HC Deb 20 October 2003 vol 411 cc365-6
9. Chris Grayling (Epsom and Ewell)

To ask the Secretary of State for Work and Pensions if he will make a statement on the Government's policy on private pension schemes. [132609]

The Minister for Pensions (Malcolm Wicks)

Our document "Action on Occupational Pensions", published in June, sets out a balanced package of measures seeking to ease financial and administrative burdens on employers while ensuring protection for scheme members. By increasing protection, promoting confidence, simplifying the system and enabling people to make informed choices, people will be able to use private pension savings alongside their state support to build up the level of retirement income that they need and expect.

Chris Grayling

I think the Minister's reply is rather thin. The Government appear to believe that the solution to the pensions crisis is either to make people work longer or to use means-testing as a way of rationing the cost. Does the Minister not think it would be smarter just to encourage people to save more for their retirement?

Malcolm Wicks

My brief answer covered much substance in policy, which I recommend the hon. Gentleman studies at some stage. As we have already said this afternoon, pension credit encourages savings. The hon. Gentleman says that our proposals are thin, but they include the introduction for the first time in Great Britain of a pension protection fund to protect pensions when companies go bankrupt. That is not thin—that is a major advance towards social justice.

Kevin Brennan (Cardiff, West)

On that point, was my hon. Friend surprised by the comments made last week by the Confederation of British Industry about the Government's proposal of a pension protection fund? The CBI made some critical remarks, which have subsequently been criticised by the Iron and Steel Trades Confederation. Is it not likely that in the past some of the CBI's members got away with not losing their pensions by taking a runner before their company went bust, as usual leaving the workers—such as those at Allied Steel and Wire in Cardiff and Sheerness, and at Dexion in Hemel Hempstead, and for all I know workers in Kettering as well—without their pensions? As well as legislating for the pension protection fund, as he has promised to do, will he do something to compensate those workers?

Malcolm Wicks

Workers who are already in severe difficulty, such as the Dexion workers whom I met only the other day, are examples of the tragedy of companies going bust leaving people who have been saving for 30 or 40 years bereft of any hope of substantial benefits. My right hon. Friend the Secretary of State has said that we will look at any sensible proposals in relation to that group, but it is difficult to legislate retrospectively. I am pleased that, in future, the pension protection fund will put an end to such scandals.

Mr. Steve Webb (Northavon)

To pursue that issue, the Government will be well aware that compensation schemes are quite common. All such matters could be regarded as retrospective, but compensation is not an unfamiliar concept to Government. Why cannot the workers who have lost catastrophically and who are absolutely innocent receive compensation? Will the Minister tell us what he thinks is the principal stumbling block to introducing such a scheme? Will he accept my offer to work with the Secretary of State and himself and their officials, on a cross-party basis, to draw up proposals to deal with the problem that could be included in the pensions Bill?

Malcolm Wicks

Despite the discussions proper in the House of Commons, I hope that we can get cross-party support for the new pension protection fund. I am afraid that I can only repeat that we are examining sensible suggestions. It would be wrong of anyone in this House to raise false hopes in respect of a complex situation.

Mr. Nigel Waterson (Eastbourne)

May I remind the Minister that he has had cross-party support, at least from the Conservatives, for the past year or so in tackling the grotesque injustice affecting long-serving workers whose pension funds become insolvent? Why has he still not taken action to change the rules on winding up pension funds that become insolvent? Will he promise today to announce his detailed plans very soon—perhaps at the pensions summit on 4 November?

Malcolm Wicks

Those details will be with the House very shortly. If the hon. Gentleman is offering cross-party support in this important and complex area, I very much welcome it.