aggregate risk-based premium for small schemes, and thus ensure that the overall burden would not change. The calculation would be simpler than that envisaged, so it would put less burden on the PPF and small schemes. As the bureaucracy would be less, there would be a smaller overall burden—a smaller levy—which is what we all want, so I am somewhat puzzled about why the Government want to go down their route.
I was astonished by the Minister's response to my question about the ability to make a choice about whether to be insured according to risk. The idea that people who are a bad risk may choose to pay a different and lower premium for an insurance scheme is bizarre and implies that cross-subsidisation would occur.
The Minister came up with an extraordinary ad hoc suggestion—although I think that he was reading it—that firms that did not adopt the risk-based element as soon as possible would be incentivised to do that. Which aspect of the Bill gives the PPF the power to do that? It can set a scheme-based levy based on the number of members in a scheme, but can it change the levy to penalise the bad guys who do not adopt the risk-based option? The Government seem to be making things up as they go along. The Minister told us at the start of his speech that the PPF will be independent of the Government, so the Government could not make the fund do that. Has he drawn up any guidance for the PPF? Will he ask it to encourage people to adopt the risk-based levy?
If the Government think that it would be good to get people on the risk-based levy, why do they not make them do so? If that measure would result in a proper insurance scheme more quickly, the Government should implement it. They say that they want to incentivise people, but where will the money for that come from? It would be bizarre to give people an incentive to adopt the risk-based scheme, and thus presumably pay a higher premium. Perhaps we will pursue the matter through a written question, because although I would be happy to give way to the Minister, he does not have the opportunity to make a speech in which he may explain himself.
We welcome the fact that the Government amendments in lieu of Lords amendment No. 298 accept its spirit. However, Liberal Democrat amendment (a) to the Lords amendment deals with a point about small firms that Baroness Hollis raised. The amendment would achieve something that the Government should try to do, so I would like to test the opinion of the House.
Amendment proposed to the Lords amendment: (a), in line 13, leave out from first "The" and insert "Subject to subsection (4A), the"—[Mr. Webb.]
16 Nov 2004 : Column 1213
Question put, That the amendment be made:—
The House divided: Ayes 196, Noes 293.
AYES
Ainsworth, Peter (E Surrey)
Allan, Richard
Amess, David
Ancram, rh Michael
Arbuthnot, rh James
Atkinson, Peter (Hexham)
Bacon, Richard
Baker, Norman
Baldry, Tony
Barker, Gregory
Barrett, John
Beggs, Roy (E Antrim)
Beith, rh A. J.
Bellingham, Henry
Bercow, John
Beresford, Sir Paul
Blunt, Crispin
Boswell, Tim
Bottomley, Peter (Worthing W)
Brady, Graham
Brake, Tom (Carshalton)
Brazier, Julian
Breed, Colin
Brooke, Mrs Annette L.
Browning, Mrs Angela
Bruce, Malcolm
Burns, Simon
Burnside, David
Burstow, Paul
Burt, Alistair
