FINANCIAL ASSISTANCE SCHEME FOR MEMBERS OF CERTAIN PENSION SCHEMES

HC Deb 19 May 2004 vol 421 cc979-1039

(1) The Secretary of State must make provision, by regulations, for a scheme for making payments to, or in respect of, qualifying members of qualifying pension schemes ("the financial assistance scheme").

(2) For the purposes of this section— qualifying member", in relation to a qualifying pension scheme, means a person—

1. (a) who, at such time as may be prescribed, is a member of the scheme in respect of whom the scheme's pension liabilities are unlikely to be satisfied in full because the scheme has insufficient assets, or
2. (b) who, at such time as may be prescribed, had ceased to be a member of the scheme and in respect of whom the scheme's pension liabilities were not satisfied in full, before he ceased to be such a member, because the scheme had insufficient assets,

and in respect of whom prescribed conditions are satisfied at such time as may be prescribed; qualifying pension scheme" means an occupational pension scheme (including such a scheme which has been fully wound up)—

1. (a) which, at such time as may be prescribed, is not—
1. (i) a money purchase scheme, or
2. (ii) a scheme of a prescribed description,
2. (b) the winding up of which began during such period as may be prescribed, and
3. (c) the employer in relation to which satisfies such conditions as may be prescribed at such time as may be prescribed;

scheme's pension liabilities", in respect of a member of a qualifying pension scheme, means the liabilities of the scheme to, or in respect of, the member in respect of pensions or other benefits (including increases in pensions), and a qualifying pension scheme has or had, insufficient assets if the assets of the scheme are, or were, insufficient to satisfy in full the liabilities of the scheme calculated in the prescribed manner.

(3) Regulations under subsection (1) may, in particular, make provision—

1. (a) for the financial assistance scheme to be managed by the Secretary of State, a body established by or for the purposes of the regulations or such other person as may be prescribed;
2. (b) for the person who manages the financial assistance scheme ("the scheme manager") to hold (whether on trust or otherwise), manage and apply a fund in accordance with the regulations or, where the fund is held on trust, the deed of trust;
3. (c) for the property, rights and liabilities of qualifying pension schemes to be transferred to the scheme manager in prescribed circumstances and for the trustees or managers of a qualifying pension scheme in respect of which such a transfer has occurred to be discharged from prescribed liabilities;
4. (d) prescribing the circumstances in which payments are to be made by the scheme manager to, or in respect of, qualifying members of qualifying pension schemes and 980 the manner in which the amount of any payment is to be determined and, where the fund is held by the fund manager on trust. the circumstances and manner may be prescribed by reference to the deed of trust;
5. (e) authorising the Secretary of State—
1. (i)where he is not the scheme manager, to pay grants to the scheme manager;
2. (ii) where he is the scheme manager, to pay amounts into the fund held by him in accordance with the regulations;
3. (iii) to pay grants to other prescribed persons in connection with the financial assistance scheme;
6. (f) prescribing the circumstances in which amounts are to be paid into or out of the fund held by the scheme manager;
7. (g) conferring functions in relation to the financial assistance scheme on the Pensions Regulator or the Board of the Pension Protection Fund;
8. (h) providing for a person to exercise a discretion in dealing with any matter in relation to the financial assistance scheme;
9. (i) applying any provision of Part 1 or 2 with such modifications as may be prescribed;

and such regulations my make different provision for different cases or descriptions of case and include such incidental, supplementary, consequential or transitional provision as appears to the Secretary of State to be expedient.

(4) Any amount which, by virtue of subsection (3)(e), the Secretary of State pays under regulations under subsection (1) is to be paid out of money provided by Parliament.

(5) A time or period prescribed under subsection (2) may fall (or, in the case of a period, wholly or partly fall) at a time before the passing of this Act.

(6) Nothing in this section prejudices the operation of section 272 (subordinate legislation (general provisions)).'.

Brought up, and read the First time.

1.44 pm

The Minister for Pensions (Malcolm Wicks)

I beg to move, That the clause be read a Second time.

Madam Deputy Speaker (Sylvia Heal)

:With this it will be convenient to take the following:

Amendment (d) to the proposed new clause, line 7, after 'prescribed', insert '(irrespective of the time at which the winding up of the scheme took place)'.

Amendment (e) to the proposed new clause, line 10, after 'prescribed', insert

`(irrespective of the time at which the winding up of the scheme took place)'.

Amendment (a) to the proposed new clause, line 73, at end add— `() The first payments from the financial assistance scheme shall be made within six months of the coming into force of this Act;'.

Amendment (b) to the proposed new clause, line 73, at end add—

`() Schemes where the qualifying pension scheme was closed whilst the sponsoring employer was solvent shall be qualifying pension schemes for the purpose of this section;'.

Amendment ((a)) to amendment (b); in line 1, after 'closed', insert 'up until 14th May 2004.

Amendment (c) to the proposed new clause, line 73, at end add— `() Assistance from the financial assistance scheme shall be at least sufficient to provide total benefits to qualifying members as they would have received had their scheme fallen within the scope of the Pension Protection Fund.'.

Amendment No. 212, in page 76, line 27 Clause 113, leave out subsection (2).

Government amendments Nos. 216 to 218.

Malcolm Wicks

Nothing will prevent the Pensions Bill from passing into law.

The pension protection fund is a major social policy advance that will bring protection and security to more than 10 million pension scheme members and their families. We hope that it will start in April next year, subject to the will of Parliament. I believe that one day it will be viewed as a substantial achievement of the Labour Government, but it is overshadowed by a cloud—the plight of the tens of thousands of workers who have already lost their pension rights or a large percentage of them, which is debilitating for those affected and undermines confidence in the idea of saving for a pension.

The Secretary of State, other Ministers and I have been considering for some time whether something could be done to alleviate the situation. We have been assisted by the representations of many hon. Members, including my hon. Friends the Members for Cardiff, West (Kevin Brennan), for Sitting bourne and Sheppey (Mr. Wyatt), for St. Helens, North (Mr. Watts), for Ayr (Sandra Osborne), for Hemel Hempstead (Mr. McWalter) and many others. All have expressed deep concern, which we share, about the position of their constituents. I should add that my right hon. Friend the Member for Birkenhead (Mr. Field) has been a stern social security saint, judging our stewardship of this vital issue.[Interruption.] It is those in front of me from whom I have nothing to fear. Thy Secretary of State, other Ministers and I have met a number of members of affected schemes. I cannot mention all the schemes, but Allied Steel and Wire, Ravenhead Glass and Dexion come to mind. Most of those people expect to receive a much reduced pension. I have been deeply moved, as we all have, by the distress and bewilderment of many people who, after long years of paying into a pension scheme, have been told that, after all, the pension they are relying on, and which they have paid for, will not be there.

Mr. Douglas Hogg (Sleaford and North Hykeham) (Con)

Will the hon. Gentleman tell the House how, as we are establishing a precedent in the new clause, we can guard against having to pay compensation in absence of fault? That troubles one very much, because one does not wish to establish such a precedent.

Malcolm Wicks

Although one might use a variety of terms in English usage, this is not compensation, and there is no legal liability. We are proposing an assistance scheme.

Alan Howarth (Newport, East) (Lab)

My hon. Friend said that the Government do not have a legal obligation. When my right hon. Friend the Secretary of State for Work and Pensions spoke on the radio at the weekend about the plight of workers who have lost much of their pensions in defined benefit schemes, he said, "My goodness they've got a human case." On the basis of humanity, why should the Minister not respond with equal generosity to people who, through no fault of their own, have lost out in defined contribution schemes, which they were required to join as a condition of employment? In fairness, why would he not then extend help to pension policyholders in Equitable Life, where the Government's duty of care was certainly no less?

Madam Deputy Speaker

Order. That is a rather lengthy intervention.

Malcolm Wicks

There is general acceptance of the argument that there is a genuine difference between the situation described by my right hon. Friend and that facing this group of workers, some of whom had to join their pension schemes and are now in difficulty. As I describe our proposals, some of those issues may become clearer.

Several hon. Members

rose—

Malcolm Wicks

I should like to describe the progress we have made, because hon. Members may wish to question me about some of the details. First, however, I shall give way to my hon. Friend the Member for St. Helens, North.

Mr. David Watts (St. Helens, North) (Lab)

I thank my hon. Friend for his comments. I urge him to ignore the beliefs of some of my hon. Friends, as we very much welcome the decision, which, we understand, was difficult and involved the Treasury, the Prime Minister and the Secretary of State for Work and Pensions. Firewalls have had to be built in, but we welcome and support the proposals.

Malcolm Wicks

I thank my hon. Friend for those remarks.

Several hon. Members

rose—

Malcolm Wicks

I think it would help the House if I made some progress; there will be plenty of time for dialogue and debate later.

Many people—ordinary, hard-working people—are being left with their legitimate expectations of a comfortable retirement in tatters. That cannot be right. One of the many people whom I have met was distraught that her plan to retire this year on an expected two thirds of her final salary has been wrecked as a result of her employer's insolvency. Coming up to her 60s, after 18 years of service in the company and 18 years of contribution, she has had to decide to continue working. It would be a hard heart that was not moved by the plight of such shattered individuals.

