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Mike Penning (Hemel Hempstead) (Con): The Minister is being extremely generous in giving way. If scheme administrators are happy to take on the role—they cannot do worse than the FAS, which has
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spent £9 million administering £3 million paid to pensioners—it is logical to let them get on with it. If they want it, let them do it; they cannot do worse than the existing scheme.

James Purnell: They do not want it. I have spoken to them and they do not want it. They are already incredibly busy winding up schemes. If the Opposition’s new clause was accepted, they would have to learn a new set of skills. The priority is to get them to apply for initial payments and to wind up their schemes as quickly as possible. Loading the operation of a Government scheme on them would risk delaying the payments and increasing the costs.

Mike Penning: It would not delay them more.

James Purnell: It would cause further delay. The expertise exists and the schemes have been assessed. The skills necessary to assess how much people should get from FAS would have to be learned by scheme administrators.

Mike Penning: Is the Minister honestly telling the House and all those pensioners here today for the debate that spending £9 million to give £3 million to pensioners is a great success?

James Purnell: The hon. Gentleman obviously did not listen to my speech. At the start of the PPF process, the scheme and what is owed has to be assessed; thereafter, the process of paying people is quite easy. FAS has made good progress in doing that and we are now in a position to pay people when they apply for initial payments. That is what needs to happen.

The Government amendment will guarantee that FAS members will get at least 80 per cent. of their core pension, but through the review we are making a firm commitment to consider other sources of funding. We understand the aspiration of Community and Amicus to achieve PPF-level pensions for their members, but there is still no certainty about the funds available in the failed pension schemes, and until the review is completed it is not possible to give a guarantee, which is what the Tory Front Bench team is trying to do. However, we will consult Community and Amicus throughout the process to ensure that the funds that are available are applied to supplementing FAS to get nearer to 90 per cent. The review will report publicly the initial recommendations by the summer and a series of consultations with Community and Amicus and related organisations will begin immediately.

Mr. Laws: The Minister mentions the unions’ aspiration, but is he saying that although the Government’s aspiration is to deliver PPF levels of benefit, the Government’s position is that pensioners who have lost their pension should take the risk in the mean time that the Government are not successful in delivering the necessary money?

James Purnell: I am saying that it would be deeply irresponsible to do as the Opposition are doing, which is promising to deliver more money on the basis of a scheme that they do not know will work and without a proper review. The right thing to do is for the Government to pay at least 80 per cent. and we have
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now provided £8 billion. The Conservatives said that they would never put in more taxpayers’ money, but we have now done so. I urge my colleagues to support the Government amendments.

Mr. Philip Hammond: The background to this matter is well known and well rehearsed. We are dealing with a finite group—future pension scheme failures will not increase its size—comprising 125,000 people, some of whom are terminally ill and some of whom have had to come out of retirement and start work again. There are some heartbreaking stories, and I am sure that hon. Members on both sides of the House will relate some of those stories during the debate. Fairness demands that the people in that group are treated similarly to those whose schemes failed after April 2005, whether their employers were solvent or not. Fairness is not alone: the ombudsman, the Public Administration Committee, the European Court of Justice and the High Court have all expressed the same sentiment.

It is fair to say that a consensus has emerged both within the House and among the pressure groups outside that a settlement around PPF levels of benefits, although it is less than some people hoped for, would be a fair and reasonable outcome. However, the Government are still appealing the ombudsman report and resisting the finding of maladministration. I repeat what I have said several times before: there will not be a legal solution to the problem; there will have to be a political solution. There is a huge amount of good will on both sides of the House when it comes to trying to solve the problem.

2 pm

As the Minister said, the Government have promised a review to consider the use of scheme assets, and we welcome that, but the review must not stand in the way of the search for an immediate solution. Our proposal will provide that immediate solution, while accommodating the review that the Government have announced, and the additional assets that may come out of that review. I pay tribute to the Select Committee on Public Administration and the hon. Member for Cannock Chase (Dr. Wright) for their work, which has been instrumental in trying to craft a consensual solution that would command support and respect in all parts of the House. There are a lot of people watching us today; Parliament is on trial, and people want and expect us to work together to find a compromise solution that will deliver a fair, sustainable and effective outcome, and to set aside party political considerations.

The Parliamentary Under-Secretary of State for Work and Pensions (Mr. James Plaskitt): That’s what you were doing yesterday, was it?

