With this it will be convenient to discuss the following:
Amendment No. 273, in
clause 98, page 61, line 9, leave out 'not'.
Amendment No. 274, in
clause 98, page 61, line 9, after 'up', insert
'or if it has already been wound up.'.
Amendment No. 276, in
clause 136, page 83, line 46, at end insert—
'(2A) The regulations must prescribe that the initial levy is not to be used for payments under section 135(3) in so far as they relate to schemes which are being wound up or which have already been wound up on the date prescribed for the purposes of section 98(2).'.
Amendment No. 277, in
clause 137, page 85, line 11, at end insert—
'(11) Regulations must make provision that the pension protection levy is not to be used for payments under section 135(3) in so far as they relate to schemes which are being wound up or which have already been wound up on the date prescribed for the purposes of section 98(2).'.
We are about to debate the point that we covered this morning, but we shall approach it from a different direction. Amendment No. 2 would remove subsection (2), which makes it clear that any schemes that are in wind-up before the Bill comes into
force are not eligible. I do not want to rehearse our earlier arguments about the 60,000 people who need compensation and who will not be compensated under the Bill because its measures do not have a retrospective effect.
However, the Committee would be surprised if I did not touch in passing on the slightly bizarre result of our Division this morning, whereby Labour Members voted down one of the amendments tabled by the hon. Member for Cardiff, West (Kevin Brennan), while he personally abstained. I hope—as I am sure the 60,000 people do—that that was on the basis that those 60,000 are on a promise that the Government will make some detailed proposals to deal with the problem soon. Tea and sympathy is wearing a bit thin, although at least we have avoided the old mantra about not raising false hopes.
I abstained because the Government promised to continue considering the issue. I accept that the amendments that I tabled might not technically have achieved what we want to achieve. However, I note that for the first time, Conservative Members voted in favour of using public money to achieve such an end. Does the hon. Gentleman agree that public money should be used to compensate the workers? Is that now his party's policy, as Conservative Members voted for it this morning?
It is said that attack is the best means of defence. The hon. Gentleman must make his own peace with those who inspired his amendments. As for his question, I thought I made my position crystal clear this morning. We are a responsible Opposition—I do not of course include the Liberal Democrats in that—so we will not sign a blank cheque. My position is that simple. However, we think that unclaimed assets provide the answer—[Interruption.] I am sorry that Labour Members find this so exciting. It was the hon. Member for Cardiff, West who took the view that he did not care where the money came from.
Kevin Brennan rose—
I will, after I have given way to the hon. Member for Cardiff, West, whose last intervention I am still trying to deal with. It is a luxury of sitting on the Back Benches not to care about where the money comes from. Those of us who sit on the Front Benches have to take a more responsible view, and my party's position could not be simpler. If the hon. Gentleman was reassured by the Government's wind-up speech this morning he is easily satisfied, because it seemed to me that they were still taking the view that they could not compensate people retrospectively; their thinking had not moved forward.
I am happy to confirm to the hon. Gentleman that I stand by what I said: there should be compensation, and I do not mind whether it comes from public funds or another source. He is right to say that I am a Back Bencher—but he sits on the Front
Bench and speaks on behalf of his party, and he led his troops to vote for the amendment that called for public funds to be used. I would have thought that that had some meaning in terms of the Conservative party's position. When he voted for that, did he mean it or not?
Order. What we discussed this morning bears a certain resemblance to what we are discussing this afternoon, but I do not want a rerun of this morning's debate.
The hon. Member for Cardiff, West is mixing up two things, as did the Under-Secretary in his summing up this morning. One factor is giving the power to pay compensation to the 60,000 people, which the amendments of the hon. Member for Cardiff, West were primarily about; the other factor is where the money comes from. It is still firmly our position that it should come from unclaimed assets. The Under-Secretary signally failed to give any genuine justification of why, if unclaimed assets are now miraculously available to give to charities, at least some of them—we are talking about a sum that could amount to £15 billion—are not available for his constituents and those of other Members.
I am sorry if the Minister has difficulty with our position. It would be infinitely more interesting to the Committee if he had a position on this matter, other than the tired mantra that the Government do not want to raise false hopes. I have made my position abundantly clear this morning, as did the hon. Member for Cardiff, West. I am only sorry that the vote was lost.