In the meetings that I have had—I know my ministerial colleagues would echo this—I was touched by the remarkable restraint and quiet dignity of many of those people as they modestly explained their plight. I asked what it meant for them, and their stories are in my mind, such as that of the man who, in his early 60s, had to return to rather backbreaking work at an airport, lifting luggage. People told me—reluctantly—about the effect on their family, their marriage, their health and their mental state. When I met these people, the phrase "proper people" always came to my mind. They are proper people, hard working, who have taken on their responsibilities, not least for their own pensions futures.

The Government have been clear all along that if we could do something to help such people, that would be the right thing to do. That is why I am so pleased—indeed, honoured—to be at the Dispatch Box to move new clause 34. It will assist people who have lost out severely as a result of the winding-up of their pension scheme as a consequence of the employer's insolvency.

Mrs. Iris Robinson (Strangford) (DUP)

Will the measure close the loophole in the case of companies that do not declare insolvency, but decide to uproot and move to other parts of the world, leaving a deficit in the pension scheme? Will people be protected in such cases?

Malcolm Wicks

I may be able to cover some of those issues in a moment. The scheme is very much for the insolvent employer. It cannot be about any disappointments in a range of pension schemes. Where an employer is solvent, the responsibility rests with that employer.

Over the past few months we have been clear with the House that a potential action for the group I was describing raises a number of complex issues. In particular, we have been clear, and I am sure the House will understand, that we cannot accept liability for private pension losses in general. Indeed, it would be quite wrong to do so, and would mean the taxpayer writing a blank cheque. No Government can undertake to nationalise financial risk. While we do not accept any Government legal liability, we do accept that the situation is very serious. It is right that the Government take action to provide some assistance.

The new clause requires the Secretary of State to establish a financial assistance scheme for people who are in underfunded occupational pension schemes that have begun winding up before the pension protection fund is set up. The Government have put forward £400 million over 20 years to help address the serious losses that some now face. It is open to industry to offer further support. We hope that that support will be forthcoming. This money will not cover everyone who feels aggrieved, nor will it give those it does help everything they might want, but it represents significant help to those who have lost the most.

Mr. Steve Webb (Northavon) (LD)

rose—

Mr. Jim Cunningham(Coventry, South) (Lab)rose—

Malcolm Wicks

I shall give way, then I shall try to keep to my word and make some progress.

Mr. Webb

We know that the Government are proposing a 20-year scheme. Can the Minister explain their reasoning? Some of the workers affected are already past pension age and therefore need money now, but some have not yet reached pension age and will still be alive in, say, 30 years. What will happen in the final 10 years or so?

Malcolm Wicks

It is our judgment that £400 million over a 20-year period, fed into whatever scheme we set up—the mechanics have still to be decided—will be sufficient. There will be a three-yearly review of the administration and of how the scheme is working.

Mr. Jim Cunningham

I welcome the Government's initiative in establishing the scheme, but will it extend into the past to cover people such as Matrix Churchill and Massey Ferguson workers in Coventry?

Malcolm Wicks

I shall make progress, because I can cover those issues.

Some important choices remain on how we should proceed. Hon. Members will appreciate that the matter is complex, and we must work quickly with all those involved to explore how we can balance the funds available. The coverage must ensure that those suffering losses are helped according to the principles of openness, fairness and, very importantly, operational practicability. The role of the industry, employers, actuaries, trustees and trade unions in resolving those issues is as great as that of the Government.

Alan Howarth

Will the Minister give way?

Malcolm Wicks

No, I shall make some progress. I hope that my right hon. Friend will not think me discourteous, but he has already intervened once.

I would like briefly to take the House through how we intend to turn our commitment into reality. It involves four phases of work: first, we shall engage with our partners and industry experts, including the trade unions; secondly, we shall design the detail of the policy and the operational framework; thirdly, we shall prepare to implement the scheme; and fourthly, we shall go live and make payments.

The House will want to know about the key milestones in that process. By the end of May, we will have established our working relationships with key partners at all levels. This week, the Secretary of State will write to stakeholders to open a discussion, so that we can address the choices that we must make in partnership. As part of that engagement, the Secretary of State and I plan to meet key stakeholders as soon as possible.

By the end of June as already promised, we shall lay a report on the results of our investigations to establish the extent of the problem and the numbers affected. Over the summer, we shall work closely with industry experts in a design phase and in exploring the options for operational delivery, on which a number of alternatives are available. Some alternatives involve running on schemes and topping them up, while others involve winding up schemes and providing assistance. Options for delivery might include that undertaken by the DWP, an industry-led body or a stand-alone trust.

By the end of November, we can begin to consult on the details of the regulations. As we expect to use affirmative regulations, hon. Members will have the opportunity to consider our proposals in depth in Committee, and debate will also occur in the other place. By the spring of 2005, we intend to have the scheme in existence with a view to being able to make the first payments as quickly as possible. The programme is demanding, and successful delivery will be possible only through a close working partnership, the establishment of which is our immediate priority.

Kali Mountford (Colne Valley) (Lab)

Will my hon. Friend clarify two points on how he intends to operate the scheme? First, when he examines the parameters for who might qualify, will he ensure that he does not open the floodgates and increase payments above the sum that he announced? Secondly. will he ensure that as much as possible is spent on the people who need help, rather than on administrating the scheme?

Malcolm Wicks

Those matters are crucial, and I hope that I have reassured my hon. Friend on her first point. We cannot nationalise risk and think that a particular case deserves assistance. Given the level of need, the question of how the money will be distributed is uppermost in our minds.

Mr. John Redwood (Wokingham) (Con)

I am grateful to the Minister for his courtesy in giving way. My entry in the Register of Members' Interests includes my being a trustee of a pension fund, but I am not speaking on its behalf. The Minister says that the figure is £200 million over 20 years, but he also says that he does not know how many people will be affected. If he discovers that many more people are affected, will he increase the sum, and if far fewer people are affected, will he decrease it?

Malcolm Wicks

We are about to publish a report examining the evidence base on that question, and the collection of that data is obviously at an advanced stage. The pensions industry also has an opportunity to contribute more money. As the Government have no legal liability, the word "compensation" is not appropriate—it is an assistance programme—but we feel that there is an ethical duty to act, as well as a need to restore confidence in pensions. I would hope that the pensions industry, too, recognises that responsibility.

Mr. Watts

Does my hon. Friend remember that in a previous debate the Conservatives supported a campaign to pay some form of compensation to this group of workers? Will he seek an assurance that they will join him in trying to get the insurance industry to pay a contribution into the fund?

2 pm

Malcolm Wicks

Even from a narrow economic and financial viewpoint, it would be a very useful investment, given the need to restore confidence and get the word "security" back into social security as regards pensions.

Norman Lamb (North Norfolk) (LD)

The Minister said that one of his stepping stones was to do more work on determining how many people might be entitled to help from such a scheme. How did he determine the sum of £400 million? Is it entirely arbitrary? He says that the Government believe that it is enough, but enough for what?

Malcolm Wicks

It is a very significant and substantial amount, and it relates to our arithmetic about the size of the scheme. It represents a very significant draw on Exchequer resources, and it will be larger if industry will make a contribution. I set out the four areas of work—stepping stones—and the six milestones. I think that Conservative Members were grappling with those two figures—[Interruption.] Well, milestones are a step forward in many respects. Given their difficulties, it is just as well that they are not in charge of collecting the evidence base. Once we have done that, we shall be able to consider these questions in more detail.

Mr. David Willetts (Havant) (Con)

The Minister is right. I admit that I was confused as to how four steps could cover six stepping stones, but he explained that authoritatively.

The Minister said that the £400 million relates to the arithmetic of the number of people affected—that is, 60,000. Can he explain how?

Malcolm Wicks

In determining how much money we wish to seek from the Exchequer, we obviously bear in mind what the evidence is telling us. It is a very substantial amount in relation to those matters.

Mr. Malcolm Savidge (Aberdeen, North) (Lab)

As my hon. Friend knows, Richards of Aberdeen Ltd., a company in my constituency, has a failed pension scheme. Can he assure us that the new clause and the timetable that he described give sufficient flexibility for hon. Members with affected constituents to be fully consulted before detailed regulations are brought in?

Malcolm Wicks

It is not possible to comment on a particular scheme, and my hon. Friend would not expect me to do so, as there are many hundreds in the same position. However, I am of course happy to talk to him and to other Members affected if that would prove helpful.

David Taylor (North-West Leicestershire) (Lab/Co-op)

On 4 October 2000, 572 deferred pensioners and 371 existing pensioners at British United Shoe Machinery—BUSM—were hit by that company's closure. My hon. Friend talks of industry contributing to the cost of the scheme. What incentives does he plan to put in place to encourage them so to do? That would clearly improve the deal that the Government have rightly hammered out over the past weeks and months, which is most welcome to those who worked for the former BUSM—not the present company, which is an entirely separate management buy-out situated at Enderby.

Malcolm Wicks

I would hope that £400 million of public money is a considerable incentive. As I said, I think that other partners would want to engage with us in restoring confidence in the pension system.

Mr. David Drew (Stroud) (Lab/Co-op)

Will my hon. Friend discuss the administration process with the Department of Trade and Industry? Many pension funds get into difficulties because of what happens to the parent company, and I am pleased that my hon. Friend will meet the workers of Lister-Petter next week. Problems arise because the pension fund is an unsecured creditor, way down the list of priorities, which means that it has little purchase over what happens to the future of the company. A pension fund can therefore be driven into insolvency when there may be other ways in which the parent company could be made to help. My hon. Friend is right to say that industry should help, including by examining the way in which other creditors bear some responsibility for what happens to the pension fund. Does he agree with that?