Butterfill, Sir John
Cable, Dr. Vincent
Calton, Mrs Patsy
Cameron, David
Campbell, Gregory (E Lond'y)
Carmichael, Alistair
Cash, William
Chapman, Sir Sydney (Chipping Barnet)
Chope, Christopher
Clappison, James
Clifton-Brown, Geoffrey
Collins, Tim
Conway, Derek
Cormack, Sir Patrick
Cotter, Brian
Curry, rh David
Davies, Quentin (Grantham & Stamford)
Davis, rh David (Haltemprice & Howden)
Djanogly, Jonathan
Dodds, Nigel
Doughty, Sue
Duncan, Alan (Rutland)
Duncan, Peter (Galloway)
Fabricant, Michael
Fallon, Michael
Field, Mark (Cities of London & Westminster)
Flight, Howard
Flook, Adrian
Forth, rh Eric
Foster, Don (Bath)
Fox, Dr. Liam
Francois, Mark
Gale, Roger (N Thanet)
Garnier, Edward
George, Andrew (St. Ives)
Gibb, Nick (Bognor Regis)
Gidley, Sandra
Gillan, Mrs Cheryl
Goodman, Paul
Gray, James (N Wilts)
Green, Damian (Ashford)
Green, Matthew (Ludlow)
Greenway, John
Grieve, Dominic
Gummer, rh John
Hague, rh William
Hammond, Philip
Hancock, Mike
Harvey, Nick
Hawkins, Nick
Hayes, John (S Holland)
Heald, Oliver
Heath, David
Heathcoat-Amory, rh David
Hendry, Charles
Hermon, Lady
Hoban, Mark (Fareham)
Hogg, rh Douglas
Holmes, Paul
Horam, John (Orpington)
Howard, rh Michael
Howarth, Gerald (Aldershot)
Hughes, Simon (Southwark N)
Hunter, Andrew
Jackson, Robert (Wantage)
Johnson, Boris (Henley)
Jones, Nigel (Cheltenham)
Kennedy, rh Charles (Ross Skye & Inverness)
Kirkbride, Miss Julie
Kirkwood, Sir Archy
Knight, rh Greg (E Yorkshire)
Laing, Mrs Eleanor
Lait, Mrs Jacqui
Lamb, Norman
Lansley, Andrew
Laws, David (Yeovil)
Leigh, Edward
Lewis, Dr. Julian (New Forest E)
Liddell-Grainger, Ian
Lidington, David
Lilley, rh Peter
Llwyd, Elfyn
Loughton, Tim
Luff, Peter (M-Worcs)
McIntosh, Miss Anne
Mackay, rh Andrew
McLoughlin, Patrick
Malins, Humfrey
Maples, John
Maude, rh Francis
Mawhinney, rh Sir Brian
May, Mrs Theresa
Mercer, Patrick
Mitchell, Andrew (Sutton Coldfield)
Moore, Michael
Moss, Malcolm
Murrison, Dr. Andrew
Norman, Archie
Oaten, Mark (Winchester)
O'Brien, Stephen (Eddisbury)
Öpik, Lembit
Osborne, George (Tatton)
Ottaway, Richard
Paice, James
Paterson, Owen
Pickles, Eric
Price, Adam (E Carmarthen & Dinefwr)
Prisk, Mark (Hertford)
Pugh, Dr. John
Redwood, rh John
Rendel, David
Robathan, Andrew
Robertson, Angus (Moray)
Robertson, Hugh (Faversham & M-Kent)
Robinson, Mrs Iris (Strangford)
Robinson, Peter (Belfast E)
Roe, Dame Marion
Rosindell, Andrew
Ruffley, David
Russell, Bob (Colchester)
Salmond, Alex
Sanders, Adrian
Sayeed, Jonathan
Selous, Andrew
Shephard, rh Mrs Gillian
Shepherd, Richard
Simpson, Keith (M-Norfolk)
Smith, Sir Robert (W Ab'd'ns & Kincardine)
Smyth, Rev. Martin (Belfast S)
Spelman, Mrs Caroline
Spicer, Sir Michael
Spink, Bob (Castle Point)
Stanley, rh Sir John
Steen, Anthony
Streeter, Gary
Stunell, Andrew
Swayne, Desmond
Swire, Hugo (E Devon)
Syms, Robert
Tapsell, Sir Peter
Taylor, Ian (Esher)
Taylor, John (Solihull)
Taylor, Matthew (Truro)
Taylor, Sir Teddy
Teather, Sarah
Thomas, Simon (Ceredigion)
Thurso, John
Tredinnick, David
Turner, Andrew (Isle of Wight)
Tyler, Paul (N Cornwall)
Waterson, Nigel
Watkinson, Angela
Webb, Steve (Northavon)
Whittingdale, John
Widdecombe, rh Miss Ann
Wiggin, Bill
Wilkinson, John
Willetts, David
Williams, Hywel (Caernarfon)
Williams, Roger (Brecon)
Wilshire, David
