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House of Commons

Monday 13 December 2004

The House met at half-past Two o'clock

PRAYERS

[Mr. Speaker in the Chair]

Oral Answers to Questions

WORK AND PENSIONS

The Secretary of State was asked—

Labour Statistics (Nottingham, North)

1. Mr. Graham Allen (Nottingham, North) (Lab): How many young people were unemployed and claiming benefit in Nottingham, North on 1 December (a) 1997 and (b) 2004. [203844]

The Minister for Work (Jane Kennedy): As at October 2004, there were 745 unemployed young people in my hon. Friend's constituency. This represents a decrease of 22 per cent. since October 1997.The number in long-term unemployment there is now 395, which is down from 1,165 in 1997.

Mr. Allen: I thank my right hon. Friend for those statistics. Will she also bear in mind the fact that, behind the statistics, there are people such as Clare Robertson, my constituent from Bulwell, who had no hope of getting the kind of job in administration that she wanted? She was given training through the gateway programme, and given advice by the job adviser. She was also given a subsidy to ensure that a local employer took her on to do the job that she wanted. I understand that, today, Clare has a full-time job as a result of all that. This is surely the best investment that we can make in our individuals. Will my right hon. Friend ensure that, as long as we are in government, we never throw that investment away, as the Conservatives would?

Jane Kennedy: In 1993, the number of jobless young people not in full-time education stood at 1,570,000. That is more than 450,000 more than today, yet we are criticised for the 150,000 under-25s who have been unemployed for more than six months, as defined by the International Labour Organisation. However, many of those young people will, like my hon. Friend's constituents, participate in the new deal, and I agree with him that it is certainly one of the best investments of taxpayers' money that one could wish for.

Sir Archy Kirkwood (Roxburgh and Berwickshire) (LD): Whereas it is true that the number of young people on jobseeker's allowance in Nottingham, North has fallen, they now represent a bigger proportion than
 
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they did in 1997. Then, 26 per cent. were on jobseeker's allowance; now, the figure is 34 per cent. Does the Minister accept that more could still be done to support young people in getting into the labour market? Will she also look at the lessons that could be derived from the Joseph Rowntree Foundation's report, which identified four wards in Nottingham as still being subjected to great poverty? Will she use mechanisms such as the social fund and jobseeker's allowance to give young people more support through their lives?

Jane Kennedy: That is a very thoughtful question. The hon. Gentleman is right to say that the Rowntree Foundation's report pointed that out. However, it also complimented the work that we have done to tackle poverty. I accept that youth unemployment remains too high, and that we have more to do in that regard. That is why there was a range of measures in the pre-Budget report last week, including a concentration on skills, so that more young people who are in unwaged full-time training can pick up financial assistance in the same way as others get the education maintenance allowance.

Pensions

2. Mr. Derek Wyatt (Sittingbourne and Sheppey) (Lab): What funding additional to the £400 million already announced will be available to former employees of ASW Sheerness, whose occupational pension scheme is in administration. [203845]

3. Mr. Bill Tynan (Hamilton, South) (Lab): When he expects individuals who lost pension entitlement owing to scheme closures will benefit from the financial assistance scheme. [203846]

The Secretary of State for Work and Pensions (Alan Johnson): We are keen that the industry should have the opportunity to offer support to the financial assistance scheme, either by voluntary financial contributions or assistance in kind. In April, we will set up the body to administer the FAS and, following the formal consultation, we will lay regulations before Parliament, and make payments as soon as practicable thereafter.

Mr. Wyatt: I thank the Secretary of State for that answer. Will he clarify one issue? There is to be a review of the scheme after three years. If there is insufficient money in the scheme by then, will the review allow money additional to the £400 million to be paid in?

Alan Johnson: We have announced that £400 million will be the amount of money available over 20 years. The review will take place after three years, when we shall look at how the scheme is operating. We have made no commitment to increase the funding at that stage.

Mr. Tynan: My right hon. Friend will be aware of the continuing enormous concern as to whether the £400 million will be enough. I was contacted this week by one of my constituents, who has been told that he will receive £8,600 from his wound-up scheme. He asked me whether the £400 million will be used to make up the one third that he will not get from his scheme, as he hopes. We know that there is going to be a certain amount of money in the scheme's funds. Will my right hon. Friend
 
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tell us whether that £400 million will be enough, or whether there will be a shortfall because of the amount of people needing to receive money?

Alan Johnson: We calculated back in June and we published a statement to say that we believed from the information we had that about 65,000 people needed assistance with schemes that had become insolvent. We made our assessment on that basis. Obviously, we need much more information, but let me make this absolutely clear once again: we have not said that we will be able to match the assistance—the compensation available—in the pension protection fund, nor do we accept any liability for what has happened in the past.

We have said that we should be able to provide some assistance, particularly to those people who have lost the most and are in the worst position in terms of being closer to retirement and who cannot make up that money because of that proximity. So we have made it absolutely clear that we do not in any way pledge to meet every single amount lost from these schemes. We also said in our statement of 2 December that we will have a de minimis £10 below which we will not offer compensation.

Mr. Nigel Waterson (Eastbourne) (Con): Has the Secretary of State seen that the US parent company blames his pension legislation for the most unfortunate breakdown of negotiations over the Turner and Newell pension scheme? Does he accept the view of industry experts that that very collapse could swamp both the FAS and the PPF? Is it not high time that he admitted what everyone else already knows—that the FAS is not remotely adequate for the task it faces?

Alan Johnson: Well, I have heard a few good jokes over the Christmas period, but I have not heard that one before. It is a real cracker—our pension protection fund is responsible for Federal-Mogul's problems with Turner and Newell. I do not accept that at all, although Conservative Members may be more gullible than we are on these Benches.