Malcolm Wicks

I understand my hon. Friend's point. We are always in close contact with the Department of Trade and Industry on such matters. In Committee and on Report yesterday, we tabled amendments to protect against what some euphemistically describe as "moral hazard"—one hon. Member called it "fraud"—whereby a parent company can, through restructuring, allegedly dump pensions on a subsidiary company. We need to stop such action.

Several hon. Members

rose—

Malcolm Wicks

I shall give way twice more at this stage, but I must then deal with the amendments that various colleagues have tabled.

Mr. Mark Francois (Rayleigh) (Con)

The Minister has been courteous in allowing so many interventions on an important matter. The issue affects several of my constituents, so I welcome in principle the Government's decision to do something about it. As with anything to do with pensions, the devil is in the detail. It is evident from the Minister's remarks that some detail remains to be worked out on exactly how the provision will operate. Will he give an undertaking to all hon. Members that, when the decisions have been made, we will all be provided with detailed briefing material, not simply so that we can understand it but so that we can ensure that it is passed on to our constituents who are affected?

Malcolm Wicks

That is a helpful and constructive suggestion. We are always happy to meet Members of Parliament to discuss such matters. I hope that the process that I have described shows that there will be opportunities for consultation. Later, consultation will take place on regulations.

Alan Howarth

I applaud the generosity of my hon. Friend's impulse. I am well aware of the predicament of Allied Steel and Wire workers in south Wales. None the less, I do not understand how he defines "a deserving case" or a "proper" person. Will he explain the Government's ethical case for helping some pensioners in misfortune but not others?

Malcolm Wicks

Recently—and perhaps throughout history—people have lost money when financial circumstances have moved in the wrong direction, and financial arrangements, such as pensions schemes and life insurance policies, have saddened the customer. I do not say that lightly—some circumstances have been serious, as we know. However, in the circumstances that we are considering, many workers were required to join the company pension scheme as part of their employment contract. We argue that that is a special case. It would be dangerous if we were to get on a slippery slope of believing that the Government could stand behind all such financial risk.

Mr. Nigel Waterson (Eastbourne) (Con)

I am grateful to the Minister,who is being generous. Before he moves on to the detailed amendments, will he tell us whether it has been decided in the discussions that have been taking place behind closed doors in the past few days that the trade union-inspired litigation in the European Court will be abandoned or settled?

Malcolm Wicks

I have heard no word about that one way or the other. I hope that, like other parties, the unions will consider what we say today and make a judgment about their legal action.

Annabelle Ewing (Perth) (SNP)

rose—

Malcolm Wicks

I shall give way to the hon. Lady and then I really will get on.

Annabelle Ewing

The Minister has, indeed, been generous this afternoon in taking interventions. He mentioned the figure of £400 million, which has come from somewhere. Is he genuinely telling hon. Members that no estimates of the average percentage payout have been conducted?

Malcolm Wicks

We are not in a position to do that. However, I have set out the critical milestones for the approaching period. I hope that that will reassure hon. Members that we have a process for dealing with the detail. Our intention is that people will receive a significant proportion of their pension rights. Something that is often forgotten in these discussions is that many of these schemes, although bust in a colloquial sense, still have considerable scheme assets. We are not just talking about the arithmetic of the £400 million; we are often talking about scheme assets as well and, of course, we hope for a contribution from the industry.

Coming as it does at the start of this process, the Government new clause simply requires the establishment of a financial assistance scheme and confers wide enabling powers so that the specifics can be expressed in regulations. When the issue of assisting those who had lost most of their expected pension was first raised, there was a lack of reliable information on the scale and nature of the problem. We have since begun to gather this important data, which will soon placed in the Library. As this information builds up, we shall be in a much better position to develop a structure for an assistance scheme. The new clause reflects our commitment to helping pension scheme members by requiring the setting up of an assistance scheme, and gives us the power necessary to enable us to devise an appropriate structure for that help. I therefore commend the Government new clause to the House as the right route for achieving the outcome that we all desire.

I now turn to the two amendments tabled by my right hon. Friend the Member for Birkenhead (Mr. Field), who is not in his normal place, which is very confusing. [HON. MEMBERS: "He's behind you!"] Is he? I know that he is in the House, but he is not in his usual place.

The two amendments amend the definition of a qualifying member to allow access to the financial assistance scheme, regardless of when the scheme began to wind up. We have yet to consult on the detail, but I believe that we will probably need a cut-off point, both to make an assistance scheme administratively feasible and to have some certainty about the funding arrangements. Indefinite backdating is simply not practical. Our current thinking that the financial assistance scheme should cover schemes that began winding up after April 1997. That date is significant because it was the implementation date of key provisions of the then Government's 1995 Pensions Act. Any starting point must bear a relationship to that important Act of Parliament.

Mr. Frank Field (Birkenhead) (Lab)

Will my hon. Friend give way?

Malcolm Wicks

I was about to ask my right hon. Friend to withdraw his amendments. I shall now give him the opportunity to do so.

Mr. Field

From what we have heard so far, I shall certainly not. The Minister's case just does not stand up. When he argued, in response to my right hon. Friend the Member for Newport, East (Alan Howarth), that we should not cover every risk, including Equitable Life, he put forward only one reason, which was that we are dealing largely with people who had to join a scheme as a condition of employment. People such as me, who joined Equitable Life, had no such condition imposed on them. The nearer to date that he takes a cut-off point, the greater the chances will be—given the changes that the Conservatives made—that members had a choice as to whether to join a scheme. The further back we go, the more likely it is that they will have had to join. So, on the Minister's own evidence today, he should be arguing the very opposite case. We should be less concerned with those who more recently lost out, and more concerned with the others, because the further we go back, the more we find that joining a scheme was a cast-iron condition of employment: people had to be in a pension scheme if they wanted a job.

Malcolm Wicks

We shall have the opportunity to look at these issues and consult on them, and I shall obviously be happy to talk to my right hon. Friend about them. There are practical difficulties relating to the question of how far we go back. Obviously, the money will stretch less far if we keep going back for decades. There is some significance to the change of regime following the 1995 Act, which is why we think that any starting point should bear some relationship to that.

Mr. Andrew Miller (Ellesmere Port and Neston) (Lab)

If my hon. Friend is relying on a key date that was triggered by an Act that he now recognises as flawed, is not that an illogical date to choose? If there has to be a date—I do not think that there should be—would it not be better to choose the date on which the 1995 Act received Royal Assent?

Malcolm Wicks

Clearly, there must be some date. The point at which the key provisions of the 1995 Act come into force is important. May I emphasise to my hon. Friend that I have said that I feel that a starting point must bear some relation to the 1995 Act? We have an open mind, not an empty mind, on that. If he reads our amendment carefully, he will see that it is deliberately drafted in broad terms as an enabling measure. I hope that he will take some comfort from that.

2.15 pm

The amendment tabled by the hon. Member for Northavon (Mr. Webb) would require the financial assistance scheme to begin making payments within six months of this Bill coming into force. I have already explained the milestones that we are setting to make sure that we have a body in place by this time next year and to make payments as quickly as possible thereafter. Including a deadline for payments in legislation at this stage of design, however, could lead to wasted effort and a poorly administered scheme. We would be doing nobody any favours by rushing these proposals through, least of all the very people whom we are trying to help.

The second amendment tabled by the hon. Member for Northavon would allow schemes that are closed while the sponsoring employer is solvent to qualify for the financial assistance scheme. The term "closed scheme" is generally applied to schemes that are still operating, albeit closed to new members. I assume that he was referring to schemes in wind-up. If so, the amendment would allow schemes that wind up underfunded, but with a solvent employer, to qualify for assistance under the proposed assistance scheme.

At this point, it might be helpful if I were also to deal with the amendment tabled by my right hon. Friend the Member for Birkenhead to that amendment, which would limit the qualification to solvent schemes that wound up prior to 14 May 2004. One of our key concerns has been to ensure that solvent companies remain responsible for their pension provision. A pension promise made should be a pension promise honoured. We have introduced regulations that can be used by trustees of schemes that started winding up after 11 June 2003. Those regulations place a debt on solvent employers to pay the full costs of members' benefits if their pension scheme is wound up. Solvent companies must be held responsible for the pension provision that they have arranged.

The third amendment put forward by the hon. Member for Northavon would set the level of assistance at no less than the amount that would be provided by the pension protection fund. All of us want to ensure that the people who will be helped by the financial assistance scheme receive meaningful levels of benefit. The final level of assistance that can be provided will depend on several factors, such as the number of claims that are submitted, the final size of the fund and the method of delivering assistance. At this stage, however, it seems unrealistic to expect that assistance will be set as high as future pension protection fund levels, as in future members will benefit from cover paid for by a premium to the pension protection fund.

In the light of what I said, I would hope that my right hon. Friend and the hon. Gentleman might consider withdrawing their amendments. Those are all the amendments to the Government proposal to set up a financial assistance scheme.