The hon. Gentleman spoke disparagingly about Members who offer tea and sympathy and then back away. Can he clarify what his party's position now is? Is he saying that, as in this morning's vote, he is in favour of providing assistance but only on condition that it comes from unclaimed or orphan assets? Is he therefore saying that if that route proves to be a dead end, all he will offer is tea and sympathy, because he would not provide the funding from any other source? I supported the private Member's Bill introduced by the right hon. Member for Birkenhead (Mr. Field) that would have gone down that route, but Government Whips blocked it.
At the risk of testing your patience, Mr. Cran, let me again tell the Committee what I said this morning—and, perhaps more importantly, what I have consistently said to the various groups who have come to see me about the issue. We believe that the route advocated by the right hon. Member for Birkenhead is the right one, and certainly the one that we prefer. The Government have twice blocked
the measures in the right hon. Gentleman's Bill, and only in the past few days has it become apparent that those unclaimed assets are indeed available. I have yet to get a straight answer as to why those assets are not available for the purposes that we propose.
Order. I am getting restless now. We are getting back to the debate that we had this morning. I want Mr. Waterson to address himself to the amendment. I do not want to hear justifications of who voted for what this morning.
Pressing on, I shall adopt what I have just said as part of my recommendation for the amendment: our preferred solution is to use unclaimed assets. There now seems to be no practical bar to doing that—or if there is, I have yet to hear about it from the Government Front Bench.
On amendment No. 2, as I said this morning in a different context, we will not sign a blank cheque for taxpayers' money. We cannot understand why the Government will not make a proper independent inquiry into the cost envisaged. We will make spending commitments when the need arises, but only when we know what they involve. It is as simple as that. [Interruption.] I understand the embarrassment of Government Members, but we should try to deal with amendment No. 2.
Schemes that are wound up before the Bill comes into force should also be eligible. As we have said, we will discuss later an amendment, or amendments, suggesting that until the risk-based levy is properly in place, we should postpone the start of the PPF. I imagine that when we get to that point, Ministers will criticise us and say, ''People need the PPF. They need the protection and confidence that it offers to pensioners and would-be pensioners.'' We do not disagree with that, but we commend to the Government the example of the Pensions Act 1995, and in particular the excellent speech made on its Second Reading by my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley), who was then the Minister responsible.
My right hon. Friend made the point that in the face of the Maxwell crisis, the Government's immediate concern was not to rush to legislate, but to stabilise the short-term position. His Government had various imaginative ideas, not least the concept of the non-reimbursable loan from the Government. That somehow managed to get past the scrutiny of the Treasury, and enabled the people immediately faced with destitution to be looked after. That Government worked to a schedule that seems positively leisurely when compared with what this Government have in mind for the Bill; the 1995 Act was introduced and came into force a year or two later.
In this area of law, it is absolute madness for any Government to legislate in haste. The Government themselves have used the word ''challenging'' about the time scale for introducing the legislation, especially
the PPF, and that is, if anything, a massive understatement. We think, as the industry does—we will deal with that subject in more detail later—that it is asking for trouble to start off with a flat-rate levy rather than a proper risk-based levy. The Government would be much better advised to put off the implementation of the legislation. However, the other side of that coin is the need to tackle the interim situation.
We have been given a figure of 60,000 people; I hope that that number does not rise before April 2005, or whenever the legislation comes into force, but it may well do so. Every week of every month, smallish schemes get into such difficulties as we heard described this morning. Rather like the Government of the 1990s, this Government should be looking at the interim situation at least as seriously as the long-term situation, and should be making sure that they get that right, too.
We simply cannot understand why the Government are being so slow to consider options for dealing with the interim situation, and problems that have arisen, or might arise, before the legislation comes into force. If they have considered options, and are thinking very hard and carefully about them, why do they seem so unwilling to share them with the Committee? I suppose that they may have shared more with their Back Benchers, which may explain the slightly bizarre voting patterns this morning.
