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We believe we will be able to move the 80 per cent. guarantee
from the taxpayer further towards 90 per cent.
The Minister himself talked about the expected core pension, which is a ludicrous concept that puts together the expected pensionwhat people expect to receiveand the core pension, which is a construct of the FAS.
Only the other day, in unveiling his Not the Queens Speech, the Prime Minister referred to an unclaimed assets Bill to be introduced later this year. He challenged us to support it, but failed to make any connection between the use of those assets and helping the pensions victims. It is as if he wished they would disappear. Sadly some of them have done so, and some of them will. That 80 or 90 per cent.of what is it 80 or 90 per cent.? The truth is that the FAS was set up in a hurry as a political expedient and was inadequately funded from the outset. It had to be set up in a different location with different staff almost to underline the
fact that it was always going to be the poor relation to the PPF. Then the Government had to invent the novel concept of the core pension to make it sound even remotely credible. What does that mean in practice?
The PPF includes some inflation linking; the FAS has none. The PPF pays from the scheme pension age, but the FAS only at 65. The FAS does not allow for tax-free lump sums, or ill health or early retirement benefits, except for the terminally ill. The FAS does nothing for dependent children and little for widows. So most victims subject to the FAS will be lucky to get half their expected pension, and many will receive far less.
If the era of spin is at an end, why will the Government or the Prime Minister not listen? They were found guilty of maladministration by the ombudsman. They decided to ignore constitutional law and practice by saying that it was Ministers job to second-guess the ombudsman on those findings. The Select Committee told the Government that they were wrong. They ignored it. The European Court said that the Government were wrong. They ignored it, too. The High Court told them, so they decided to appeal.
Now, in an almost unprecedented move, the Select Committee has issued a report aimed directly at todays debate and giving guidance to hon. Members on how to vote. Reading between the lines, it is clear that when these matters were last debated in the Chamber, the able Chairman of the Select Committee felt that he was led up the garden path by the then Minister. The Select Committee supports the view that those who have lost pensions where a solvent employer has wound up the scheme should also be included. That is the purport of amendment (a). The Committee states that
the losses suffered by scheme members are identical, whether or not an employer still exists.
Mr. William Cash (Stone) (Con): Does my hon. Friend agree that although the proposal announced by the Minister with regard to a review must be taken seriously, that is a step backward from what was said by the former Minister in the House, when far greater emphasis was given to the need to protect those who were affected by schemes that were solvent? We therefore want meetings with the Minister. My constituent, Richard Nichol, and the people who fought valiantly on the matter will look to our Front-Bench team to help them in that, as they have already done.
Mr. Waterson: I am grateful to my hon. Friend for that intervention. Yes, there was some lack of claritythat is the most charitable way of putting itabout what the then Minister said in response to the hon. Member for Cannock Chase (Dr. Wright), as a result of which his amendment then was withdrawn. The hon. Gentleman is back for another bite at the cherry and I wish him well with that.
the Government should not use the indigence and distress of those who have suffered considerable losses to try to blackmail them.
the general principle that FAS benefits should be aligned to those in the PPF
the House should consider any government assurances extremely carefully before it gives up this weapon.
Any assessment of the increase in benefit
can only be speculative. We do not have the expertise to comment on whether the proposals for a review of unclaimed assets stand a realistic prospect of success.
The centrepiece of the Ministers speech tonightthe lifeboat towards which he has been swimming for most of the evening so far, but making little progresshas been the Young report. I agree that it is a useful document, as far as it goes. It is, of course, an interim report and seems to have been rushed out in an attempt by Ministers to bolster their position on the Bill. There is clearly more work to be done by Mr. Young and his colleagues, and I think he accepts that. My overall mark so far is six out of 10must try harder.
We welcome parts of the report. It is correct to conclude that the funds available for the victims can be boosted by not purchasing bulk annuities. That is not rocket science. We have been saying that for quite a long time and campaigners such as Ros Altmann for even longer, yet Ministers have taken no notice at all. I am pleased to see that in their response to the Young report, Ministers have finally seen the light. But there is a massive danger that faces us this evening. The hon. Member for Aberdeen, South (Miss Begg) touched on it in her intervention. It explains why, forgetting all other arguments for and against, hon. Members in all parts of the House must support the amendments tonight.
As wind-ups of schemes proceed, many of the assets identified by Young could be dissipated by purchasing annuities in bulk before the review team produces its final report at years end. We must not allow that to happen, or much of this will become academic. That is the aim of amendment No. 22.