The amendment tabled by the hon. Member for Havant (Mr. Willetts) relates to the pension protection fund. It would, in effect, make the pension protection fund retrospective. It provides an apparently simple answer to a complex problem[Interruption.] He says from a sedentary position that that is not necessarily a bad thing. He normally reverses that by providing complex answers to simple problems. However, the pension protection fund will be financed through a levy on occupational defined benefit and hybrid occupational pension schemes. Retrospective cover would mean that this levy would be required to meet unknown and potentially very large liabilities. It is possible that those additional costs could threaten the viability of the fund itself. In addition, it would be unfair to place such a disproportionate burden on levy payers who are running schemes. We have always maintained that the new fund is similar to an insurance scheme in some respects: it should not cover people against events that have already happened. In view of what I have said in setting out the Government proposal, I therefore ask the hon. Gentleman to withdraw his amendment.

Finally, I should like to deal with some small amendments to clauses 265 and 273 that are consequential on proposed new clause 34. The amendments to clause 265 simply add the financial assistance scheme provision to the list of provisions that may be modified by regulation—if necessary—when being applied to either a hybrid or a multi-employer scheme. The amendment to clause 273 will add the financial assistance scheme provision to the list of provisions that require use of the affirmative procedure for any statutory instrument made under them, for the reasons I have just given.

Mr. Edward Garnier (Harborough) (Con)

I apologise for not being here at the beginning of the Minister's speech. I had duties elsewhere.

I understand the Minister's wish to be careful about open-ended commitments that would expose the Treasury to huge amounts of liability. Let me remind him, however, that the Lord Chancellor's Department—the Department for Constitutional Affairs—has encouraged access to the courts through what is called "after-the-event insurance", which underpins something called "conditional fee arrangements". It seems to me that the principle that the Department has opened up applies directly to the recovery of lost pensions. The Government are now setting up an after-the-event insurance scheme. The problem for my constituents, many of whom have worked for British United Shoe Machinery, is that the system will not—[Interruption.]

Madam Deputy Speaker

Order. I hope that the hon. and learned Gentleman will soon be bringing his intervention to a close.

Mr. Garnier

I shall do so immediately, Madam Deputy Speaker. The problem is that the system set up by the Minister is nowhere near adequate to protect my constituents, including those who have worked for BUSM, who have seen their pensions disappear.

Malcolm Wicks

Naturally, I anticipated that question. I could give a very lucid answer, but given the lateness of the hour and the disruptions we have experienced, I wonder whether the hon. and learned Gentleman would allow me to write to him—after I have taken advice from my learned friends, of course.

Kevin Brennan (Cardiff, West) (Lab)

Does my hon. Friend agree that it is not just a matter of sympathy in cases such as this? We are talking about defined benefit schemes, not defined contribution schemes. The benefit was supposed to be a promise. As late as 2002, the Financial Services Authority's "guide to the risks of opting out of your employer's pension scheme" stated: Some types of employers' schemes (the ones called 'final salary' or 'defined benefit' schemes) give you a guaranteed pension. The amount of pension you get from a personal pension is unpredictable". That makes it pretty clear why the state has some responsibility to act, regardless of whether it is set down in legal terms.

Malcolm Wicks

I agree, and it is important to remember that many people had to join a pension scheme as a condition of employment.

A significant number of Members on both sides of the House have represented constituents in dire straits very ably, but I think my hon. Friend the Member for Cardiff, West deserves a special mention as a parliamentary champion of this group of workers, and indeed as a parliamentary hero—[Interruption.] One among many, I am sure.

Opposition Members made fun of my confusing stepping stones with milestones. Let me say that one step for our Department is a giant step for our Department.

I can assure the House not just that we have the outlines of a plan, but that we have drawn up a clear route march towards implementation. By the end of May we shall have established our relationship with key partners, including trade unions, as all levels. Over the summer we will be doing critical work on the design of the scheme so that by the end of November we will be able to consult on regulations. By the spring of next year—just one year away—we will have a scheme in existence, with a view to being able to make the first payments as soon as possible.

We have a clear plan for the future with the pension protection fund. but there is a current and grave pensions injustice. Our proposals will bring support to decent, hard-working people—those whom I describe as proper people—and I commend them with enthusiasm to the House.

Mr. Willetts

The fact that we are debating these proposals today is a tribute to pressure from Members on both sides to help the 60,000 people who have been affected by the winding up of their pension schemes. I am pleased that, even at this late stage in the process, we now have something from the Government. We have an obligation to help the people affected.

I see the three most powerful arguments for giving help as follows: first, the human distress that many people are suffering as a result of their pension being so much less than they had hoped for; secondly, the effect on everyone's confidence in saving for their pension if they see the horrific experience of those 60,000 people endlessly repeated; and thirdly, as the hon. Member for Cardiff. West (Kevin Brennan) quite rightly mentioned, the public statements that have bean made by a variety of public institutions that saving in a company final salary pension scheme is in some sense secure, safe or guaranteed. Those expressions were thrown around. Looking back, they were thrown around rather too lightly, but people took them seriously. That is why they are particularly angry.

David Taylor

Will the hon. Gentleman take this opportunity to confess to the House whether during Prime Minister's questions earlier today, when his party leader claimed credit for the change that the Government are now introducing, he felt just a scintilla of embarrassment at the fact that his party had opposed Second Reading?

Mr. Willetts

If the hon. Gentleman looks at the reasoned amendment we tabled when the Bill came to the House on Second Reading, he will see that one of the specific reasons that we gave was that it did nothing to help the 60,000 people who had lost out as a result of their pensions winding up. That was specifically set out in our reasoned amendment because it was one of the big omissions from the Bill. We are pleased, even at this late stage, that that matter has been tackled.

Mr. Watts

May I remind the hon. Gentleman that many Labour Members have been campaigning for more than two and a half years on that issue? It seems to me that the only time when the Opposition joined the campaign was when they thought that the Government were going to concede and provide compensation to that group of workers. Does he agree?

Mr. Willetts

If I may say so, we have had several debates on this specific subject, which Opposition Members have raised over a long period. It might well be the case that it was the intervention from my right hon. and learned Friend the Leader of the Opposition that finally clinched the matter. There were then panic meetings among the Chancellor, the Prime Minister and the Secretary of State. The—[Interruption.]

Madam Deputy Speaker

Order. The House must come to order.

Mr. Willetts

The Prime Minister ran from this Chamber last Wednesday and asked why it was that nothing had yet been done.

John Robertson (Glasgow, Anniesland) (Lab)

On a point of order, Madam Deputy Speaker. I would ask you to rule on the remark that the hon. Member for Havant (Mr. Willetts) has just made. The Prime Minister was ushered out by the Secretary of State for Health after something was thrown down into the Chamber. The fact of the matter is that it was the Leader of the Opposition who would not come back and take the drubbing that he was getting from the Prime Minister at Question Time.

Madam Deputy Speaker

That is not a point of order for me. This is an important debate and many Members in the Chamber want to contribute to it. We should proceed as quickly as possible. I call Mr. David Willetts.

Mr. Willetts

Perhaps I could just explain that I was referring to events last Wednesday. That was when my right hon. and learned Friend the Leader of the Opposition raised this point, and it was after that, later on in the day, that there was a meeting of Ministers.

2.30 pm

Mr. Hogg

May I press my hon. Friend—I should point out that he supports the provision—on the principle on which the Government are operating? In the past, assistance—to use a consensual word—has always been given when Government agencies were at fault, an example being the Barlow Clowes affair. It is far from clear to me that ring-fencing is possible. The question has been raised of Equitable Life members. Where lies the distinction in principle between them and the people is question?

Mr. Willetts

It appears that people were led to believe by various public bodies that their defined benefit schemes were in some sense guaranteed or safe. It has been asked whether the legal case, in which this point will doubtless prove important, will be pursued. This could indeed still be a matter for the courts.

Several hon. Members

rose—

Mr. Willetts

I shall give way to the hon. Member for Cardiff, West first.

Kevin Brennan

In the case of Equitable Life, members chose to put their money into that scheme because they thought that it was offering the best rate in the market. No Government agency promised them that their pension was secure or guaranteed.

Mr. Willetts

It would be a great pity if one group of Members in this House argued that we should help the victims of pension wind-ups and do nothing to help the victims of Equitable Life, and another group argued the opposite. Both sets of victims have a case—although they are different cases—and both give rise to the question of whether public bodies have, on occasion, misled people or failed to discharge their obligations.

Mr. Savidge

Does the hon. Gentleman remember that Labour Members asked questions about this issue a fortnight and three weeks before the Leader of the Opposition raised it, and that the Prime Minister made clear his intentions? The phrase "jumping on bandwagons" comes to mind.

Mr. Willetts

The trouble was that although the Prime Minister said that he was going to do something, nothing happened. We have pursued this issue for a long time and we have raised it regularly; indeed, we debated it last year and in February of this year. It was the Prime Minister's failure to pursue the rather confused assurances that he gave during the two preceding Prime Minister's questions that caused the Leader of the Opposition to raise this issue, which finally led to action being taken.

Several hon. Members

rose—

Mr. Willetts

I want to question the Minister about his proposal, so once I have given way to the hon. Member for North-West Leicestershire (David Taylor), I shall try to make some progress.

