It was interesting to listen to a thoughtful speech about important world affairs by the Minister of State, Foreign and Commonwealth Office, the hon. Member for Upminster (Sir N. Bonsor). It shows the strength of the House that we can move immediately from an important debate on world affairs to a much more parochial issue that affects ordinary citizens in our constituencies.
In introducing the debate, I record my thanks to hon. Members on both sides of the House who have contributed to the enormous amount of information that I have gathered relating to the case. I pay tribute to the right hon. Member for Wirral, West (Mr. Hunt), the hon. Member for City of Chester (Mr. Brandreth), my hon. Friends the Members for Birkenhead (Mr. Field), for Wallasey (Ms Eagle), for Alyn and Deeside (Mr. Jones), and for Makerfield (Mr. McCartney), and to my right hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott), the deputy leader of the Labour party. My hon. Friend the Member for Wirral, South (Mr. Chapman) will not be able to participate in the debate as he has not yet made his maiden speech. Hopefully, he will catch your eye later today, Mr. Deputy Speaker.
H. H. Robertson has a long history in Ellesmere Port, having started its life as the Wolverhampton Iron Works more than 90 years ago. Some of the original workers walked along the Shropshire Union canal from Wolverhampton to Ellesmere Port to get their jobs. Today I shall concentrate on the activities of its two most recent parent companies, Robertson Ceco Inc. of the United States and the 1W Group, which took over on 1 January 1994.
On 23 January this year, it was announced that H. H. Robertson had sold to British Steel the intellectual property rights and plant associated with its only profitable product. As a result, the principal wage-earners of 150 families in the Ellesmere Port area will lose their jobs. In 1989, the then owners entered into a pension holiday. At that time, the fund had a surplus of £4.4 million, but by October 1992 there was a deficit of £2.4 million. However, it was not until Christmas eve 1991 that the consulting actuaries, Sedgwick Noble Lowndes, advised the managing director, Mr. Ian Wood, of the problem—that is the way that he described the situation to me.
However, for reasons yet to be explained, the pension holiday continued until April 1992. Therefore, my first series of questions is: what happened to the investment strategy during that period? When were the trustees first notified of the problem? Why, when the managing director knew of the seriousness of the problem, did contributions not recommence until April 1992? It seems to me that, irrespective of the difficulties that the company may have faced, there are some serious issues surrounding the management of the pension fund at that time.
I now move to 1994 when the 1W Group took control. One of its first actions was to reach an agreement with the workforce about a 10 per cent. pay cut-that is a real contribution by any workforce to a company's well-being. A slow process of repaying pension fund moneys was put in place, and large-scale redundancies occurred. It is alleged that pension fund moneys were used to boost redundancy payments at that time. It is now obviously impossible to prove that one way or the other from the enormous pile of information that I have gathered. However, it raises the question whether the fund should have been used in that manner, irrespective of the discretionary powers held by the trustees, while it was in deficit. The fund was clearly in deficit from some point after 1989 throughout the time in question.
I now bring the House to the present. When I was told about the proposed closure and an apparent £5.3 million sale to British Steel, I began an investigation into the company and its parent group. I shall briefly describe the structure of the company. H. H. Robertson is owned by the 1W Group whose managing director is Mr. Ric Wharton. In turn, that company is owned by Midmar Investments Ltd, which Mr. Wharton describes as a trust in the name of his children. The 1W Group owns, or has a shareholding in, a string of other companies. Mr. Wharton is, or has been, a director of about 28 companies, some of which are in liquidation, some of which have failed to file their accounts in the normal time, and some of which appear to be not trading. At the time of the H. H. Robertson acquisition, there was a significant share issue in the 1W Group. I draw to the Minister's attention the fact that, if H. H. Robertson is sold at a negative value, presumably those shares will be worthless.
The structure that I have described so far is complex, but not unusual. I then discovered that the deal with British Steel was not for the figure that I was first told, but for £7.4 million, and that it also involved a company called Chester Plant and Leasing Ltd. The plant that British Steel was interested in was leased to H. H. Robertson by Chester Plant and Leasing Ltd. There is nothing terribly unusual about that: people lease all sorts of business needs, from photocopiers to buildings. However, it is a little odd to lease plant that is at the core of the business.