Mr. Edward Garnier (Harborough) (Con):
Is there not a further danger in relation to the purchase of annuities? Recently, compared with previous years, annuities have been performing pretty poorly. They have not been giving annuity holders the income that they might have given, say, 15 years ago. Is that not a further concern for those with broken pensions? Are
they not also entitled to be concerned about what has happened to their additional voluntary contributions and about the sloth with which the Government have sought to mend the broken pensions? I am thinking particularly of my constituents who have seen their British United Shoe Machinery Ltd occupational pensions go down the Swanee, and have received little comfort from the present Prime Minister or the previous Chancellor of the Exchequer.
Mr. Waterson: I am grateful to my hon. and learned Friend for that intervention. I know that he has been a doughty campaigner for the British United scheme members who lost many of their pension rights. He is right about the annuities market. An interesting and thoughtful document was produced by the Treasury a few months ago on the subject.
Almost by definition, if pension funds are to be wound up without sufficient assets and the money is to be used to purchase annuities in bulk, the money will not go as far as it might otherwise do. We entirely agree with Mr. Young about that. Belatedly, the Government also seem to agree, but all the Minister can say, rather wetly, if he will forgive me, is that the trustees must take their own advice. It is little more than a nod and a wink, whereas amendment No. 22 would make it crystal clear that they must stop purchasing annuities in bulk for the foreseeable future so that we can get the money going through the system to help the people who need it most.
Danny Alexander: The hon. Gentleman is making a critically important point. If what the Minister said is to be taken at face value, surely at the very least the Government should be advocating voting for amendment No. 22 to stop the assets being converted into annuities, or the money that he hopes will come in November when the Young review re-reports might be unavailable because by then it will have been annuitised.
Mr. Waterson: I am grateful to the hon. Gentleman for that intervention. I repeat what I have already said. If hon. Members are oblivious to all the other arguments on the issue, this is the central argument that should make them vote for the amendments tonight, especially amendment No. 22.
It is good news, at least for the moment, that the report concludes that there are some £1.7 billion of uncommitted assets in FAS eligible schemes. We agree about making better use of those assets. And glory be! Young also concludes that there would be advantages in operating the FAS along the lines of the PPF. The Minister seemed a bit iffy about that, but I recall tabling amendments to the 2004 Bill, as it then was, proposing just that: a separate fundit must be separate, for obvious reasonsfor existing claimants, operated in parallel to the PPF and by the same people, using the same skills set. We have consistently argued more recently that the failing FAS should be scrapped as a separate entity and folded into the PPF administration, which has shown itself to be efficient and cost-effective under the leadership of Lawrence Churchill. However, one of the galling aspects of opposition is that being proved right all along is not good enough.
Mr. Mike O'Brien: I really cannot allow the hon. Gentleman to get away with that. He has been saying all along that unclaimed personal pensions and life assurance policies would provide a lifeboat for the various pensioners. Will he now accept that Andrew Youngs report, published yesterday, makes it clear that unclaimed personal pensions and life assurance policies have a very uncertain outcome and although they might theoretically provide a source of funding, there would be substantial administrative, legal and other difficulties behind such a scheme? In other words, what he kept saying was going to provide the answer in fact provides no answer at all.
Mr. Waterson: I can assure the Minister that I am not going to do what he did, which was just to pick out the bits of Young that helped his case and leave the rest. I will deal with that aspect in detail later, and if the Minister feels that I have fallen short he is welcome to intervene again.
It is a tragic lost opportunity that the Government have been so slow to consider unclaimed assets as a source for topping up assistance to the victims. We raised that during the passage of the Pensions Act 2004; the right hon. Member for Birkenhead (Mr. Field) had raised it much earlier. The mantra from the Treasury at that time was always the same: Just because these assets are unclaimed does not mean that they do not belong to somebody. Then suddenly the then Chancellor, now the Prime Minister, turned 180° and announced that he would be looking to use unclaimed assets, albeit for a different purpose.
The Government have made much mischief on this subject. They have sought to rely heavily on some commentsnow overtaken by eventsfrom their new best friends, the Association of British Insurers, attacking the possible use of trust-based pension assets. For the record, we accept what the ABI says on that specific category, butthis may be helpful to the Ministernowhere in our amendments on the lifeboat fund do we seek to specify which unclaimed assets could be appropriate for this purpose. That would be left to regulation and to the Secretary of State, and, arguably, to the final Young report. No doubt that makes organisations such as the ABI somewhat uncomfortable. I can understand that, because its job is to look after the interests of the companies who are its members. However, that does not alter the fact that in different ways, and for varying purposes, both Government and Opposition are looking to turn unclaimed assets to the benefit of people in our community who need help. I suspect that now the ABIs greater concern is the briefing from Government sources over the weekend suggesting that as part of the ongoing review they were going to look seriously into using the inherited estate of insurance companiessaid to amount to some £20 billion.