The Government's explanation for not addressing this issue is becoming threadbare. From their point of view, the way in which the Bill, which has many good things in it, is being overshadowed by the problems of the people who have lost out and who will continue to lose out when the legislation comes into effect, must be extremely annoying. I am trying not to repeat too much of this morning's debate, although all those arguments remain valid.
It depends what the hon. Gentleman means by retrospection. I see the logic of the Government's position to the extent that it would be inappropriate to use the revenues and levies from the Bill to pay claims that have arisen in the past. That is why our preferred model, as set out in our amendments—the first to be tabled on the subject—is to have a separate interim pension protection fund, running in parallel to the PPF, which uses the unclaimed assets as a method of compensating people who have already lost out by the time the legislation comes into force. If that is what he means by retrospection, the answer is yes. If he means a simple retrospection that uses the PPF and its future levies for past claims, the answer is no.
Amendments Nos. 273, 274, 276 and 277 relate back to, and are interlinked with, much of what we discussed this morning. I am trying to probe the Government's thinking and can suggest a possible way forward. I want to find out where the Government are going and when they will give us a
definitive answer, which they have been unable to do so far, on how they will deal with the problem covered by my amendments.
I want to give the Government the opportunity to respond to my amendments. It seems from the vote this morning and from what the hon. Member for Eastbourne just said that we have discovered why the Opposition voted for my suggestion of a possible way forward—namely, to use taxpayers' money to compensate schemes. They were in favour of it, not because that is their position, but because they want to cause embarrassment and to play a political game. I thought all parties had agreed that we would not act like that. I appeal to the Opposition to stop playing that game.
I hear that loud and clear, Mr. Cran, and that is exactly what I will do.
Amendment No. 273 refers to clause 98. It is a simple amendment that would leave out the word ''not''. That would bring schemes that have been wound up and schemes that are in the process of being wound up under the auspices of the PPF. Clause 98 defines the schemes that are eligible for assessment, that will be taken into the care of the pension protection fund and, ultimately, that will be bailed out by that fund. Under the clause as drafted, schemes in wind-up on the appointed day will be expressly excluded from the provision and therefore from the scope of the pension protection fund. The amendment would bring those schemes under its scope.
We can assume that, with the best will in the world, it takes years for any scheme to be wound up because of the complexity involved in identifying all its liabilities. The amendment would bring the schemes of companies that have gone bust in the past two or three years, but which are still in wind-up, under the scope of the PPF. That would include schemes in which the wind-up has not progressed far, such as the Allied Steel and Wire scheme in my constituency, and other schemes that concern hon. Members, such as the Kalamazoo scheme, for which the wind-up is nearly complete and annuities have been purchased. The amendment would not cover schemes that had completed winding up.
Amendment No. 258 would complete the job left undone by amendment No. 273 and bring in schemes that had already finished winding up—those in which annuities have been purchased and final accounts have been completed, and whose lights have been switched off.
I beg your pardon, Mr. Cran. I meant amendment No. 274; my apologies for that slip of the tongue.
No end date is specified in the amendment, which would bring schemes that were wound up many years ago into the scope of the pension protection fund. I anticipate that the Minister may have concerns about that. The only insolvent schemes that the amendment would not cover would be those in respect of which the last traceable beneficiary had died.
In fact, in the legal case pursued by Amicus and the Iron and Steel Trades Confederation, the legal obligation that they rely on refers to the EU insolvency directive, which only goes back as far as October 1983. During the course of our discussions, the only schemes that we have discovered that would be likely to be a great liability if compensation were to be introduced are those for which wind-up commenced after April 1997. As was mentioned earlier, the mass pension failures and difficulties that we have experienced are a relatively recent phenomenon.
Before that date, guaranteed minimum pensions could be brought back into the state earnings-related pension scheme without great difficulty, the cost being borne by the national insurance fund if the scheme could not afford to do so. The unmet benefits could only relate to pensions in excess of the guaranteed minimum pension, but that is still a substantial benefit, if smaller than complete compensation.
Finally, Mr. Cran—I will try to get the numbers right—amendments Nos. 276 and 277 relate to clauses 136 and 137 respectively. Amendment No. 276 would effectively ring-fence the levy to deal with the problem mentioned earlier. It would be incorrect for the levy to be used to compensate schemes that had gone bust before the Bill was introduced.