I also discovered that Chester Plant and Leasing is owned by H. H. Robertson, and that the directors of the company are Mr. Wood, the managing director of H. H. Robertson, and Mr. Wharton, the owner of the parent company. It also appears to have a mysterious offshoot known as Gardenia Holdings, which is registered in the Bahamas. Mr. Wood has so far denied knowledge of Chester Plant and Leasing and of Gardenia Holdings, although he is a director of the first company.
Any reasonable person examining the structure that I have described would ask whether the directors are in breach of their fiduciary duties. It is clearly impossible to answer that question without accessing the management accounts of all the companies—even then, it would not be easy. I wrote to Mr. Wood on 5 March, asking him a series of questions and pointing out that I had secured this Adjournment debate. I asked him about Gardenia Holdings, Chester Plant and Leasing Ltd and the exact date of the takeover—which I have since discovered. I also requested any information that he had about various financial issues. Thus far, he has chosen not to reply.
The third and final complication arises from H. H. Robertson's attempt allegedly to protect creditors. The firm has transferred all the remaining assets, including land and buildings, to another company called Ledge 313 Ltd., which was incorporated in Scotland on 17 December 1996. Mr. Wood told me a fortnight ago that that was done in the best interests of the creditors, especially the pension fund. However, Ledge 313—whose particulars I have received thanks to the good offices of Mr. Ross Ramsey of Companies House in Scotland, who has been extremely helpful—appears to have three charges associated with it: in the names of the Bank of Scotland, Chester Plant and Leasing, and Gardenia Holdings.
Mr. Wood has meanwhile been trying to argue that, if the borough council gave him planning consent to build a supermarket, there would be enough money to pay all the creditors, including the pension fund. As every hon. Member knows, a local authority could not unilaterally grant consent, even if that would help the pension fund. The authority must base its decisions on planning grounds alone. However, a planning application was lodged on 18 February 1997.
Even if that application went ahead on the most favourable terms, how—given the charges on Ledge 313—can the pension fund be protected? Why was the pension fund—H. H. Robertson Pension Trust Ltd.—not listed as having a charge on that company, bearing in mind that Mr. Wood told me specifically that the company was created to help the creditors, particularly the pension fund?
I have always argued that the Pensions Act 1995 would not stop another Maxwell. Whether this case falls into that category, one cannot be certain.
I thank the hon. Gentleman for kindly agreeing that I might intervene. I share his concern about the rights of the pensioners. Their position is stressed by a letter sent to me by one of my constituents, who writes that the trustees met on 3 March, and that Mr. Wood has since given notice to members of the pension plan that the plan is to be wound up and that trustees will be advising members direct. No advice has been given and no pensions surgeries have been held, so everyone is in a state of uncertainty. I entirely agree with the hon. Gentleman that we must know the truth as quickly as possible, so that we can tell our constituents.
I am grateful to the right hon. Gentleman for that helpful intervention. According to the latest information given to the trustees by professional advisers, the fund is underfunded in excess of 50 per cent.—in other words, it is forty-something per cent. funded.
A friend of mine, Councillor Brian Jones, works at H. H. Robertson. If he took his pension at the point of his dismissal, bearing in mind that he has only about six years to go and that he would have to take a reduction because of taking his pension early, which he may have to do in the circumstances, he would receive a pension of about 14 per cent. of the amount that he has paid for. That is appalling.
My hon. Friend will know that I also have constituents who are in that situation. Will he comment on the activities not only of the firm in relation to the pension fund, which seems to have been raided, but of those whose duty it is to protect pension funds? Clearly, something odd was going on that led to the emptying of the pension fund as the firm was getting into difficulties. Does not he think that those charged with looking after deferred earnings should have done a better job?
Indeed. Serious questions must be raised about the activities of the trustee, the professional advisers and the investment company from 1989 until 1994, or possibly 1995 or even up to the present day. The situation is complicated because there has been a change of personnel over time with the change of ownership of the company, but there must have been a point when it was known that the fund had dipped into deficit. At that time, surely it must have been the duty of the professional advisers, the directors of the company and the trustee to reinstate the funding of the scheme. That did not take place. My hon. Friend makes an important point, which should be the subject of investigation.
