Pensions Bill

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Mr. Waterson: At the risk of testing your patience, Mr. Cran, let me again tell the Committee what I said this morning—and, perhaps more importantly, what I have consistently said to the various groups who have come to see me about the issue. We believe that the route advocated by the right hon. Member for Birkenhead is the right one, and certainly the one that we prefer. The Government have twice blocked

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the measures in the right hon. Gentleman's Bill, and only in the past few days has it become apparent that those unclaimed assets are indeed available. I have yet to get a straight answer as to why those assets are not available for the purposes that we propose.

Kevin Brennan: Will the hon. Gentleman give way?

Mr. Waterson: Let me just—

The Chairman: Order. I am getting restless now. We are getting back to the debate that we had this morning. I want Mr. Waterson to address himself to the amendment. I do not want to hear justifications of who voted for what this morning.

Mr. Waterson: Pressing on, I shall adopt what I have just said as part of my recommendation for the amendment: our preferred solution is to use unclaimed assets. There now seems to be no practical bar to doing that—or if there is, I have yet to hear about it from the Government Front Bench.

On amendment No. 2, as I said this morning in a different context, we will not sign a blank cheque for taxpayers' money. We cannot understand why the Government will not make a proper independent inquiry into the cost envisaged. We will make spending commitments when the need arises, but only when we know what they involve. It is as simple as that. [Interruption.] I understand the embarrassment of Government Members, but we should try to deal with amendment No. 2.

The Chairman: Yes, I hope that we will.

Mr. Waterson: Schemes that are wound up before the Bill comes into force should also be eligible. As we have said, we will discuss later an amendment, or amendments, suggesting that until the risk-based levy is properly in place, we should postpone the start of the PPF. I imagine that when we get to that point, Ministers will criticise us and say, ''People need the PPF. They need the protection and confidence that it offers to pensioners and would-be pensioners.'' We do not disagree with that, but we commend to the Government the example of the Pensions Act 1995, and in particular the excellent speech made on its Second Reading by my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley), who was then the Minister responsible.

My right hon. Friend made the point that in the face of the Maxwell crisis, the Government's immediate concern was not to rush to legislate, but to stabilise the short-term position. His Government had various imaginative ideas, not least the concept of the non-reimbursable loan from the Government. That somehow managed to get past the scrutiny of the Treasury, and enabled the people immediately faced with destitution to be looked after. That Government worked to a schedule that seems positively leisurely when compared with what this Government have in mind for the Bill; the 1995 Act was introduced and came into force a year or two later.

In this area of law, it is absolute madness for any Government to legislate in haste. The Government themselves have used the word ''challenging'' about the time scale for introducing the legislation, especially

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the PPF, and that is, if anything, a massive understatement. We think, as the industry does—we will deal with that subject in more detail later—that it is asking for trouble to start off with a flat-rate levy rather than a proper risk-based levy. The Government would be much better advised to put off the implementation of the legislation. However, the other side of that coin is the need to tackle the interim situation.

We have been given a figure of 60,000 people; I hope that that number does not rise before April 2005, or whenever the legislation comes into force, but it may well do so. Every week of every month, smallish schemes get into such difficulties as we heard described this morning. Rather like the Government of the 1990s, this Government should be looking at the interim situation at least as seriously as the long-term situation, and should be making sure that they get that right, too.

We simply cannot understand why the Government are being so slow to consider options for dealing with the interim situation, and problems that have arisen, or might arise, before the legislation comes into force. If they have considered options, and are thinking very hard and carefully about them, why do they seem so unwilling to share them with the Committee? I suppose that they may have shared more with their Back Benchers, which may explain the slightly bizarre voting patterns this morning.

The Government's explanation for not addressing this issue is becoming threadbare. From their point of view, the way in which the Bill, which has many good things in it, is being overshadowed by the problems of the people who have lost out and who will continue to lose out when the legislation comes into effect, must be extremely annoying. I am trying not to repeat too much of this morning's debate, although all those arguments remain valid.

2.45 pm

Mr. Bill Tynan (Hamilton, South) (Lab): Is the hon. Gentleman saying that the official Opposition think that retrospection should be part of the Bill?

Mr. Waterson: It depends what the hon. Gentleman means by retrospection. I see the logic of the Government's position to the extent that it would be inappropriate to use the revenues and levies from the Bill to pay claims that have arisen in the past. That is why our preferred model, as set out in our amendments—the first to be tabled on the subject—is to have a separate interim pension protection fund, running in parallel to the PPF, which uses the unclaimed assets as a method of compensating people who have already lost out by the time the legislation comes into force. If that is what he means by retrospection, the answer is yes. If he means a simple retrospection that uses the PPF and its future levies for past claims, the answer is no.

