Pensions Bill
5:25 pm
Lord Higgins (Shadow Minister, Economic Affairs; Conservative)
My Lords, in moving Amendment No. 66, I think that it will also be convenient to debate Amendment No. 67 and government Amendment No. 68. In previous debates, we referred to the problem that exists because the Bill contains two separate systems; namely, the original pension protection fund, which was set out in the Bill when it was debated at Second Reading in another place, and the financial assistance scheme, which was introduced at the very last moment in another place before coming to your Lordships' House.
As your Lordships are aware, the financial assistance scheme is financed by the Treasury from a sum that is apparently limited to £400 million, which would be spread over 20 or more years. Therefore, the present value is probably something like £250 million. We have no idea from where that figure came: it appears to have been taken out of the air by the Chancellor in an attempt to buy off Labour Members of Parliament who were otherwise going to revolt against the problems faced by their constituents. Indeed, they were supported by Conservative Members who had suffered from their pension funds going bust.
The crucial question here is whether the financial assistance scheme, which will come in for schemes that are already bust, overlaps with the pension protection fund; or, alternatively, whether there is a gap in time between the two. I think that I would be right to say that it is common ground between the noble Baroness and those of us on this side of the House that the right structure for the Bill is to have neither a gap nor an overlap between the financial assistance scheme and the pension protection fund; that is, the one fund should cease to have new members at the moment where they are able to enter the second fund.
If that is the intention, it is not clear from the Bill as it currently stands. My two amendments seek to make that clear. Amendment No. 66 states:
"New qualifying members shall continue to be eligible for membership of the financial assistance scheme until such time as they could, instead, qualify for the Pension Protection Fund".
Amendment No. 67 effectively states that there cannot be benefits under both schemes.
The Government have tabled an alternative amendment, which is much more esoteric in character. It may achieve the same end, but I am not clear whether it does. There are a whole series of related problems to be referred to otherwise, which arise because, quite clearly, the financial assistance scheme will be less favourable than the pension protection fund.
Therefore, there is some danger in two ways: on the one hand, that the Government will seek to alter the situation so that people become a burden on the fund's levy rather than on the Government's financial assistance scheme; or, on the other hand, that individual companies may seek to arrange their affairs in such a way that they delay being qualified for the financial assistance scheme in order to become entitled to benefits under the pension protection fund.
Essentially, these two amendments seek to clarify the position. As I said, I believe that the Government's amendment is designed to achieve the same end. If that is so, it may be better drafted than mine, although I hope that mine also has the same effect. We look forward with interest to what the noble Baroness has to say. But we think that this is an important issue. Unless we receive a satisfactory answer, we may wish to vote on our amendments. I beg to move.