David Taylor

I am grateful to the hon. Gentleman for giving way yet again; he is being most generous. He is trying to establish the logic that, because the Leader of the Opposition raised this issue last week and the announcement was made subsequently, those two incidents are somehow connected. Given the brain that the hon. Gentleman is reputed to have, he will doubtless be familiar with the post hoc, ergo propter hoc logical fallacy. Does he acknowledge that, in fact, pure coincidence and undiluted opportunism have led to the Leader of the Opposition's attempt to claim credit?

Mr. Willetts

The Secretary of State is welcome to intervene if he wishes to correct this account, but according to one newspaper, when the Prime Minister left Prime Minister's questions last week—

Madam Deputy Speaker

Order. The tenor of this debate is becoming very repetitious indeed. We are discussing Government new clause 34 and I advise Members to address their remarks to it.

Mr. Willetts

After I have finished this point, Madam Deputy Speaker, I will indeed try to make some progress. There were specific accounts of the Prime Minister leaving Prime Minister's questions last week, phoning the Chancellor to ask why nothing had yet been done, and calling a meeting—

Madam Deputy Speaker

Order. I have already ruled on this. May we please discuss the new clause that is before the House?

Mr. Willetts

I was responding to a challenge, but I shall of course follow your strictures, Madam Deputy Speaker, and try to make some progress. This issue is in fact very relevant to the new clause. Labour Members are saying that this campaign has gone on for a very long time and that they have pressed for action for ages. But whenever people have pressed for action—as we have done—the Secretary of State has always come up with the same sort of answer. In March, he said: We are exploring with industry representatives the basis on which we can establish…the extent of the problem, the number affected".—[Official Report,2 March 2004; Vol. 418, c. 764.] Earlier, in an Opposition debate in February, he said that it was important to have a clear idea about how and where boundaries could be placed around those who would be eligible."—[Official Report, 24 February 2001; Vol. 418, c. 212.] We have already heard those answers, implying that the Secretary of State was doing lots of work behind the scenes to try to tackle the problem. If he has been doing all that hard work behind the scenes, why has he ended up with the new clause before us today? It does not answer any of the technical problems that he claimed he was busy addressing and studying. He could have tabled the amending provisions before us today a year or even two years ago. This evinces no progress whatever in tackling the problems or establishing the evidence, which he claimed was the only reason why amending provisions could not be tabled sooner.

I understand why sometimes quick and dirty, and sometimes long, slow and carefully considered, amending provisions are necessary. This new clause, however, has been turned out very slowly, but it has not been carefully considered and offers no detail on the scheme—[Interruption.]

Madam Deputy Speaker

Order. There is far too much noise in the Chamber.

Mr. Willetts

The new clause appears to have been cobbled together at the last possible moment, without answering any of the questions that the Secretary of State has told the House for the past 18 months had to be studied before he could take any action. The question before us now is why such a thin new clause has been tabled at such a late stage, and which does not answer any of the relevant questions.

Let me put to the Secretary of State some of the questions that he has told the House for the past 18 months that he has been busy studying. First, we have heard various suggestions that he will restrict his assistance to pension rights accrued pre-1988 and to people who joined pension schemes pre-1988, when it was indeed possible for companies to make membership of a pension scheme compulsory. That was changed in the Social Security Act 1986 and after 1988 no one had to be a member of their company pension scheme. People may not have realised that there had been that change because their contract of employment may have appeared still to require compulsion. Is the Secretary of State contemplating some restriction so that the provisions would apply only to those who were compelled to join schemes or who built up rights pre-1988? That issue has been discussed for a long time, so can we have some indication of the Government's thinking?

Secondly, what about the scale of the losses? Are the Government intending to provide more assistance for the people who lost most or are they thinking of targeting people with substantial losses? Will there be a minimum loss, below which people will not receive any assistance? That seems to me to be an elementary question to ask of any compensation scheme. Again, can Ministers please respond to that question?

Thirdly, what about the use of the pension protection fund itself? I do not believe that the Minister for Pensions fully captured the purpose of our amendment. It is not our intention to make the levy in the PPF the basis for funding the assistance retrospectively. We fully understand that the new insurance scheme has to operate for the future. Our point is different. An institution is being established, which will deal with the assets of insolvent pension funds. I presume that some expertise will be built up to help people whose pension funds have wound up.

The Minister referred to the obvious ways in which new help could be provided and mentioned the possibility of his Department setting up a separate institution. What he missed out from his list of possibilities was the most administratively simple way of proceeding—setting up a separate compartment within the overall structure of the PPF that would receive the Department's funding and take in the assets of the companies that are winding up their pension schemes, enabling them not to have to purchase annuities. We would like to hear more from the Minister about that. Such a body could then administer the assistance programme that he is announcing. I am genuinely baffled as to why Ministers are ruling out using an institution that is being set up by the Bill before us.

I do not know why it is all so difficult. Is it because the Secretary of State, in broadcast media interviews, appeared to rule out the PPF being used in that way and does not want to go back on it? Is there any rational reason for inventing yet another institution when the Bill is setting up one that could easily be used for the purpose? We would be grateful for the Minister's guidance on that question.

I would like more detail on the scale of the assistance. Let me offer the House some admittedly rough and ready or back-of-the-envelope figures. Here we go. The number of people affected is 60,000. That figure was first given officially by the Secretary of State in an Opposition debate on this matter earlier this year. The assistance to be provided amounts to £400 million. Dividing £400 million by 60,000 gives me a figure of slightly under £7,000 for every person affected.

I am sure that hon. Members of all parties have had people at their surgeries who have lost that amount every year from the pension that they expected.

Mr. Watts

rose—

Sandra Osborne (Ayr) (Lab)

rose—

Mr. Willetts

I shall just finish this point, and then I shall give way to the hon. Lady, as I have given way to the hon. Gentleman already.

Each person will get slightly less than £7,000 in total over 20 years, but we know that many people have lost more than that every year. What sort of annuity would a capital sum of £7,000 buy? With luck, it might buy one worth £350 a year. That is nothing like the scale of financial loss faced by many people

The advocates of early-day motion 200 were not satisfied with our early-day motion 66, but they campaigned for full compensation for the people who had lost out. Many Labour Members put their names to that demand. Do they consider the package before the House today, given the sort of figures that are being used, to be anything like the full compensation that they requested when they subscribed to early-day motion 200? Perhaps the hon. Member for Ayr (Sandra Osborne) will comment on that.

(Sandra Osborne

Some of us will want to press the Minister about the percentage that people can expect. Does the hon. Gentleman recall that in the Opposition debates to which he referred, he was extremely reluctant to commit his party to public expenditure of any kind? Now that he appears to support a rescue package, where would the Opposition find the money for it—in the very unlikely event that they became the Government—given the cuts that they intend to make?

Mr. Willetts

The hon. Lady raises exactly the point to which I want to turn. The House, and those Labour Members who signed early-day motion 200, must accept that the Government are in a position of maximum political exposure. I think that they could have faced defeat in the House this afternoon, but they have come up with a package worth £20 million a year for 20 years, to be financed out of public expenditure. We can take it that that is the maximum amount that the Government are prepared to make available to help the people who have been affected. That falls a long way short of the amount of assistance that the announcement led many people to expect. I saw the photographs of ASW workers celebrating on Friday night. They raised their glasses to this great settlement, but I am afraid that, for many people, euphoria will turn to depression when they discover how modest the help is.

As a result, either we have to call for more public expenditure—and I do not believe that we should—or we must turn to the other proposal that is on the table. It is an option that the right hon. Member for Birkenhead (Mr. Field) has raised before, and it involves using the unclaimed assets of banks and building societies to make the amount on offer a useful sum. I am clear that the sum of money proposed at the moment will not match the scale of the financial distress that people face, but I do not believe that there is any reasonable prospect that the Government will put in any more money.

Mr. Bill Tynan (Hamilton, South) (Lab)

The hon. Gentleman has been doing sums on the back of a fag packet. How much does he believe should be given in compensation or assistance to help the 60,000 people who have lost out? Will he clarify the Opposition's position with regard to retrospection? Does he believe that the Bill should contain a provision for retrospection?

Mr. Willetts

The hon. Gentleman says that I am quoting figures that I have worked out on the back of a fag packet. I freely accept that they are rough and ready, but they are more detailed than anything that the Secretary of State has had to offer. The Department for Work and Pensions has worked on the problem for more than a year, but no practical evidence has yet been offered about the scale of the problem.

It is very difficult for the Opposition to estimate the scale of the problem. We have been pressing Ministers about the 60,000 figure, which was offered by the Secretary of State when we asked him for an estimate of the number of people affected. Given that we have hit the limit for public expenditure on this matter, I believe that the only way forward is to increase the financial support for people who have lost out by using the unclaimed assets to which I referred. The Chancellor specifically referred to that in the Red Book this year. It states on page 116: Where assets and owners cannot be reunited, it is also right that the assets be reinvested in society, as long as the original owners' entitlements to reclaim are preserved. The Chancellor has his eyes on that money, and the Irish Government have introduced reforms aimed ultimately at claiming unclaimed assets after 15 years.

The House faces a problem today that is as serious as the problem we faced before. In some ways the problem is worse, because many people think—as a result of the announcement and the amendment—that their problems have been solved. Their problems have not been solved. Therefore, either we need yet further public expenditure or we should use the unclaimed assets, and I favour the latter approach.

