We have heard a lot of talk about consensus. Perhaps the consensus that dare not speak its name but that is emerging is that successive Governments of all political colours have failed to provide adequate protection for current employees in cases of insolvency. We are almost unique in the industrialised world in lacking any protection for workers in those situations. I think that the Government now accept that if the guiding principle of the Goode committee on pensions law reform was to provide maximum security, the legislation based on it, the minimum funding requirement, has been an unmitigated failure in meeting that objective.
We have heard of the bleak situation facing the workers at Allied Steel and Wire. I spoke to John Benson only this morning. There are plenty of other examples—we have heard of United Engineering Forgings, Albert Fisher and others. Frustratingly, the solution has been lying in the in-tray of Ministers in both the current and previous Administrations. The idea of a statutory safety net for occupational pensions is not particularly new or original. It was the Government Actuary who first proposed a central discontinuance fund in his evidence to the Goode committee 10 years ago. He said in a memorandum to the committee:
"Because many schemes would find it difficult to secure their liabilities on discontinuance, a mechanism is needed for handing over the liabilities to another vehicle, similar to an ongoing pension fund . . . The answer would appear to be to have a Central Fund . . . The fund would simply act as an administrative arrangement and investment vehicle for running off the liabilities of discontinued pension funds."
If only the Government then or now had listened to the advice of their own Actuary, we would not be in this mess today.
The Government have floated the idea of a mutual insurance system or a central discontinuance fund on a number of occasions. Indeed, they have commissioned research or consulted on those two options on no less than four occasions over the past five and a half years. At the time of the last round of consultation two years ago, the Government claimed that the responses received were overwhelmingly against mutual insurance or a central discontinuance fund.
That strikes me as a little curious and strange to say the least, given the fact that the Trades Union Congress, the Confederation of British Industry, the National Association of Pension Funds and Pensions Management Institute have all been lobbying for the introduction of a central discontinuance fund for the past 10 years. Indeed, when in opposition, the Labour party tabled an amendment, during discussions of what became the Pensions Act 1995, to create a central discontinuance fund. Unfortunately, that was conveniently forgotten when Labour won the election.
It strikes me that the Government cannot have it both ways: they cannot sanction an increasing reliance on private provision without providing adequate protection against the danger of fund collapse. It is no accident that in every country where widespread private provision exists, a central discontinuance fund or a mutual insurance system is an integral component of the pension system. As we have heard, since the Pension Benefit Guaranty Corporation was set up in America in 1974, the benefits of hundreds of thousands of scheme members have been saved from the failure of their pension funds.
The Government have said that they will look again at these ideas in the Green Paper, but even if they do improve provision and protection for future generations, that will not address the plight of former workers at companies such as ASW, as Kevin Brennan pointed out. The Minister has again ruled out any prospect of retrospection, but retrospection is precisely what happened in similar situations in the United States when the PBGC was established. More than 200 companies that had gone into liquidation were retrospectively brought under the terms of the relevant legislation.
As has been said, a strong argument exists that the Government have a moral responsibility to the affected workers. Before the recent introduction of the stakeholder pension, legal rules actually prevented people from contributing to a private pension if they were in an employer's scheme. That meant that people had no way of providing any other retirement income for themselves, yet their contributions were not properly protected. The responsibility for that surely lies with the Government. However, if the Government refuse to accept their moral obligations in this regard, they must live up to their legal obligations. Article 8 of the 1980 European Union directive on insolvency rights requires member states to protect pension benefits in situations of insolvency. This provision has never been fully implemented into UK law, and as a result the Government are liable to be sued for compensation. That is the opinion of Denton, Wilde Sapte, the UK's leading insolvency and pensions practice, and of Thompsons, the employment law firm that is acting on behalf of ASW employees, who are members of the Iron and Steel Trades Confederation. I understand that last week Thompsons employed a Queen's counsel to take this matter further.
Faced with a lawsuit on behalf of ASW workers who are in the ISTC, the Government must ask themselves whether they are prepared to send Government counsel into the courts to rob redundant steel workers of their entitlements under European law. That would be a new low for the Government. Instead, I hope that they will make it clear that they intend not only to provide real protection for future generations of workers, but—as has been argued—to compensate in full the former workers who have been failed by the inaction of this Government and of previous Governments.