Winterton, Ann (Congleton)
Winterton, Sir Nicholas (Macclesfield)
Wishart, Pete
Yeo, Tim (S Suffolk)
Young, rh Sir George
Tellers for the Ayes:
Mr. Alan Reid and
Richard Younger-Ross
NOES
Abbott, Ms Diane
Ainger, Nick
Ainsworth, Bob (Cov'try NE)
Alexander, Douglas
Allen, Graham
Anderson, rh Donald (Swansea E)
Anderson, Janet (Rossendale & Darwen)
Armstrong, rh Ms Hilary
Atherton, Ms Candy
Atkins, Charlotte
Bailey, Adrian
Baird, Vera
Banks, Tony
Barron, rh Kevin
Battle, rh John
Beard, Nigel
Begg, Miss Anne
Bell, Sir Stuart
Berry, Roger
Blackman, Liz
Blizzard, Bob
Blunkett, rh David
Boateng, rh Paul
Borrow, David
Bradley, rh Keith (Withington)
Bradley, Peter (The Wrekin)
Brennan, Kevin
Brown, rh Nicholas (Newcastle E Wallsend)
Brown, Russell (Dumfries)
Browne, Desmond
Buck, Ms Karen
Burgon, Colin
Burnham, Andy
Byrne, Liam (B'ham Hodge H)
Caborn, rh Richard
Cairns, David
Campbell, Alan (Tynemouth)
Campbell, Mrs Anne (C'bridge)
Campbell, Ronnie (Blyth V)
Caplin, Ivor
Caton, Martin
Cawsey, Ian (Brigg)
Challen, Colin
Clark, Mrs Helen (Peterborough)
Clark, Dr. Lynda (Edinburgh Pentlands)
Clarke, rh Tom (Coatbridge & Chryston)
Clelland, David
Coffey, Ms Ann
Colman, Tony
Cook, rh Robin (Livingston)
Corbyn, Jeremy
Corston, Jean
Cox, Tom (Tooting)
Cranston, Ross
Cruddas, Jon
Cryer, Ann (Keighley)
Cryer, John (Hornchurch)
Cunningham, Jim (Coventry S)
Cunningham, Tony (Workington)
Curtis-Thomas, Mrs Claire
Davey, Valerie (Bristol W)
David, Wayne
Davidson, Ian
Davies, rh Denzil (Llanelli)
Davies, Geraint (Croydon C)
Dawson, Hilton
Dean, Mrs Janet
Denham, rh John
Dhanda, Parmjit
Dismore, Andrew
Dobbin, Jim (Heywood)
Dobson, rh Frank
Donohoe, Brian H.
Dowd, Jim (Lewisham W)
Drew, David (Stroud)
Dunwoody, Mrs Gwyneth
Eagle, Angela (Wallasey)
Eagle, Maria (L'pool Garston)
Edwards, Huw
Efford, Clive
Ellman, Mrs Louise
Ennis, Jeff (Barnsley E)
Etherington, Bill
Field, rh Frank (Birkenhead)
Fisher, Mark
Fitzpatrick, Jim
Fitzsimons, Mrs Lorna
Foster, rh Derek
Foster, Michael (Worcester)
Foster, Michael Jabez (Hastings & Rye)
Francis, Dr. Hywel
Gerrard, Neil
Gilroy, Linda
Godsiff, Roger
Goggins, Paul
Griffiths, Jane (Reading E)
Grogan, John
Hain, rh Peter
Hall, Mike (Weaver Vale)
Hall, Patrick (Bedford)
Hamilton, David (Midlothian)
Hamilton, Fabian (Leeds NE)
Hanson, David
Harman, rh Ms Harriet
Healey, John
Henderson, Doug (Newcastle N)
Henderson, Ivan (Harwich)
Hendrick, Mark
Hepburn, Stephen
Heppell, John
Hesford, Stephen
Heyes, David
Hill, Keith (Streatham)
Hinchliffe, David
Hoey, Kate (Vauxhall)
Hood, Jimmy (Clydesdale)
Hoon, rh Geoffrey
Hope, Phil (Corby)
Hopkins, Kelvin
Howarth, rh Alan (Newport E)
Howarth, George (Knowsley N & Sefton E)
Howells, Dr. Kim
Hughes, Beverley (Stretford & Urmston)
Hughes, Kevin (Doncaster N)
Humble, Mrs Joan
Hume, John (Foyle)
Hurst, Alan (Braintree)
Hutton, rh John
Illsley, Eric
Irranca-Davies, Huw
Jackson, Glenda (Hampstead & Highgate)
Jackson, Helen (Hillsborough)
Jamieson, David
Jenkins, Brian
Johnson, rh Alan (Hull W)
Johnson, Miss Melanie (Welwyn Hatfield)
Jones, Helen (Warrington N)
Jones, Jon Owen (Cardiff C)
Jones, Martyn (Clwyd S)
Joyce, Eric (Falkirk W)
Kaufman, rh Sir Gerald
Keeble, Ms Sally
Keen, Alan (Feltham)
Kelly, Ruth (Bolton W)
Kemp, Fraser
Kennedy, Jane (Wavertree)
Khabra, Piara S.