The situation with Federal-Mogul is very serious. That company is not in insolvency and we expect that it can meet its commitments. Indeed, negotiations are going on now. We think that the amount in the FAS will give proper compensation. I question the assertion made by the hon. Member for Eastbourne (Mr. Waterson) that, somehow, the Opposition could do better than this, because from what I see—£35 billion spending cuts and, I presume, 100,000 staff to go from the Department for Work and Pensions—I doubt whether they would have the money even to administer the FAS, let alone—

Mr. Speaker: Order. I think we will leave that one.

Paul Holmes (Chesterfield) (LD): Those facing financial devastation as a result of losing their occupational pensions through no fault of their own include constituents of mine who work for Chesterfield Cylinders, Dema Glass and Coalite. They soon saw that the £400 million in the FAS was a cruel con trick; it was far too little to provide the compensation needed. Ministers seem to accept this, because they have said that they hope that industry will make up the shortfall.
 
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If, as it appears from the Secretary of State's earlier answer, industry has not provided any money to make up the shortfall, are the Government prepared to see these people face a bleak old age, or will they make up the difference?

Alan Johnson: The hon. Member for Northavon (Mr. Webb) has put on a bit of weight since we last saw him—it is pleasant to have the hon. Member for Chesterfield (Paul Holmes) stepping in. I do not accept the hon. Gentleman's point that this is a cruel deception. Most people thought it extraordinary that a Government would provide such assistance in retrospect. Certainly in view of the experience under previous Governments, no matter what we are considering, it is very rare for such a thing to happen and it is very unlikely that it would have happened under the previous Government. We think that the money available is sufficient. We have also said right from the start that we would welcome a financial contribution from the industry. It is fair to say that we have not been swamped with money, but we live in hope.

There is also the money that is still in some of those schemes and the deemed buy-back arrangements that could add extra money to it, but £400 million is a significant contribution for the Government to make, giving some financial assistance with the real problems that the hon. Gentleman raises on behalf of his constituents.

Mr. Geoffrey Robinson (Coventry, North-West) (Lab): I agree with my right hon. Friend in dismissing the hypocritical and nonsensical remarks from the Opposition. In respect of Federal-Mogul, can he confirm if not today, then in the near future, that if indeed the Americans have resiled and remain in the position of repudiating the undertakings they gave to Members of all parties in the House some weeks ago, and that if the pension fund were to go into wind-up—a second order would be necessary to dispose of the assets, which could not come into operation until April next year—that pension fund would then benefit from the PPF arrangements and that, largely, the commitments could be met in that way?

Alan Johnson: I confirm that in the scenario that my hon. Friend paints that would be the situation; it would qualify for the PPF. It is also relevant to point out that there would be a substantial amount of money anyway, to assist us with that situation. Also, the money paid out from the PPF—if it came to that, and let us hope it does not—would not be paid out for several years. So the PPF is adequately placed to meet any commitment, including one from Turner and Newell.

Mr. Patrick McLoughlin (West Derbyshire) (Con): The Secretary of State said a few moments ago that he lived in hope. My constituents live in England, and they want to know what has happened over the past few weeks to the Turner and Newell pension fund, which they thought was sorted out, but which they now find has a great question mark hanging over it? Never mind living in hope—what hope is there for them?
 
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Alan Johnson: The hon. Gentleman and I have clashed on various occasions, but in a good-natured way. I cannot understand a question that seems to place the onus in these negotiations on those on the Government Front Bench, the Opposition Front Bench or any other person in the House. The responsibility for the situation in relation to Turner and Newell and Federal-Mogul, which is of huge concern to his constituents and those of others around the House, is a matter for the company, its trade unions and its shareholders. It is up to them to find a solution to the problem, and I very much hope that he will join me in urging them to redouble their efforts to do so.

Mr. Frank Field (Birkenhead) (Lab): The Secretary of State keeps talking about the Government having put up £400 million. May I remind him that it is my constituents who are putting up that money, and they think that it is a very generous settlement? But as they and practically everyone else in the House do not believe that the £400 million will be adequate, who in the Government is blocking the suggestion, which is supported on both sides of the House, that the Government use some of the unclaimed assets to meet the bill, so that people have their pensions met in full?

Alan Johnson: I agree with my right hon. Friend that we should always be careful about talking about Government money—of course it is taxpayers' money. I also agree with him completely that his constituents and mine think it a very generous settlement. In terms of what we do with so-called orphan funds, we want to reunite those unclaimed assets with their rightful owners. It is a mistake to base policy on a financial assistance scheme of taking money when we do not know how much is there—I have heard estimates varying from £170,000 to billions of pounds—or on seeking to take money from accounts over which we have no control and which are owned by other people. The £400 million settlement, which is generous, as he recognises, gives far more confidence to the people affected than the suggestion that we can somehow match that from orphan funds.

Mr. David Watts (St. Helens, North) (Lab): Has my right hon. Friend had the chance to study my early-day motion 359, which calls on the pension industry to make a contribution? Does he agree that there is a moral obligation on the pension industry to make a substantial contribution to this fund?

Alan Johnson: I have studied my hon. Friend's early-day motion in great depth—I did very little else over the weekend—and know it word for word. It is an important early-day motion, as it matches what we would like, which is a contribution from the industry. We live in hope, as the hon. Member for West Derbyshire (Mr. McLoughlin) reminded me, and now that the FAS is on the statute book, and as we get closer to finalisation, I still hope that we will see contributions coming from that quarter.
 
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