Had we passed the amendment on that subject this morning, the Secretary of State would have been permitted to contribute to a single pension protection fund, which otherwise would consist of funds raised only by the levy. As I said, some of my other amendments would bring past insolvencies within the scope of the pension protection fund and allow it to pay past claims. Amendment No. 276 would ring-fence the money raised by the levy so that it could not be used to meet claims in respect of schemes in wind-up on the appointed day or of those that had completed wind-up.
Amendment No. 277 would do the same in relation to the ongoing levy after the initial period. In other words, levy money could only be used for those schemes in wind-up after the Bill's introduction. I realise from the rejection of my amendments this morning that that would create the difficulty of how compensation could be paid if it did not come from the levy and if there were no public funds available to pay it.
The discussion has been useful and I thank my hon. Friend for his contribution. He has become a significant champion of this group of workers.
Clause 98 defines those schemes that are not eligible to be taken over by the pension protection fund. Subsection (2) specifies that those schemes that are in the process of winding up immediately before an appointed day are ineligible for compensation.
Amendment No. 2 would enable members of schemes that are in the process of winding up before the introduction of the PPF to become eligible for compensation. That extension would effectively make the PPF retrospective. Therefore, the question of how that would be paid for arises, and that has been discussed.
Amendment No. 273 would do the same thing. Amendment No. 274 would, similarly, cover members of schemes that have completed wind-up before the introduction of the PPF. Those extensions would also effectively make the PPF retrospective.
Amendments Nos. 276 and 277 specify that the initial levy and the pension protection levy should be used only to compensate members of eligible schemes that commence wind-up after the introduction of the PPF. We cannot disagree with that because it supports our intention as set out in the Bill. However, I realise that amendments Nos. 276 and 277 were meant to be considered alongside amendments Nos. 273 and 274. Those amendments would make schemes that are in the process of winding up or have completed wind-up before the introduction of the PPF eligible for compensation. The effect of amendments Nos. 276 and 277, if taken with amendments Nos. 273 and 274, would merely leave open the source of funding for retrospective compensation payments. That would mean that the PPF would take on unknown and potentially very large liabilities without any obvious source of funding for the compensation. However, I acknowledge that there are good intentions behind the amendments.
My ministerial colleagues and I have spent a lot of time meeting hon. Members and scheme members to hear their concerns. We never refuse such requests and there are a couple of forthcoming meetings. It is worth noting that the Secretary of State has met workers from ASW, Dexion and UEF. I have met workers from Kalamazoo, Felix Schoeller and Dexion. My predecessor, my right hon. Friend the Member for Makerfield (Mr. McCartney), met workers from UEF, ASW, Astra Training Services and Ravenhead, and the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Liverpool, Garston (Maria Eagle), met workers from Famous Army Stores. We have also met concerned workers from solvent employers, including Parsons and Triplex. Therefore, we have had an opportunity to listen to and learn from those directly affected, and to try to explain the Government's position to them.
When I say that I sympathise with the people who will not receive the pensions that they were expecting, I, too, choke on the word ''sympathise'' because it is inadequate to express our feelings for those people. It is one thing to hear examples in Committee, but when we are face to face with them and hear what that means for their hopes and aspirations, and when they talk with what I would describe as quiet dignity about the impact on their health, welfare, and sometimes their marriages, the word ''sympathise'' does not begin to describe our feelings. We are examining closely all the suggestions that have been put to us, but given workers' anxieties, which we understand, we owe it to those affected to do so without raising expectations.
There are formidable difficulties involved in what hon. Members propose. As I said, retrospective cover would mean the fund taking on unknown and potentially very large liabilities. Such provision would also prove administratively difficult, if not impossible, to carry out for those schemes that have completed the wind-up process. With the prospect of guaranteed coverage for schemes that have not yet completed that process, some employers might seek to abandon their pension liabilities, thus further increasing costs on the new PPF. Such additional costs could threaten the viability of the fund. They would also be likely to place an unfair and disproportionate burden on levy payers.