Kidney, David
King, Andy (Rugby)
Knight, Jim (S Dorset)
Kumar, Dr. Ashok
Ladyman, Dr. Stephen
Laxton, Bob (Derby N)
Lazarowicz, Mark
Lepper, David
Leslie, Christopher
Levitt, Tom (High Peak)
Lewis, Terry (Worsley)
Linton, Martin
Lloyd, Tony (Manchester C)
Love, Andrew
Lucas, Ian (Wrexham)
Luke, Iain (Dundee E)
McAvoy, Thomas
McCabe, Stephen
McCafferty, Chris
McCartney, rh Ian
McDonagh, Siobhain
MacDonald, Calum
McDonnell, John
McFall, rh John
McIsaac, Shona
McKenna, Rosemary
Mackinlay, Andrew
McNamara, Kevin
McNulty, Tony
MacShane, Denis
Mactaggart, Fiona
McWilliam, John
Mahmood, Khalid
Mallaber, Judy
Mann, John (Bassetlaw)
Marris, Rob (Wolverh'ton SW)
Marsden, Gordon (Blackpool S)
Marshall, David (Glasgow Shettleston)
Marshall-Andrews, Robert
Martlew, Eric
Meacher, rh Michael
Meale, Alan (Mansfield)
Merron, Gillian
Michael, rh Alun
Miller, Andrew
Mitchell, Austin (Gt Grimsby)
Moffatt, Laura
Moran, Margaret
Morgan, Julie
Mountford, Kali
Mudie, George
Munn, Ms Meg
Murphy, Denis (Wansbeck)
Murphy, Jim (Eastwood)
Murphy, rh Paul (Torfaen)
O'Brien, Bill (Normanton)
O'Hara, Edward
Olner, Bill
O'Neill, Martin
Organ, Diana
Owen, Albert
Perham, Linda
Picking, Anne
Pickthall, Colin
Pike, Peter (Burnley)
Plaskitt, James
Pollard, Kerry
Pond, Chris (Gravesham)
Pope, Greg (Hyndburn)
Pound, Stephen
Prentice, Ms Bridget (Lewisham E)
Prentice, Gordon (Pendle)
Prosser, Gwyn
Purchase, Ken
Purnell, James
Quin, rh Joyce
Quinn, Lawrie
Rapson, Syd (Portsmouth N)
Reed, Andy (Loughborough)
Robertson, John (Glasgow Anniesland)
Robinson, Geoffrey (Coventry NW)
Roche, Mrs Barbara
Rooney, Terry
Ross, Ernie (Dundee W)
Roy, Frank (Motherwell)
Ruane, Chris
Ruddock, Joan
Ryan, Joan (Enfield N)
Sarwar, Mohammad
Savidge, Malcolm
Sawford, Phil
Sedgemore, Brian
Shaw, Jonathan
Sheerman, Barry
Sheridan, Jim
Shipley, Ms Debra
Short, rh Clare
Singh, Marsha
Skinner, Dennis
Smith, rh Andrew (Oxford E)
Smith, Geraldine (Morecambe & Lunesdale)
Smith, Jacqui (Redditch)
Smith, Llew (Blaenau Gwent)
Soley, Clive
Squire, Rachel
Starkey, Dr. Phyllis
Steinberg, Gerry
Stinchcombe, Paul
Stoate, Dr. Howard
Strang, rh Dr. Gavin
Stringer, Graham
Stuart, Ms Gisela
Sutcliffe, Gerry
Tami, Mark (Alyn)
Taylor, rh Ann (Dewsbury)
Taylor, David (NW Leics)
Timms, Stephen
Tipping, Paddy
Touhig, Don (Islwyn)
Trickett, Jon
Truswell, Paul
Turner, Dennis (Wolverh'ton SE)
Turner, Neil (Wigan)
Twigg, Derek (Halton)
Twigg, Stephen (Enfield)
Tynan, Bill (Hamilton S)
Vaz, Keith (Leicester E)
Vis, Dr. Rudi
Walley, Ms Joan
Ward, Claire
Wareing, Robert N.
Watson, Tom
White, Brian
Whitehead, Dr. Alan
Wicks, Malcolm
Williams, rh Alan (Swansea W)
Wilson, Brian
Winnick, David
Wood, Mike (Batley)
Woolas, Phil
Worthington, Tony
Wright, Anthony D. (Gt Yarmouth)
Wright, David (Telford)
Wright, Iain (Hartlepool)
Wright, Tony (Cannock)
Wyatt, Derek
Tellers for the Noes:
Paul Clark and
Vernon Coaker
Question accordingly negatived.
16 Nov 2004 : Column 1216
Lords amendment No. 298 disagreed to.
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