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Vera Baird (Redcar) (Lab): I am waiting with bated breath to hear what sum of money the Conservatives will put into the FAS to rectify the faults that he is now picking on.

Mr. Waterson: I have never known what bated means, but I hope it is not painful. If the hon. and learned Lady will bate her breath just a little bit longer, I will come back to the point that she very reasonably raised.

I return to the point that I was discussing. Dr. Ros Altmann has done some figures, and on her calculations, the £20 million a year that the Government are proposing to put into the FAS would buy a pension of £6,000 a year for 130 people. Compare that to 65,000 people who we know for sure have lost a large proportion or all of their pension rights. And for many people, £6,000 does not begin to compensate for what they have already lost. Let me repeat: on Dr. Altmann's calculations, 130 people might be assisted.

I think, in fairness—I am not trying to pre-empt something that the Minister may want to say—one must add to that any remaining assets of those funds that would be carried into the FAS, in the same way as
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I assume they would be carried through into the PPF when that is up and running, but by definition those assets are inadequate for the purpose of paying pensions and buying annuities under the current system.

Is it not strange that before the announcement of 14 May, the mantra we consistently heard, over and over again from Ministers, whether in Opposition day debates or departmental questions, was that they did not want to raise false hopes? I am afraid that the charge now is that on 14 May they did precisely that; they raised false hopes by cruelly making a lot of people think that they were going to be compensated for the pension they had lost.

I think it is somewhere in Sherlock Holmes that there is talk about the dog that did not bark, but I think this is more a question of the dog that stopped barking, by which I mean those Labour Back Benchers who have been so persistent and vociferous in pursuing the interests of their constituents who have lost their pension rights. They have largely, if not entirely, fallen silent. These are intelligent Members of Parliament, who, I hope, display a cynical disbelief in what most Governments have to say, so it cannot be, I trust, that they believe that the £400 million will be enough.

Sir John Butterfill: While my hon. Friend is talking about cynical disbelief, may I point out to him that the effect of the Government amendment to the Lords amendment is that it does not rule out private contributions as long as they are voluntary, but of course there are various ways of ensuring that one might get voluntary contributions, such as a great deal of arm twisting? Has it occurred to my hon. Friend, for example, that it might be rumoured that the Government were thinking about new tax changes that would affect the industry, but of course if members of the industry were to make voluntary contributions, that might become unnecessary? Should we not therefore reconsider whether we support the Government amendment?

Mr. Waterson: My hon. Friend makes a very good point. There are sectors where the Government might have more leverage, such as the defence sector or any sector where the Government are the customer. Computer procurement and IT might be another area.

Mr. Fallon: There is another example in this very sector, and that is of course the banks. They were asked whether they would contribute to the costs of the universal bank that the Government were setting up through the Post Office and the Department of Trade and Industry. When the Minister uses the phrase "obtain a voluntary donation", that is exactly what happened; the banks were strong-armed into making that donation. I would not be at all as sanguine as my hon. Friend is about the effect of Government amendment (a). I hope that he will start opposing it soon.

Mr. Waterson: My hon. Friend makes another very good point. All I can say is that, so far, the arm twisting has clearly failed to produce any results.

I was just touching on the fact that all the noise and fury we heard from Labour Back Benchers stopped, in effect, on 14 May and we have heard very little from any
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of them since. It cannot be because they believe that the £400 million is adequate, but could it be that, with an election looming, they realise that it is not in their interests to rock the boat? Is that the real purpose of the £400 million and the announcement of the FAS on 14 May?

I return to the point raised by the hon. and learned Member for Redcar (Vera Baird). She knows what I am going to say, but let me say it anyway. We do not believe in using yet more taxpayers' money to make the FAS workable. We have long borrowed the proposal, originally made by the right hon. Member for Birkenhead (Mr. Field), to use unclaimed assets. Despite the Secretary of State's round abuse of that idea—put forward by his own Chancellor—until relatively recently the mantra of the Treasury was that just because assets are unclaimed does not mean that they do not belong to somebody. Then suddenly, in the small print of the last Budget, we saw that unclaimed assets were suddenly available but for a different purpose. My understanding, having met the British Bankers Association among others, is that those proposals are continuing and are going forward, and we expect, because I was told so in a reply to a question the other day, that we shall have an update on that policy in the pre-Budget report.

A respected body—the Unclaimed Assets Register—stands by its estimate that there are £15 billion of unclaimed assets in this country, and it is estimated that some £3 billion of pensions remain unpaid every year. The Government trouser vast sums in unclaimed gilts and national savings; they simply put that money in their own pocket because no one has claimed it. So a variety of different pots of unclaimed assets are available. In Ireland, such assets are disposed of for charitable purposes.

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There must be proper safeguards—I shall not discuss them in detail today, although I hope that we will hear more about them when the Chancellor reports on his own pet project for unclaimed assets—but when the next Conservative Government take office, possibly in May next year, I hope that we will find a new, finely honed, glossy fund, produced under this Government, for claiming unclaimed assets and putting them to good use, and one of the good uses to which we intend to put them is providing compensation over and above the existing £400 million to the people who have lost their pension rights.