I thank my hon. Friend for the work that he has done on the matter, which affects not only his constituents but, as my hon. Friend the Member for Wallasey (Ms Eagle) said, people throughout Wirral, Chester and Merseyside. As well as looking at the past, important as that is, it is also important to look to the future. This is the first such tragedy to come to notice as the Pensions Act 1995 takes effect. Will not the occupational pensions advisory service—OPAS—and the pension ombudsman be in the spotlight as people watch how effectively they carry out their functions? Sadly, this may not be the only case that will come to our attention in the next five years.
That, too, is an extremely important observation. We do not yet know how the new Act will work. The fund was conveniently wound up just before relevant parts of the Act come into effect. There may have been good advice; I do not know. However, even if the trustee took bad advice, made bad decisions or acted improperly during the period in question, where on earth will the money come from to refund the people who have been so poorly treated? It can only be from within the structure of companies that I have described.
The company structure is convoluted. There is a possible theme suggesting that Chester Plant and Leasing, with its offshore shoot Gardenia Holdings registered in the Bahamas, may be an important area of investigation, especially as those two companies hold a charge over the company that has allegedly been set up to protect the staff, including the pension fund.
I agree with my hon. Friend that the matter will highlight important new functions of the pensions ombudsman and OPAS, but we must also get to the bottom of the company structure, or we will simply be taking academic steps in relation to individual trustees who might lose their house, but that would not solve a funding problem of the scale that I have described.
I have always argued that the Pensions Act 1995 would not stop another Maxwell. Whether this case falls into that category, one cannot be certain. It is certain, however, that 150 families in constituencies of hon. Members on both sides of the House, and many other creditors, including to a considerable extent the Department for Education and Employment, will have to wait a very long time to recover anything from such a sorry state of affairs.
I have spoken to the Minister about this important matter. I know that he is sympathetic to the plight of my constituents and other creditors, and I appreciate the time that he has already given me on the matter. I ask him, however, to take action urgently—action that includes asking the DTI inspection branch to investigate immediately the matters that I have raised. I shall make all the documents that I have received available to him, and I shall co-operate fully with the investigation.
The House has a duty to help my constituents, and the neighbouring constituents of hon. Members on both sides of the House. I should like the Minister to respond with a strong message of hope for the 150 families who face an awful plight.
I congratulate the hon. Member for Ellesmere Port and Neston (Mr. Miller) on securing the debate, and on the considered way in which he and others have raised questions that concern us all. I acknowledge the presence of, not least, my hon. Friend the Member for City of Chester (Mr. Brandreth), who—like our new colleague, the hon. Member for Wirral, South (Mr. Chapman)—cannot speak in the debate, for his own proper reasons. I also acknowledge the presence of the hon. Member for Alyn and Deeside (Mr. Jones), who has just joined us.
I share the concern that has been expressed about the security of pension funds, which is important to the Government and, indeed, to all of us; but I must utter a word of caution. This is a discipline that, perhaps, binds me more than anyone else in the Chamber, but the company that is the subject of today's debate is not, to my knowledge, in any form of insolvency, and we must hope that nothing that we say here will damage its prospects.
The hon. Member for Ellesmere Port and Neston has discussed his anxieties with me at some length. Although I may have to be somewhat circumspect, I shall introduce him to my appropriate officials immediately after the debate—in nine minutes' time. We spent more than half an hour together last night. The hon. Gentleman is necessarily more informed than I am at this stage, but I shall catch up, in the spirit of sympathy that he invited me to adopt for his and other hon. Members' constituents.
I note that only eight minutes remain. Let no one doubt that I am limited in what I can say in that time. My reply to the debate is not an end to the matter, and the hon. Gentleman's raising of the matter constitutes the beginning of what I shall endeavour to do. If time does not allow me to deal with all the issues, I wish to leave the House in no doubt about my attitude.
