Occupational Pensions

Part of the debate – in the House of Commons at 7:18 pm on 20th January 2003.

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Photo of Maria Eagle Maria Eagle The Parliamentary Under-Secretary of State for Work and Pensions 7:18 pm, 20th January 2003

I welcome the debate, which although short, has been robust and fascinating. I welcome the fact that the Opposition are buying into some of the proposals in the Green Paper, which shows a willingness to develop a consensus for moving forward. Certainly, on pensions, the wider the consensus that we can achieve, the better. We look forward to hearing what else they have to say and what other parts of the Green Paper they agree with, because the motion is very narrow.

Many Members from all parties and many people outside the House are concerned about ensuring an appropriate level of protection for the interests of pension scheme members on wind-up, whether or not insolvency is the cause. That is partly because there have been high-profile cases to which right hon. and hon. Members have referred. My hon. Friend Kevin Brennan, Mr. Heald and others have talked about ASW.

If we value our voluntary system of private pensions, and we do, pension promises must be kept. That is an important part of the partnership. The question is how we can balance appropriate protection for members, which is tremendously important, with sufficient flexibility and the lowest possible costs, which will make the provision of pension schemes appealing to employers as well.

My right hon. Friend the Minister for Pensions set out our proposals for improving protection on wind up, so I shall refer to only one or two of them before I deal with some of the points that have been raised in the debate. In the Green Paper, we are already consulting on whether there should be a fairer sharing of assets between those with larger and smaller pensions when a scheme winds up. We are looking at capping the level of the highest payment where there are limited assets. In his opening remarks, the hon. Member for North-East Hertfordshire appeared to show some sympathy for that, so we look forward to the support of the Opposition on that proposal.

Where there is a wind-up of an underfunded scheme, we are looking into possible changes to the priority order, introduced in 1995 by the Conservatives, to ensure fairness for those affected. However, it is right that we should listen to what everyone affected might think of the proposals, as the National Association of Pension Funds noted in its parliamentary brief for this debate. Despite the calls for immediate action, citing the ideas of the NAPF, which we heard from Opposition Front-Bench speakers, the association itself says that further discussion with interested parties would be necessary to finalise the fairest and most practical solution. The NAPF does not suggest that we move immediately to producing a set of regulations but that we should get things right before we go forward. I approve of that.

The motion expresses deep concern at the current arrangements for dealing with pension funds affected by employer insolvency. As we have already heard, the Conservatives devised those arrangements, so it is touching that they are now championing workers' rights. I prefer to look at the Conservatives' record, however, and to judge them on the basis of what they did when they had the chance.

During their 18 years in office, the Conservatives did nothing to enhance protection for workers affected by insolvency and redundancy and they themselves devised the order of priority between unsecured creditors on the wind-up of schemes that they now criticise. When prompted, the hon. Member for North-East Hertfordshire remembered that in fact he was responsible for that when he was an Under-Secretary at the former Department of Social Security. As Mr. Webb kindly reminded us, the responsibility did not lie only with the hon. Member for North-East Hertfordshire; both the current Leader of the Opposition and their previous leader were involved in setting out that order of priority.

It is not as though there was no pressing problem of company insolvency and redundancies during the Conservatives' time in office. They were engaged in systematically wrecking the private pension provision of millions of workers by promoting mass unemployment. That did not happen by accident; they did it on purpose. Creating mass unemployment was an instrument of economic policy for the Conservatives. They were also engaged—just for good measure—in allowing the mis-selling of private pensions on a truly staggering scale, so people who did not lose their jobs might have fallen foul of that.