Mr. Bill Tynan (Hamilton, South) (Lab): In the unlikely event that you are in government come next May, what payment would you take from—

Mr. Deputy Speaker: Order. The hon. Gentleman must use the correct parliamentary terms. I think it most unlikely that I will be in government next May, whatever happens.

Mr. Waterson: We would have to look at that at the time. Let me finish the paragraph if not the sentence. We still have not got from the Government the details of how their scheme will work. What is the level of benefit? How will it be paid? Who will be excluded and who will
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be included? The one thing that will certainly not happen this side of next April, at the earliest, is that anyone will see any money. Again, that seems extraordinarily convenient.

Vera Baird: Is the hon. Gentleman saying that the Tories would not put a penny of the Government's money—the taxpayer's money—or anyone's money, apart from the unclaimed assets about which there is strong argument, into trying to save all the 65,000 people who have lost their pensions? Is he making it clear that the Tories would not give them a penny piece?

Mr. Waterson: Let us be clear on two issues. First, the £400 million is already part of the public expenditure figures. We would take that over, and I am talking about topping it up to a realistic figure by the use of unclaimed assets. Secondly, the only argument about unclaimed assets is going on within the Government between the Chancellor and the Secretary of State for Work and Pensions, who has expressed tremendous independence and freedom of thought since he took over, but I am sure that people in the Department will eventually beat that out of him. They are the ones who are arguing, not us—we have said all along that those assets are available. The only argument is between the Treasury and the Department for Work and Pensions.

We accept—I do not want to seem entirely churlish—that the Government have made a concession. They have had to recognise the wisdom of the Opposition's arguments. We also accept, as I said at the start, what the Minister says about the drafting and technical issues on these amendments.

Mr. Webb: The purpose of Lords amendment No. 416 was to ensure that private funds were not required to top up the inadequate sums in the financial assistance scheme, and I am perfectly happy to accept the principle that Government amendment (a) will do so rather more effectively than the Lords amendment. In the unlikely event that such a contribution was freely given—I understand the comments made by the hon. Member for Bournemouth, West (Sir John Butterfill)—it would be slightly absurd if statute prevented that money from being accepted into the financial assistance scheme, so the change is sensible.

The very fact that the Government said that private contributions might be part of the package proves that £400 million was not enough. If £400 million were enough, extra money would not be needed from the private sector to make it up to a decent level. Indeed, that money would be turned away as excessive and unnecessary—so the £400 million is inadequate.

There has been an important development this afternoon with regard to the prospects of the people who will come under the financial assistance scheme getting justice. The parliamentary ombudsman announced this afternoon that she will investigate the alleged maladministration of several Departments, including the Department for Work and Pensions, leading to the loss of those workers getting a fair deal. I wrote to the ombudsman last May to ask whether, in principle, she would investigate. I met her, together with Dr. Ros Altmann, who was mentioned by the hon. Member for Eastbourne (Mr. Waterson), and members
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of a pensioners action group in July. I and other Members, including the hon. Gentleman, have made submissions to the ombudsman. I am delighted that she has confirmed that she will investigate, because that seems increasingly likely to be the only way that the workers covered by the financial assistance scheme will get justice.

The Minister for Pensions, speaking at the weekend, appeared to be rather surprised that the private sector had not come up with some cash to top up that inadequate fund. We need to understand just how inadequate that £400 million is. It inevitably sounds like a lot when added up over 20 years. If my overdraft was added up over 20 years, it would look even more terrifying. We are talking about £20 million each year. In the context of a departmental budget of £100 billion a year, the Government are putting in 0.02 per cent. of the Department's budget. That is clearly not enough. When the scheme was proposed, the figure of £400 million was presumably based on the assumption that schemes that went to the wall in the infamous gap year would not be covered. Assuming that the scheme was not adequate on that basis, it is clearly even more inadequate now.

The key point with regard to Government amendment (a) is that, even if the sums were to come from the private sector, they are likely to be extraordinarily limited in scope. Even if the private sector were to become extraordinarily generous, it will not begin to touch the millions of pounds of underfunding. The best estimates are that £20 million a year over 20 years should have been perhaps £75 million a year over 40 years. The idea that the private sector might come up with £50 million every year for 40 years to bail out an underfunded scheme seems wholly implausible.

Although we shall reach the end of our consideration of these amendments to the Bill in a few moments, we shall still end up in a wholly unsatisfactory situation, with a huge hole in the financial assistance scheme. Government amendment (a) will allow the possibility of the private sector bailing the Government out, but no one seriously expects contributions of anything like the necessary level and the people who will lose out are those workers who trusted Governments of successive parties, who believed that their company pensions were safe and who have been cruelly let down. I am afraid that the financial assistance scheme is wholly inadequate to deal with that problem.

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