§ 12. Mr. Jim Cunningham (Coventry, South)
What plans he has to use pensions protection funds to underwrite deficits in occupational pensions. 
§ The Secretary of State for Work and Pensions (Mr. Andrew Smith)
Through the introduction of the pension protection fund, we are taking action to ensure that a pension promise made is a pension promise honoured. The fund will step in to protect members of defined benefit schemes if their sponsoring employer goes bust and the scheme is underfunded.
§ Mr. Cunningham
I thank my right hon. Friend for that answer, in particular the detail that he went into, but I am sure that he is aware that there is widespread anger in Coventry about the way that the ex-employees of Massey Ferguson were treated in respect of their pension fund. Equally, is he aware that the employees at Rolls-Royce have been balloted recently, because, once again, a company looks as though it is going to default on its occupational pension fund? Does he have any plans to meet those companies to discuss these matters?
§ Mr. Smith
First, I praise my hon. Friend for the energy with which he has been advancing and representing the needs of his constituents. As he knows, I was pleased to meet him and our hon. Friend the Member for Coventry, North-West (Mr. Robinson) to discuss those very matters. I understand that the Massey Ferguson situation is the subject of legal action, so I cannot comment further on it. In relation to Rolls-Royce and any other company that is contemplating, or perhaps reported to be contemplating, changes to its defined benefit arrangements, I have to say that I well understand when the employees and their trade union representatives move the issue up the bargaining agenda and say that the promises that have been made to workers over the years must and should be honoured. Of course, the pension protection fund that we are bringing in is an important way of ensuring that that is indeed the case. I hope that the fund will have support in all parts of the House.
§ Mr. Patrick McLoughlin (West Derbyshire)
When the Secretary of State brings in that fund, does he intend that the public sector should contribute to it?
§ Mr. Smith
We are already supporting the provision of occupational pensions through our proposals to simplify pensions legislation and the costs of operating schemes by cutting away acres and acres of red tape on those schemes, which, with the best of intentions, was introduced by Conservative legislation. As far as 371 whether the public should stand as a guarantor of the fund, that would be wholly inappropriate. First, there would be the moral hazard. Secondly, I hope that a moment's reflection would underline the importance of not nationalising that risk, which is what the hon. Gentleman is advocating amounts to. The state cannot stand behind the hundreds of billions of pounds of what are private sector obligations. Moreover, the scheme that operates in the United States has no such underwriting from the US Government.
§ Jim Dobbin (Heywood and Middleton)
As I understand it, the Secretary of State has received suggestions from a pensions expert, Dr. Ros Altmann, as to how the Government could make those compensation payments with little or no cost to themselves. I have a number of constituents in this category. Has my right hon. Friend had time to consider those proposals?
§ Mr. Smith
Like my hon. Friend the Minister for Pensions and other colleagues in our team, I have met a number of representatives and workers affected by this tragic, awful situation where funds have gone under and they have no means of ensuring that people get the pension that they were promised. As my hon. Friend said in his answers, we are looking seriously and carefully at any serious, sensible propositions here and I am happy that offers were made earlier of cross-party support on the matter. However, it would be quite wrong for us to raise false hopes that those people can get extra help until or unless we know that that is the position. We do not know now that that is the position.
I too have met Ros Altmann and others, and I have encouraged our officials to engage with her and with those who are campaigning for Allied Steel and Wire and for United Engineering Forgings as well as for other workers affected. However, I do not want to raise expectations until we know that something can be done to help those people.