Mr. Hammond: I am glad that the Under-Secretary of State mentioned yesterday, because, to turn to Government new clause 38, I have to say that I am a little disappointed by the speech that the Minister for Pensions Reform just made; he seemed to think that he was arguing in yesterday’s debate. The tone today is not partisan. Today, I hope, is about the search for consensus on a solution. As the Minister said, new clause 38 responds to the Budget announcements that
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the Chancellor and the Secretary of State for Work and Pensions made. It improves the scheme significantly for younger members who would otherwise have been excluded, but it does not address the real issues to do with speed of payment, the effectiveness of the financial assistance scheme, and the benefit payable. The increase in the cap will benefit some higher-paid scheme members, but that does not address the issues affecting the desperate people whom the Members most interested in the subject meet repeatedly. We will not oppose new clause 38, because it is a significant improvement and a helpful step forward, but it does not address the real issues before the House today.

Amendment (a), which the hon. Member for Cardiff, North (Julie Morgan) tabled, would amend Government new clause 38 by increasing the benefits provided in the new clause to Pension Protection Fund levels. It is similar in its effect to new clause 24. We have two concerns with amendment (a). First, because of the reference to qualifying members, it appears to include only those members who are over 65, rather than those who are over scheme retirement age, as the PPF does, yet that group includes some of the people in greatest hardship. Secondly, we believe that, contrary to what the Minister said, it is necessary to balance the moral case for helping that group of people with the obligation on us all to protect the taxpayer. I shall outline how we think that our proposals to use unclaimed assets, backed up by a Government loan, get that balance right.

The amendment tabled by the hon. Lady and new clause 24 simply transfer the problem to the taxpayer. We accept that, as the Minister pointed out, if a loan is made, a residual contingent liability is taken on, but if we are to reach a solution to the problems, we have to recognise that we are all in this together. There has to be a sharing of the pain. The pensioners concerned have to accept that they will receive only 90 per cent. of the benefits that they would have got, the industry has to accept that it will have to yield up the unclaimed assets, and the Government have to extend the loan to bridge the gap, so that relief can be provided right now, while the unclaimed assets are being collected. I have set out the two reasons why we cannot support amendment (a), tabled by the hon. Lady; we urge her to consider supporting new clauses 41 to 45 instead, which have the same objective and would deliver the same outcome for pensioners, but which take a different route.

Mr. Adrian Bailey (West Bromwich, West) (Lab/Co-op): I have listened to the hon. Gentleman’s arguments carefully, and to his declared intention of trying to develop a consensual approach. Given the amendments and the solution that he has put forward, would it not be more appropriate to wait until after the review, proposed by the Government, has taken place, so that we can see whether that solution is the most appropriate, and whether the Government address the issues that he says need to be addressed?

Mr. Hammond: This is the day when Parliament has the opportunity to demonstrate that it is committed to solving the problem, not committed to another review
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of the problem. I say to the hon. Gentleman that the scheme that we have set out, involving a lifeboat fund, in no way precludes using the assets that the Minister hopes to find in his review, including, possibly, the residual assets in the schemes; those could go into the lifeboat fund. The difference between the Government’s approach and the approach that we are setting out in this group of amendments is that we are proposing to create that structure immediately, and by the means of a modest loan, we would be able to start delivering immediately to a group of people who need help now, not at some point in the future.

James Purnell: In yesterday’s debate, the hon. Member for Tatton (Mr. Osborne)—he is sitting right next to the hon. Member for Runnymede and Weybridge (Mr. Hammond), so he can consult the shadow Chancellor right now—said that the test of the Conservatives’ credibility was whether they could resist making such pledges on pensions. The hon. Member for Runnymede and Weybridge is pledging to increase public borrowing by £600 million to fund his proposal, but he has no idea how to fund that. Will he tell us what else he is cutting, given that the Conservatives’ third fiscal rule means reducing the proportion of public spending in gross domestic product? How will he fund the proposal?

Mr. Hammond: The Minister is absolutely wrong. He knows as well as everyone else in the House that unclaimed assets are available. The Government used to claim that unclaimed assets did not exist, but they have now discovered them, and the Chancellor has started looking at them for various purposes. What we have said is that the Government should make a loan available to the lifeboat fund to enable it to start paying out immediately. The process of collecting unclaimed assets, which would enable that loan to be repaid, would then begin. It is ridiculous for the Minister to suggest that the loan would need to be £600 million; he has just explained, in the context of the financial assistance scheme, that the scheme would not have to be pre-funded. It can be a pay-as-you-go scheme.