The Young report avoids the issue of bank and building society assets because, it says, those are being considered by the Treasury, but we can safely assume, for these purposes, that significant amounts of money are available from those sources. Young goes on to deal with some ideas that have certainly not emanated from us, such as windfall taxes or additional levies on business. Perhaps they came from the Liberal Democrats. With wry amusement, I see that Young concludes that voluntary contributions from business are not
a credible source of additional funding.
We said that when it was mooted by the then Pensions Minister back in 2004. The report dismisses somewhat tersely the use of unclaimed assets held by National Savings and Investments, and we would wish to look at that again as part of the groups ongoing work.
Rob Marris: Can the hon. Gentleman distinguish between orphan assets, which have been much talked about in this Chamber for all kinds of pet projects over the years, including for youth provision, and what is commonly termed the inherited estate? I have a life assurance policy that will not pay out what it was expected to, yet the company has inherited estate assets which could be divided between shareholders and policyholders, such as myself and my wife. I do not want the hon. Gentleman coming along, as a result of these amendments or regulations consequent upon them, and nicking money that could come to me as a policyholder.
Mr. Waterson: I am grateful for the hon. Gentlemans intervention, which was as penetrating as ever. I think he should be more worried about what his own Front Benchers have in mind, given the briefing over the weekend. He is absolutely right. The insurance companies argue that those funds are available to improve the lot of policyholders such as himself and his good wife. At least one or two companies are considering court applicationsit must ultimately come down to thatto divide the booty between policyholders and shareholders. [ Interruption. ] The hon. Member for Wolverhampton, South-West (Rob Marris) says from a sedentary position that I want to take it. He needs to read what has been said over the weekend, which suggests that his own Government are thinking of taking it.
Mr. O'Brien: Before the hon. Gentleman makes an allegation like that, he should remember that it is precisely these sorts of funds that he and his colleagues have been saying are unclaimed assets in insurance and pension funds. We have repeatedly warned him, and he has been warned by others, that they are not available, yet now he is trying to claim that the Government want to access them. The Government have never made any such claimit has always been made by the Opposition.
Mr. Waterson: I think that the Minister is failing to distinguish between the inherited estate of insurance companies and unclaimed pension assets. However, I will come to that in a bit more detail in a moment.
The report goes on to talk of the need for primary legislation to enable unclaimed assets to be utilised. We now know, fortuitously, that the Government intend to introduce an unclaimed assets Bill, for the Prime Minister has told us so. Should the amendments fail in due course, that would be a golden opportunity to remedy the situation. Perhaps the Minister could deal with that when he responds. We are heartened that the report concludes:
there may be additional funds available in further types of unclaimed assets and the Review team will investigate these further before our final report is produced.
The Minister is wrong to say that the interim report closes the door on the use of unclaimed assets. I note that the review team is intending to continue to investigate the legal and other issues surrounding unclaimed assets, although they reach some provisional conclusions on unclaimed defined benefit scheme assets and so-called orphan assets. Like the Government, we shall consider the implications of those provisional findings. For those who favour the use of unclaimed assets, there is real encouragement in the reportthe Minister clearly did not get as far as annexe Eas regards the experience in the Republic of Ireland. A comparison with what it achieved scaled up for our larger population suggests that we might generate £234 million in the first year and £70 million a year thereafter. The report is a good start to the process, and we are told that the final version will appear before the end of this year.
In fact, however, this is all beside the point. I had harboured hopes, based on my respect for the new Secretary of State and the new Pensions Minister, that they would come to these issues with fresh minds. The history of the FAS since its birth in May 2004 has been a dismal disappointment. Things have merely gone from bad to worse. In its annual report, it revealed that it spent more on running itself than it got to the victims. The latest number receiving paymentsabout 1,300is only a fraction of the 10,000 who have reached retirement age and need help now.
Let us consider the appalling case of Mr. John Brooks, a constituent of my right hon. Friend the Leader of the Opposition, who has been deeply involved in his case. Mr. Brooks is 68 and suffers from leukaemia. He worked for 38 years for Earlys blanket factory in Witney, but when the business collapsed in 2002 he was left without a company pension. He is one of about 50 people in the same situation. He was recently contacted by the FAS, which offered him 60 per cent. of his full pension in the form, at least initially, of a loan. He said that he would not accept it because he wanted to know if the other 49 people were being offered the same thing. He then got a phone call from someone at the FAS. What he said is quoted in the Oxford Mail:
I asked him if anyone else from Earlys was being offered money and he said no, you are the squeaky wheel that we have got to grease.
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