2.45 pm

Kevin Brennan

Does the hon. Gentleman acknowledge that his calculations assume that all those involved will retire on the same day? The key to the amendment is the ability to take the assets in the pension funds in question and to use them more effectively than simply by purchasing annuities, in order to build a fund. The hon. Gentleman is being slightly misleading in his calculations. As for early-day motion 200, the word "full" does not appear in it.

Mr. Willetts

The hon. Gentleman has been very active on this issue and I would be interested to know whether he regards the new fund as sufficient to address the problems that he has identified. If he does not, what does he think would be a better way forward? I am trying to help him, and other Members on both sides of the House, to identify that. [HON. MEMBERS: "Answer the question!"] I shall answer his question. I agree that it would be much better to continue a scheme rather than to wind it up and require the purchase of an annuity or deferred annuity. Ministers have still not made it entirely clear that they are committed to that course of action, but I agree that it would be better. Indeed, it is something that the pension protection fund will do in future. It is another argument for supporting our amendment.

We will set up one institution under the Bill that will take over the assets and liabilities of pension schemes in wind-up in future, so why does not the hon. Gentleman support our amendment that would add a separate compartment to the PPF to do that for schemes that already have a problem and are in wind-up? I agree with him, but his point is another argument in favour of using the approach that we set out in our amendment.

I know that many hon. Members wish to speak, and I have taken several interventions, but I wish briefly to touch on the Liberal Democrat amendment. It would tackle perhaps the greatest single omission from the Government's announcement—to which the Minister briefly referred—which was the issue of solvent wind-ups. Many hon. Members will have been approached by constituents who have been victims of solvent wind-ups. For example, I have constituents who were employees of Ballast UK. They lost out, but they will receive no assistance under the Government's announcement because the parent international company is solvent. That also applies to former employees of the Dalgety group and a Japanese bank in the City.

Andrew Selous (South-West Bedfordshire) (Con)

Will my hon. Friend comment on the fact that it is curious that Ballast Wiltshire continues to be able to trade in the Netherlands, despite having so short-changed its UK employees? Does he agree that there is a case for the European Union to look much more seriously at companies that defraud their pensioners in one member state but continue to trade elsewhere in the Union?

Mr. Willetts

The issue first got on to the front pages with Maersk, although that company changed its mind and decided to support the company pension scheme. Maersk would not be covered by the provisions in the Government's amendment, and my hon. Friend makes an important and interesting point.

Bob Spink (Castle Point) (Con)

Will my hon. Friend add to his list the Bradstock group, where there was a solvent wind-up that affects many of my constituents? They feel that the Government's treatment of them is terribly unfair.

Mr. Willetts

My hon. Friend gives another good example of solvent wind-ups that are not covered by the Government's new clause. The purpose of the Liberal Democrat amendment is to cover such people and I fully accept that there was a serious omission from the announcement.

I put the same question to the Lib Dems and to Members on both sides of the House: on what basis might we help the victims of solvent wind-ups? We should help them, and using unclaimed assets is the only feasible or practical way to do so. If the hon. Member for Northavon (Mr. Webb) can assure us that that would be possible under his amendment, I will look at it sympathetically. What I am not clear about is whether he envisages that the solution is higher public expenditure and, if so, how spending more public money in this case would be consistent with various statements from Lib Dem economic affairs spokesmen about their tax and spending plans. I have never found a reference in those statements to spending more money on the victims of pension wind-ups.

I have looked through the list of Liberal Democrat spending pledges and the victims of pension wind-ups do not appear, although I should be happy to go through the list with the hon. Gentleman because I hesitate to suggest that he may be proposing something with which his colleagues may not agree. As I cannot see help for the victims of pension wind-ups among the Liberal Democrat expenditure pledges, it would be helpful to know whether he regards his amendment as such a pledge.

Mr. Redwood

Is my hon. Friend advising us to support spending £400 million of public money? Is he advising us to support the outline Government scheme, or is he suggesting that the money is inappropriate, that the scheme will not work and that we should, therefore, be against it? I am not quite clear which advice he is giving us.

Mr. Willetts

I am sorry that my right hon. Friend has not found that my comments over the past 27 minutes answered all the questions he may have had about the Government's proposal. The real problem is that we know very little about their proposal. I welcome the £400 million that has been put into the scheme and I am proposing extra assistance, which would not be public money but would use the unclaimed assets of banks and building societies. That would be a constructive way forward that would involve no increase in public expenditure.

Alan Howarth

The hon. Gentleman has indulged in a variety of expressions of sympathy this afternoon. He has indicated that he would not rule out the possibility that it might be appropriate for assistance to be given to the victims of Equitable Life and to the victims of solvent wind-ups. As I agree that there is not the remotest fiscal scope for providing adequate help to all those deserving cases, how is it to be afforded? He suggests that the unclaimed assets will provide what is necessary, but is he not at risk of spending that nest egg several times over?

Mr. Willetts

The House may not face the decision today, but I am sure that as the penny drops about the very limited scale of the Government's announcement Members on both sides of the House will have to decide whether to explain to their constituents, "This is all there is and there is no more", or whether we should aim to do more. I do not claim that we could give 100 per cent., and we certainly need to see the Figures. We are still waiting for Ministers to provide them. The money from unclaimed assets that the Chancellor identified in the Red Book would enable us to do more and we could plug a large loophole in what the Government have announced today—namely, the position for victims of solvent wind-ups. That is the proposition that I am putting to the House.

I have two final points about the lessons that we should learn from this unhappy episode. The first is on compulsion. Although I give less, weight to it than Labour Members, one of the arguments that has been used is that people are entitled to compensation because they were obliged to join a pension fund. That raises questions about whether it would ever be conceivable to embark on implementing the proposals made by the Secretary of State 18 months ago for forcing people to save. If compulsion is to be used as a basis for Government liability when things go wrong, it seems to me that Members who are using the compulsion argument on this occasion will make it much more unlikely that a future Government would ever be willing to contemplate compelling people to save in any form. I should be interested to learn whether the Secretary of State or the Minister can envisage that Adair Turner, who has been commissioned to look into compulsion, would really make proposals, which they would accept, for compelling people to save, if when people were compelled to save we faced the arguments about Government financial liability that have been put today. That is the first lesson for the future.

Rob Marris (Wolverhampton, South-West) (Lab)

Is not the hon. Gentleman setting up a straw man? Most of the compulsion that has been discussed has been based on models such as the Australian scheme where there would be compulsion to save in a money purchase scheme. The new clause offers no hope of financial assistance for people in the UK who were forced—as some employees were before 1988—to save in a money purchase works pension scheme.

Mr. Willetts

The hon. Gentleman may not be fully reflecting Adair Turner's commission. Nothing in the original statement said that he should look only at compelling people to save in money purchase arrangements; the remit was much wider than that.

My second point on lessons for the future is directly addressed to the Minister of State. Another reason for the obligation we face, to which the hon. Member for Cardiff, West referred—as have I on several occasions—is that people were led to expect that in some sense the money in their company pension schemes was safe or guaranteed. May I, therefore, quote to the Minister some of the things that he and his Department have been saying about the PPF?

A DWP fact sheet published at the same time as the Pensions Bill states that members can be reassured they will still receive the core of the benefits to which they are entitled". In Committee, the Minister said that people's pension rights "will be safeguarded" and that they will get 90 per cent."—[Official Report, Standing Committee B, 30 March 2004; c. 483–88.] That is 90 per cent. of the pension they were entitled to expect. With the PPF, the Minister and the Secretary of State are in danger of repeating exactly the same mistake that was made on company pensions. They talk about the fund as though it safeguards, reassures or guarantees, yet we all know that without the Government standing behind it and without the rate of levy that has been suggested, it can offer no such guarantee.

The Minister chose his words unwisely on several occasions in Committee when he was referring to the PPF. If ever the fund cannot provide the 90 per cent. that has been promised, the Minister has already said sufficient for future Members to come to future debates in this place and say that Ministers told people that they would get their 90 per cent. We should all be careful about the words we use when talking about pensions and I am sorry to say that Ministers have not been careful when talking about the PPF in our debates on the Bill.

Dr. Jenny Tonge (Richmond Park) (LD)

On a point of order, Madam Deputy Speaker. Have you received notice from the Foreign Secretary that he will come to the House to make a statement about the deteriorating situation in Gaza? We now have confirmed reports that in the last hour the Israelis fired missiles from jet fighters into a peaceful demonstration in Rafah. It is reported that about 20 people were killed and more than 40 were seriously injured. The demonstration was peaceful and had been organised to protest against house demolitions. Many, many women and children were involved.

Is it not time for the Foreign Secretary to come to the House and tell us his plans for action against the Israeli Government—not just fine words of disapproval?

Madam Deputy Speaker

I have received no such request. Clearly, the hon. Lady's remarks are very serious and Members on the Treasury Bench will have heard what was said.

Mr. Frank Field

I rise to speak to amendments (d) and (e), which stand in my name and that of my hon. Friend the Member for Sittingbourne and Sheppey (Mr. Wyatt).