Mr. Frank Field: Would the Opposition spokesman like to remind the House that as part of the recovery plan for the pensioners who had their pensions stolen by Maxwell, the Government offered a loan to the funds? That loan is still being repaid, and some of us are under pressure from pensioners who believe that the repayment should not continue, but that the moneys should be paid into their funds instead, so that they can enhance their pensions. The money was a loan; the House agreed it as a loan, and repayments have been made and continue to be made.

Mr. Hammond: As the right hon. Gentleman says, and as my right hon. Friend the Leader of the Opposition said at Prime Minister’s questions today, the Maxwell loan is the model on which we based our proposal.

James Purnell: No one is disagreeing that it would be possible for the Treasury to make a loan. All that we are saying is that the Opposition have no idea where the money will come from. They have just proposed, yet again, an unfunded Government policy. They are
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proposing to increase the public sector borrowing requirement, and the hon. Gentleman’s only answer to my question is, “We’d get the money from unclaimed pension assets.” If he is to increase public borrowing, he has to tell us what else he would cut, but I bet the House that he will refuse to do so.

Mr. Hammond: The amount of money that we are talking about is around £30 million a year in the early years, and I hope that the Minister agrees with those approximate figures. He talks about unfunded commitments, but he has just made an increase in the commitment to the financial assistance scheme from £2.4 billion to £8 billion. That money will be spread over 50 or 60 years, and the money needed for the lifeboat fund will also be spread over 50 to 60 years. The initial cost will be approximately £30 million in the first year, and that will be funded by a Treasury loan of £30 million, which is way below the rounding error in any of the accounts that his Department produces.

Mr. Bellingham: My hon. Friend has a point about the £30 million. A few weeks ago, he went on the green to meet some former Albert Fisher employees, who lost a huge amount, and he was very sympathetic to their plight. They want the speed of payment and the level of benefits to be looked at, and they cannot wait for another review. We have an opportunity this afternoon to solve their problems, so it is incumbent on all Members to support the amendments that would allow that to happen.

Mr. Hammond: My hon. Friend has got it exactly right. The Government have announced a review in an attempt to head off a Labour Back-Bench rebellion. What the public expect from us today is a solution to the problem, not a further review.

Mike Penning: My hon. Friend is very generous in giving way. The reason that this is so urgent—the Minister will remember that he met the widows of members of the Dexion scheme and other pension schemes who lost their husbands since the schemes collapsed—is that those people are in the lobbies today. They need help today, not after a review, and they should not be fobbed off yet again.

Mr. Hammond: My hon. Friend is absolutely right. I repeat that there is nothing incompatible between our proposal and what the Minister hopes to be able to do in future. The only difference is that we believe that the House has a moral obligation to act now. If that requires a Treasury loan, we are prepared to make that commitment. That is the minimum that people listening to the debate would expect a responsible and moral Government or Opposition to be prepared to do.

Miss Julie Kirkbride (Bromsgrove) (Con): It strikes me that the Government Benches are grasping at straws to try to claim the credit for a policy that they will announce in the summer but which is ours today. Representing many of the people affected by the collapse of schemes, I find that disappointing. In trying to denigrate our claims of financial prudence, the Minister said that he does not know whether his £8 billion forecast is accurate. Would it not be fair to say that if there were more unclaimed assets than he
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expects, we could save the taxpayer money so we might not have to finance 80 per cent. of the FAS commitment? There might be more money in unclaimed assets, thus saving the Treasury money for my hon. Friend the Member for Tatton (Mr. Osborne).

Mr. Hammond: My hon. Friend makes a very good point, but she should be careful. Her criticism should not be aimed at the Government Benches, where there are plenty of Members who have entered into this discussion in a spirit of good will and are trying to find a solution. Those on the Government Front Bench should bear the brunt of her comments.