Kevin Brennan: Amendments Nos. 273, 274, 276 and 277 relate back to, and are interlinked with, much of what we discussed this morning. I am trying to probe the Government's thinking and can suggest a possible way forward. I want to find out where the Government are going and when they will give us a

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definitive answer, which they have been unable to do so far, on how they will deal with the problem covered by my amendments.

I want to give the Government the opportunity to respond to my amendments. It seems from the vote this morning and from what the hon. Member for Eastbourne just said that we have discovered why the Opposition voted for my suggestion of a possible way forward—namely, to use taxpayers' money to compensate schemes. They were in favour of it, not because that is their position, but because they want to cause embarrassment and to play a political game. I thought all parties had agreed that we would not act like that. I appeal to the Opposition to stop playing that game.

The Chairman: Order. The Committee is doing exactly what I said it should not do. Mr. Brennan, I want you to speak to your amendments and to nothing else.

Kevin Brennan: I hear that loud and clear, Mr. Cran, and that is exactly what I will do.

Amendment No. 273 refers to clause 98. It is a simple amendment that would leave out the word ''not''. That would bring schemes that have been wound up and schemes that are in the process of being wound up under the auspices of the PPF. Clause 98 defines the schemes that are eligible for assessment, that will be taken into the care of the pension protection fund and, ultimately, that will be bailed out by that fund. Under the clause as drafted, schemes in wind-up on the appointed day will be expressly excluded from the provision and therefore from the scope of the pension protection fund. The amendment would bring those schemes under its scope.

We can assume that, with the best will in the world, it takes years for any scheme to be wound up because of the complexity involved in identifying all its liabilities. The amendment would bring the schemes of companies that have gone bust in the past two or three years, but which are still in wind-up, under the scope of the PPF. That would include schemes in which the wind-up has not progressed far, such as the Allied Steel and Wire scheme in my constituency, and other schemes that concern hon. Members, such as the Kalamazoo scheme, for which the wind-up is nearly complete and annuities have been purchased. The amendment would not cover schemes that had completed winding up.

Amendment No. 258 would complete the job left undone by amendment No. 273 and bring in schemes that had already finished winding up—those in which annuities have been purchased and final accounts have been completed, and whose lights have been switched off.

The Chairman: Order. The hon. Gentleman said amendment No. 258. Did he mean that? We are all confused.

Kevin Brennan: I beg your pardon, Mr. Cran. I meant amendment No. 274; my apologies for that slip of the tongue.

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No end date is specified in the amendment, which would bring schemes that were wound up many years ago into the scope of the pension protection fund. I anticipate that the Minister may have concerns about that. The only insolvent schemes that the amendment would not cover would be those in respect of which the last traceable beneficiary had died.

In fact, in the legal case pursued by Amicus and the Iron and Steel Trades Confederation, the legal obligation that they rely on refers to the EU insolvency directive, which only goes back as far as October 1983. During the course of our discussions, the only schemes that we have discovered that would be likely to be a great liability if compensation were to be introduced are those for which wind-up commenced after April 1997. As was mentioned earlier, the mass pension failures and difficulties that we have experienced are a relatively recent phenomenon.

Before that date, guaranteed minimum pensions could be brought back into the state earnings-related pension scheme without great difficulty, the cost being borne by the national insurance fund if the scheme could not afford to do so. The unmet benefits could only relate to pensions in excess of the guaranteed minimum pension, but that is still a substantial benefit, if smaller than complete compensation.

Finally, Mr. Cran—I will try to get the numbers right—amendments Nos. 276 and 277 relate to clauses 136 and 137 respectively. Amendment No. 276 would effectively ring-fence the levy to deal with the problem mentioned earlier. It would be incorrect for the levy to be used to compensate schemes that had gone bust before the Bill was introduced.

Had we passed the amendment on that subject this morning, the Secretary of State would have been permitted to contribute to a single pension protection fund, which otherwise would consist of funds raised only by the levy. As I said, some of my other amendments would bring past insolvencies within the scope of the pension protection fund and allow it to pay past claims. Amendment No. 276 would ring-fence the money raised by the levy so that it could not be used to meet claims in respect of schemes in wind-up on the appointed day or of those that had completed wind-up.

Amendment No. 277 would do the same in relation to the ongoing levy after the initial period. In other words, levy money could only be used for those schemes in wind-up after the Bill's introduction. I realise from the rejection of my amendments this morning that that would create the difficulty of how compensation could be paid if it did not come from the levy and if there were no public funds available to pay it.

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