Today is a great day; it is a day of celebration. It is a day that many of us thought that we would not see. The heroes of today's events are sitting below me on the Treasury Bench. Of course, we wish to pursue issues about how complete the compensation fund will be. but we also know that the Freedom of Information Act 2000 will allow us to ask for policy papers on issues of public concern from 1 January next year. So when I ask for the papers on 1 April next year, on the whole saga of trying to get justice for those workers who lost their pension funds, I have no doubt whatsoever that riding on white chargers from those papers will be my right hon. and hon. Friends who are now sitting on the Treasury Bench. We will be able to celebrate their success then, as we are celebrating it today. Of course, I am sure that that will not affect how they view these issues as we finally see this matter through to the statute book. I am sure that, as decent comrades, they will ensure that other Ministers know that a lot of us will be pressing for the policy papers and to know who said what and who does what in the final stages of the analysis.

3 pm

I also want to compliment those on the Treasury Bench on their confidence and on the graceful way they have approached the debate—there has been nothing of trying to be too clever about it; there has been no arrogance about it—for it is now two and a half years since I was trying to put on the statute book a Bill that covered all these issues and more, and those on the Treasury Bench were blocking it. Of course, we now know that they were spending almost every minute of the day trying to find answers to all the questions that we have been posing. What have we experienced? We have not had clever little Dicks jumping up, reciting answers to all the questions that we have been posing during the past two and a half years. They have been nonchalant; they have been laid back; and they have been careful. Indeed, they have not bragged at all that they have done one iota during the past two and a half years. So I want to thank those on the Treasury Bench for the real stature of their characters, which have been on such good display during the debate.

Mr. Garnier

I, too, should like to join in the congratulations that the right hon. Gentleman is showering on his right hon. and hon. Friends. When he gets access to those policy papers next April, will he be sure to bring with him a carbon-dating machine, so that he can check the age of the pieces of paper on which those policies were written?

Mr. Field

Those people with hearing better than mine will already be hearing the machines at work, shredding various papers that will not be part of the record. That was trying to be humorous; those on the Treasury Bench must not be too worried about that.

The reason why I proposed my Bill more than two and a half years ago was that I have constituents who lost out heavily in the closure of their company. Those constituents worked in the constituency of my hon. Friend the Member for Ellesmere Port and Neston (Mr. Miller). Not only has he endlessly raised the issue, along with me, but whenever I have made such moves—albeit as a Parliamentary Private Secretary, which usually prevents him from signing such motions, Bills and so on—he has always signed those measures.

I am not anxious therefore for new clause 34 to be passed, unless the reason why I became interested in the issue—the position of those constituents—is met, but another issue is as important as that of those constituents. The first pension scheme that attracted the attention of the House was the closure of the Belling scheme in Burnley. My hon. Friend the Member for Burnley (Mr. Pike) is not here, but all hon. Members know that candidates of all parties are facing the most serious challenge from the National Front in Burnley.

Are we so naive, so idiotic, so proud and so boastful that we will let a measure go through from which, given what the Minister for Pensions has said, those workers will be excluded? Those workers are largely working-class, male and disfranchised. Is that the message that the House thinks it should send to Burnley in the middle of fighting elections against some of the nastiest people in the business? So when we come to deal with amendments (d) and (e), we need a clear statement from the Minister. He is wrong to say today that the worry about the measure is who may come in from earlier years. That is not the worry. We know most, if not all, the people who would qualify if we ensured that there was no starting date for the new compensation scheme.

The worry is that employers will try to dive-bomb the scheme and drop very large liabilities on to it before it commences. So I hope that we will not have to press amendments (d) and (e) and that the Government will say that they take on board the fact that their one defence against other Labour Members and against helping, for example, Equitable Life is that those workers were compelled to join. Workers from H. H. Robertson in Ellesmere Port were made to join. Workers at the Belling factory were made to join. Therefore, if words mean anything, surely what the Minister for Pensions has spoken about today will cover those workers.

The numbers that will be covered are minuscule compared with the 60,000 that the Government have estimated. So I make a genuine plea—it is a plea—not to unbalance the scheme, but for natural justice. If we go ahead with the scheme and exclude small handfuls of our colleagues elsewhere in the country, some of them will become so desperate and do the most awful things to themselves and perhaps their families, as a result of the actions that we take today. I beg the Government to tell us clearly before we deal with the relevant amendments that they will be serious in moving an amendment in the other place.

Mr. Redwood

The right hon. Gentleman has fought a valiant and honourable campaign to get this far. Does he think that £6,700 per person, on average, will be a big enough capital sum? My hon. Friend the Member for Havant (Mr. Willetts) says that it would buy £350 a year. At most, it would buy £500 a year, on current actuarial tables. Does the right hon. Gentleman think that that is enough; or does he wish that those on the Treasury Bench would come up with a better solution?

Mr. Field

No, of course, I do not think that sum enough. If I had been a little quicker when the Secretary of State for Work and Pensions asked me to withdraw my clause—in fact, it was tabled by my hon. Friend the Member for Sittingbourne and Sheppey—I should have said, "I will do so on condition that you give Government time for the Bill on unclaimed assets that I introduced a couple weeks ago." Of course, £400 million is not enough. If anything, I am critical of the Government coming up with £400 million. Why should our hard-pressed taxpayers, who are earning away, contribute £400 million, when we could use the large sum that has been lying idle, sometimes for 100 years or more?

I make a plea to the Government. It might go down well among Labour Members to say that the industry should make a contribution. If the Government are serious in that, they are in danger of having their sanity tested. We have charged the industry £5 billion a year in extra taxation. If we think that those who have done well by their schemes to ensure that they are not in deficit will now come up with even more funds to keep someone else's scheme going, we are living in cloud cuckoo land. So by all means make that point if we want to make a party point, but please do not be misled by one's own rhetoric into thinking the industry will come up with the money to save us on this one.

Mr. Watts

Does my right hon. Friend agree that the Government today have not accepted liability for the problem, but put in some money to try to restore some confidence in the insurance industry? Surely he would agree that it is in the interests of the insurance industry to do the same, to find some resources and to boost the amount of money available to that vulnerable group.

Mr. Field

As we both come from Merseyside, I am always loth to disagree with my hon. Friend, but I am afraid that I do. The Government have not put any of their money into the scheme. Instead, they have put some of our workers' money into it. So they are using taxpayers' money. It is wonderful that they have made a move to start the fund at £400 million, but it is not their money: it is our constituents' money. Our constituents are also contributing to a pension scheme which, thanks to the Bill, will now be protected not only to a large extent, but for the first time. That is great.

I would love to see the Pauline conversion of this country's financial institutions, but although I hope that I have a long life ahead of me, I do not think that I will live long enough to see that. We have to get other sources of funding, before the general election, if we are to avoid the disgust and hatred of many of our constituents. It is a great start, but in no way are the funds sufficient.

I hope that the Minister will tell us that the Government will find Government time for the Balance Charitable Foundation for Unclaimed Assets Bill. The hon. Member for Havant (Mr. Willetts) was right to quote the Red Book. The original Bill for winding up pensions stated that we should pay for deficits by using unclaimed assets. The Chancellor moved those unclaimed assets to a new foundation, the Balance Foundation. That Bill has all-party support. The first charge on that new foundation should be to pay these pensions.

Although it is a challenge for the Government, it is also a challenge for the Opposition. They have said that they support using the huge resources in unclaimed assets to ensure that we do not run amok yet again with people's hopes and expectations of a good payout. I put it to the hon. Member for Havant that if the Government do not find time in their programme to ensure that the Bill on unclaimed assets gets to the statute book, will the Opposition attempt to find a way to adapt the procedure of the House? Instead of having a rant from them—whatever the rant of the week might be—perhaps we could use one of their Supply days to have the Second Reading of the Bill to push it on its way.

Mr. Willetts

The right hon. Gentleman asks me a specific question. We have considered that idea, and it is an ingenious suggestion. It is my understanding, however, that such a debate would appear to be a Second Reading, but it would not have any legal force in practice. It would not be a real Second Reading, but a copy. Although it would be an interesting way to ensure that that important matter is debated, sadly it would not help his Bill on its way. However, it would be an opportunity for us to show yet again how much we support his particular idea.

Mr. Field

If the Opposition spoke more to the Clerks, they might find that the motion on the Order Paper would come very close to a Second Reading motion. More importantly, it would flush everyone out because we would have a vote on whether hon. Members give that priority to unclaimed assets. I leave that with him, as I leave it with my hon. Friend the Minister.

I support the Liberal Democrat amendment (c). It is immensely important that at this stage of the debate, when the ink is not yet dry on the Government's new clause, we apply as much wisdom as possible to determining how we can protect as many people as possible. Those people have done what every Government told them to do—to save and be independent in their retirement—and thought that they were doing the right thing. They have found, however, through no fault of their own, that future wickedly grabbed from them. We cannot let them down.

Bob Spink

Does the right hon. and highly respected Gentleman believe that the unclaimed assets could be used to compensate those people who were victims of solvent wind-ups, such as the Bradstock Group plc, which affected people in my constituency?

3.15 pm

Mr. Field

I do. Those people should be included in the scheme.

Although some of my comments were technical, I hope that for the first time I have been slightly humorous. It is difficult to be humorous in this place if people think that you are not. Neil Kinnock only had to stand up and everyone started laughing. I was pushed into the House by the deputy Chief Whip one day and told to speak. I did not know what the debate was on, and only realised when someone intervened on me. When I got to my feet, I said, "Mr. Speaker, I record reading over the weekend in one of the supplementary volumes to a book on Churchill's life that friends of his were approaching the garden house at Chartwell when they heard the great man say, 'Mr. Speaker, I didn't expect to catch your eye today.' I, Mr. Speaker, did not expect to catch your eye." Not one hon. Member laughed. I am pleased if I managed to put smiles on the faces of Front-Bench spokesmen today.