Several hon. Members rose

Mr. Hammond: May I make some progress and turn to new clause 25 and the Minister’s welcome announcement that he is willing to yield on the issue of solvent schemes? There appears to be a technical issue concerning the extent of his commitment. Yesterday, the Chancellor displayed alarming unawareness of the problem of solvent schemes, and told the House that the problem for those pensioners was that their employers had gone bust. Hon. Members who take an interest in these things know that in some cases that is not so. The problem is that the schemes are underfunded, not that the employer has gone bust.

That is an issue that the hon. Member for Cannock Chase (Dr. Wright) must address in his contribution. He must decide whether his new clause 25 needs to be pressed further, notwithstanding the commitment that the Minister made today. I came to the Chamber ready to commit the Opposition to supporting the hon. Gentleman and his new clause, which extends the scheme to solvent employers. [ Interruption. ] The Minister is asking where the money will come from. It will now come from the Government’s pot, because he has made a commitment. The hon. Member for Cannock Chase will make a judgment as to whether to proceed with new clause 25. He has taken a great deal of care and consulted experts on the issue, and I certainly await what he says with great interest.

Mr. Cash: I am encouraged by what my hon. Friend has said. I was encouraged, too, by what the Minister said when, in reply to the hon. Member for Cannock Chase (Dr. Wright), and with reference to my constituent Mr. Nicholl and others, he said that the hon. Gentleman would be very happy with the outcome. That is highly significant. Although we will vote on the issue today, there is still an opportunity to get the wording into the exact shape needed to satisfy all parties in the House of Lords. There is therefore plenty of room and time to get this right while taking the consensual approach that my hon. Friend has quite rightly emphasised.

2.15 pm

Mr. Hammond: I am grateful to my hon. Friend for his intervention. The Minister, in a rather niggardly way, criticised the drafting of the amendments at the Dispatch Box. We all recognise, whether we are Opposition spokesmen or Back-Bench Members, that when we table amendments and new clauses we are asking the Government to look at their spirit. I am sure
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that no one who tabled a new clause today would fail to hesitate to press it if the Minister made a commitment to deal with the substantive issues that they raise when the Bill proceeds to the House of Lords.

Our new clause 40 approaches the problem from a slightly different angle from new clause 25. On reflection, we have decided that new clause 25 provides the better approach so, if the hon. Member for Cannock Chase chooses to proceed with it, we will support it. New clause 26, which was tabled by the hon. Gentleman and members of Select Committee on Public Administration, does not suffer from the defects of new clause 24, as it clearly includes people under 65 who are none the less over scheme age. It still makes a public spending commitment. I should have made it clear earlier that one of our concerns about amendment (a) to Government new clause 38 is that it appears to exclude members who are under 65 but above scheme age.

In new clause 26, however, there is a further problem that I wish to draw to the attention of the House. Subsection (3) requires the omission of the provisions of section 286 of the Pensions Act 2004 that prevent the means-testing of FAS benefits. If the new clause were accepted, it would allow the Secretary of State to impose means-testing on FAS benefits. By seeking specifically to omit the provisions that prevent means-testing, the implication is clearly that FAS benefits should be means-tested. I do not believe that that is the consensual view in the House, and for that reason, and because of the public spending commitment that it implies, we do not support it. New clause 27, which was tabled by the hon. Member for Yeovil (Mr. Laws), excludes the means-testing problems, but it still makes a direct public spending commitment.

Since the new clauses were tabled, there have been intense discussions in all parts of the House, co-ordinated by the pensions action group, which represents the people who are outside the House today. There is genuine good will to try to seek a solution. I do not think that anyone, except for the Minister, is trying to score political points. We seek a way forward that is fair and deliverable. I pay tribute to Members from all parts of the House, to the pensions action group, and to the tireless Ros Altmann—her mobile phone bill, I am sure that many hon. Members agree, must be horrendous—who have done so much to bring the issue to the attention of the House and to focus our attention on the way forward. As a result of that process, a series of new clauses has been agreed by the pensions action group and by Members from all parts of the House as the best way forward, and I thank all hon. Members who have been involved. The amendments belong to the whole House.

Mike Penning: Will my hon. Friend pay tribute, too, to my constituent, Mr. Peter Humphreys, a leading member of the pensions action group who is critically ill in intensive care? When I spoke to him yesterday, all that he wanted was for the consensus to move on so that he can stop worrying about it and get on with getting better.

Mr. Hammond: Of course, I join my hon. Friend in those sentiments, and I know that everybody in the House would send Mr. Humphreys their best wishes.

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