Amendments Nos. 2 and 273 could also encourage schemes to slow down the winding-up process, in the knowledge that they would be covered by those provisions. Let me reassure hon. Members that the Government are sympathetic—to use that word again—to all those who will not receive the pension that they worked so hard to build up for their retirement. As my hon. Friend the Under-Secretary explained this morning, we are currently exploring with industry representatives a basis on which we can establish firm estimates of the extent of the problem of defined benefit schemes winding up under-funded. We are also assessing the numbers affected and the potential scale of losses. Once those data have been collated, my right hon. Friend the Secretary of State for Work and Pensions will be in a better position to report more fully the findings of our examinations and to suggest the appropriate course of action, if any. If I were a Back Bencher whose constituents had been affected, I too would be impatient to hear more, but that is as far as I can go today.
I understand the time scales involved, and that we have a duty to report to the House on this matter as soon as we have the information. That is our considered position. In asking the hon. Member for Eastbourne to consider withdrawing his amendment, I would say that it is better to have such a considered position than to be all over the place on the question of how we can deal with the issue of cost.
I thought as much. I notice that he singled out the hon. Member for Cardiff, West when he was talking about the good intentions behind amendments. The Minister should move on. I am sure that we all take what he says about sympathy at face value, as do the people affected. We have all, both Ministers and shadow Ministers alike, had those meetings, and there will no doubt be more, and more discussions on ways of dealing with the problem. I welcome the admission that the Government are to produce some hard figures. I do not want to understate the challenge, because the Opposition have tried to find ways of producing those, and it is quite a large task. The Government are the people to do it, and I am delighted that they now agree—I wonder why they
have been so unwilling to admit that for so long. However, that does not deal with the question of how compensation will be structured once the figures are known.
I am minded to withdraw amendment No. 2—on one simple condition. The Minister has told us that the Government are looking into the figures; as I have said, that is welcome. I will withdraw the amendment if he undertakes not to exclude—indeed, actively to consider—the use of unclaimed assets, now that the Chancellor in his Budget proposals has apparently swept away any practical problems. I am not asking the Minister to commit himself to that as the preferred option, but if he undertakes to ensure that that is one of the options that the Government will consider, I will happily seek to withdraw the amendment—although of course, hon. Members may not wish me to do so. Otherwise, I shall be minded to press amendment No. 2 to a vote.
The hon. Member for Cardiff, West seems to resent Committee members supporting his amendments, which could make for a rather unhappy Committee stage for him. I hope that that does not mean that he is pulling his punches.
As a former Back-Bench Member under a Conservative Government, perhaps I could give the hon. Gentleman a bit of advice: it is always as well to pin down one's ministerial colleagues pretty firmly before deciding not to pursue such amendments. In principle, we support his amendments in this group. I do not know about the procedure, Mr. Cran, but I should be grateful for your support and advice. If I do not get the reassurance for which I have asked the Minister—who is welcome to intervene at any point—to what extent could we engineer votes on amendments Nos. 273, 274, 276 and 277, as well as on amendment No. 2?
I do not want to strain this point, but the hon. Gentleman is calling for retrospection, and the issue of cost does arise. In view of the fact that he voted this morning to spend taxpayers' money, yet now seems to be talking about unclaimed assets, I must tell him that I can only give him an answer if I know what the question is.
I thought that I had put it fairly simply. Let me try to put it in words of one syllable—or even less. [Interruption.] Sorry, I meant two syllables. I will seek the Committee's leave to withdraw the amendment if the Minister will give an undertaking not to exclude—and indeed, to consider as an option—the use of unclaimed assets to compensate the 60,000 people. I do not expect him to say that that would be the preferred solution, I merely ask him not to close his mind to it.
I cannot add greatly to what my hon. Friend and I have said already. We have given an undertaking that we will listen to and study all serious suggestions for a way forward.
The problem with that is that it is inherent in the Minister's previous remarks that he does not regard that as a serious suggestion. If he
accepts that it is, why can he not say, ''We'll take it away and look at it''? He could always come back and say, ''This is unmitigated rubbish—and we think that the Chancellor has got it wrong as well, because it does not work.'' In that case, I would happily withdraw the amendment. Apparently we are not going to get to that point, so I shall not seek leave to withdraw the amendment.
Question put, That the amendment be made:—
The Committee divided: Ayes 4, Noes 12.