A range of protections already exist in pensions legislation and trust law, on which most pension schemes are based. All trustees have a duty to ensure that schemes are run properly, and to act in the interest of members at all times. Whether, and to what extent, pension funds can be used to provide early retirement benefits will depend on the rules of particular schemes, and on the powers of trustees to make such awards; but I repeat that trustees have a duty to protect all members' rights. That point was raised by the hon. Member for Wallasey (Ms Eagle).
According to our information, although there was a deficit in the Robertson scheme three years ago, recovery was made within six months. The latest solvency statements about the Robertson pension scheme put to the Department of Social Security in respect of its contracted-out status show no evidence of underfunding.
I hope that there is enough good faith between the hon. Gentleman and me for him to accept that I will clarify that for him behind the Chair after the debate. He should, of course, feel free to share the information that I give him with other participants in the debate.
Trustees can make investments of any kind, but cannot normally invest more than 5 per cent. of a scheme's assets in the sponsoring employer or associated companies. That restriction substantially reduces the risk of loss should the employer become insolvent; but, if the employer does become insolvent, a trustee must be appointed who is entirely independent of the employer and any associated companies. The independent trustee is responsible for looking after the resources of a final salary scheme, and for protecting the interests of members. If there is a shortfall of assets in the fund, the deficit becomes a debt due from the employer to the trustees. It is the trustees' responsibility to pursue such a debt.
The protections to which I have referred are about to be strengthened. Important new measures, stemming from the Pensions Act 1995, will come into effect on 6 April. All those measures are geared towards safeguarding the security of pension funds and protecting members' rights. We must accept that the Act cannot be seen as an absolute guarantee that there could never be another Maxwell—as the hon. Gentleman pointed out—but it will introduce clear duties relating to the procedures that trustees must follow, and the controls that they must implement. That will increase trustees' vigilance in ensuring that pension schemes are properly administered and protected, and adequately funded.
One of the crucial new checks will be the solvency requirement. In other words, pension schemes must have funds so that, whenever they are closed, they can afford to buy annuities. It was said at the time that it would have been better for the industry to have an insurance scheme, so that when such cases arose the whole industry would ensure that those who had paid into pension funds received their pensions. Sadly, the solvency requirement does not have such an effect.
The hon. Gentleman is an acknowledged parliamentary expert on pensions, and I note his opinion with appropriate respect. I do not think, however, that he wants me to reopen that previous debate; he wanted to put a point to me, and I take it in that spirit.
There will be stricter rules on record-keeping, and the separation of pension scheme bank accounts from those of the company. Let me give a specific example: trustees will be required to set up and monitor a formal schedule of contributions due from the employer, and an amount that the employer fails to pay into the scheme by the due date will become a debt due to the trustees. Trustees will be expected to pursue that debt immediately, and will be required to make a report to the pensions regulator. New rules will be introduced to specify a minimum level of funds that schemes must hold to meet their liabilities, and the restriction on employer-related investment will be tightened.
In the investigation that could be held under the Pensions Act, could the actuaries themselves be investigated for professional misconduct, given their potential role in failing to act appropriately to defend the pension fund?
It would be a great mistake for me to prejudge the outcome or outcomes, or the action or lack of action, that may flow from my officials' consideration of the evidence that they will be given by the hon. Member for Ellesmere Port and Neston. I hope that the House will understand that I cannot make a judgment from the Dispatch Box.
The hon. Gentleman has called for my Department to undertake an inspection. As he and the hon. Member for Makerfield (Mr. McCartney) know, the DTI has a range of powers at its disposal; but, as I have said, I will not make any prejudgment.
I will ask the investigation and enforcement directorate in my Department to consider the comments that have been made during today's debate. Should the hon. Gentleman have further evidence to support his call for an investigation, I invite him to send it to me, and I will refer it to the directorate for further consideration. He has said that he has substantial information at his disposal that he will give to me. However, I do not wish to prejudge the matter, and accordingly repeat my invitation to the hon. Gentleman and to other hon. Members to send me whatever evidence they have for proper consideration by my officials.
As my time draws to a conclusion, I invite the hon. Gentleman to accompany me—