I do not want my remarks to detract in any way from my thanks to the Government for tabling new clause 34 and to the Ministers for the difficult negotiations that they entered into in order to convince their colleagues that it was the right thing to do. Many of our constituents must have given a big cheer for them. I wish to add my cheer to theirs.

Mr. Webb

When the right hon. Member for Birkenhead (Mr. Field) began, I thought that he was giving a whole new meaning to the term "wind-up".

The new clause is a breakthrough. It is the first time that the Government have accepted that it is legitimate to use taxpayers' money to help people who have lost their pensions. It is entirely welcome and I hope that every hon. Member will support it. I hope the House will note the lack of a "but" at the end of that sentence, although there will be one later.

The fact that the new clause exists at all is a tribute to a large number of people. I am not going to turn this into the Oscar ceremony, but the workers and trade unions who have been affected by these issues campaigned tirelessly and deserve great credit. Dr. Ros Altmann, who has not been mentioned in this debate but has in many others, made a huge contribution. She applied her expertise, commitment and compassion in equal measure and brought credibility to the campaign in a way that I have seldom seen before. She deserves huge credit for that.

Many hon. Members also deserve credit. In particular, the hon. Members for Cardiff, West (Kevin Brennan), for Sittingbourne and Sheppey (Mr. Wyatt), for Ayr (Sandra Osborne), the right hon. Member for Birkenhead and others were successful in campaigning on the matter. I have said in other contexts that the hon. Member for Cardiff, West has bored for Wales on the subject. Speaking as someone who was described in the press this morning as a "nerd", I can think of no higher compliment.

The new clause is an important step forward. It is worth reminding ourselves of how far we have come by reflecting on just one quote. The hon. Member for Sittingbourne and Sheppey has raised the subject many times, including in an Adjournment debate in mid-October 2002. In that debate, the then Minister for Pensions, the right hon. Member for Makerfield (Mr. McCartney), said: My hon. Friend has called for an ex gratia payment to be paid into the pension scheme. I would not like to give him false hope. Indeed, I cannot give him any hope. The Government are not able to assist schemes in wind-up that are underfunded."—[Official Report, 16 October 2002; Vol. 390, c. 441.] That shows the magnitude of what has been achieved, which is to the immense credit of every hon. Member who has pursued the problem doggedly.

We still do not know what we do have, however. The critical point, and we cannot let Ministers off the hook on this, is whether what we have is a hardship fund—a bit of charity because we feel sorry for those people—or a compensation scheme. The distinction matters. If we are to talk about who should be included, how much they should get and when they should get it, the basis on which we are to pay out that money matters. In my judgment, the new clause needs to be about more than a hardship fund.

Why is there a case for more than just a bit of money, in this case £400 million over 20 years? Why is there a case for more than tea and sympathy and £20 million a year? It is because are talking about people who have paid into their pension for 40 years but got next to nothing. ASW transferred 30 years' worth of miners' pensions into its fund and lost the lot, because a distinction was not made between money transferred in and money that was there all along. That is not right, and it is not just a question of extending sympathy to people in that position. as I shall explain. The system makes provision for a guaranteed minimum pension—a legal term originating in Government statute—but in that case the guaranteed minimum pension was not guaranteed. The Minister for Pensions made an important point when he said that the Government propose that compensation will apply only to schemes that were wound up from 1997 onwards. It was in 1997 that the Pensions Act 1995 came into force. If the financial assistance that is being offered has nothing to do with Government and is just charity, why is it being offered from the date to at which an Act of Parliament came into force?

Mr. Watts

The Government have made it quite clear that the scheme does not offer compensation. They have resisted the notion of liability and have proposed a hardship fund. Do the hon. Gentleman's comments not make it more difficult to try to convince the Government to do something similar in future, because everyone will line up trying to find criteria to extend the help given to a particular group?

Mr. Webb

I do not of accept that. We need to ensure that justice is done, but we will not do people who have suffered an injustice any favours if we ask them not to make a fuss about their case because that may prevent other people who have suffered an injustice from getting handouts. That is not a basis on which to draw up a scheme. The Government have asserted that the scheme is effectively a hardship fund, but payment should be made on a basis that dictates certain things about the level and structure of payments.

Mr. Miller

I would like to correct the hon. Gentleman, as the Pensions Act did not come into force in April 1997. It came into force in part when Royal Assent was given on 19 July 1995. `Butterworths" has 26 pages on the detailed provisions that came into force then. There are arguments for drawing a line at any one of those 26 pages, but I would urge the hon. Gentleman to agree with my analysis that either there should be no cut-off date, or it should be the date when Royal Assent was given.

Mr. Webb

I understand why the hon. Gentleman has made that point. The Government chose 1997 as the cut-off date because the changes in the order of priorities on the winding-up of schemes came in to force then. It was in 1997 that trustees lost the discretion to divide an inadequate pot more fairly, but it was Government who changed the rules. However, I know where the hon. Gentleman is coming from, and I have a lot of sympathy with the amendment tabled by the right hon. Member for Birkenhead specifying an earlier date.

In 1997, statutory instruments removed employers' obligation to warn of insolvency risks. Because the 1995 Act had been introduced and there was a minimum funding requirement, employers' obligation to tell their workers that the pension fund was at risk when the company was in danger of becoming insolvent was removed by Government. A trail of responsibility starts to emerge, so this is about more than having sympathy for those employees—it is about justice, which is a key distinction.

The hon. Member for Cardiff, West mentioned the Financial Services Authority, which was set up by Government. In a guide to pensions headed "Reasons for joining an occupational scheme if you can" it said: In a final salary scheme you know broadly how much pension you'll get. This makes it easier to plan for retirement". The Green Paper that the Government produced in December 2002 said on page 55: Accrued rights…are clearly protected under pensions legislation and this will remain the case". Some people are getting nothing, when the Government were telling people only 18 months ago that their rights were protected.

"Occupational Pensions:Your Guide", a document produced in 2003 by the Pensions Service for the Department for Work and Pensions, told people who wanted to know how they could be sure that their money was safe that they were protected by a number of laws and that the regulator could act quickly to protect your interests". Successive Governments do not have clean hands on this issue. The regulator, set up by the previous Government in the 1995 Act, issued a guide to trustees which has since been withdrawn. However, it said that the Act was intended to increase the security of members' benefits". It talked about the minimum funding requirement and said that it was the minimum amount…that should be in the scheme at any one time…to meet the scheme's liabilities if it were to be discontinued". However, schemes that met that requirement did not have enough money to meet those liabilities. The regulator was issuing erroneous information to trustees, and the Government, too, are not completely blameless.

The National Association of Pension Funds is not part of Government, but it issued documentation saying that the schemes were safe. It is reasonable to claim that as Government are part of the problem, more than just charity is required.

Mr. Waterson

I am following the hon. Gentleman's arguments closely. Does he share my surprise that in cobbling together a deal the Government have not obtained a firm undertaking that the European Court case will be withdrawn? Does that not mean that in due course they could put this package in place, the detail of which is still sadly lacking, but end up paying much more if they lose that case in the European Court?

Mr. Webb

I do not share the hon. Gentleman's view. Because this is about justice, if the unions' claim is tried in the courts and they are successful they have every right to pursue it, and should not bought off by this package. I am not suggesting that they were asked to give up their claim, but I do not believe that they should do so.

There are the hands of successive Governments all over this issue. Many of us have had to rely for information on the press, who were briefed by the Department, and the workers. Last night, I went across the road to meet the Dexion workers who were holding a vigil by candlelight. They asked me how much they would get, as it is still far from clear what they will receive. We have queried the difference between the £400 million fund offered by the Government and the cost of full cover, which is estimated to be more than £2 billion. In theFinancial Times today, a Government spokesman said that we are not in the business of paying full compensation. What we are talking about is assistance. We are not guaranteeing anything. That last sentence is critical. Even today, the Government cannot say what sums are available, so people do not know where they stand.

There is a big gap between the figure of £400 million to be paid over 20 years, equivalent to £20 million a year, that the Government have come up with and Dr. Altmann's estimate of £76 million to be paid over 30 years, or £2 billion in total. We do not know the precise figures, but there is clearly a big shortfall, giving rise to problems of timing, cover and level, the subjects of our three amendments. Amendment (a) deals with timing and says that payments should be made within six months of the coming into force of this Act". We tabled the amendment last week to try to get the Government to say something on the record and stop the date drifting. We have received some reassurances from the Minister, who said that a scheme would be in place this time next year. If things are ready to roll then, it would be about six months after the measure comes into force, so we shall not seek to press amendment (a) to a vote.

Cover is a problem, though. If the true cost of covering the 60,000 workers is £2 billion-plus, but the Government are offering only £400 million, there must be big exclusions, including people who work for solvent companies. The Government have prevented that problem from arising in future, because they have introduced provisions which, from last June, mean that solvent employers cannot close a scheme unless there is enough money in it. I hope that amendment (b), which the right hon. Member for Birkenhead tabled to our amendment, is not necessary, but there are cases historically in which people have been members of schemes closed by a solvent employer, where the minimum funding requirement was satisfied but there was not enough money in the fund to pay people full pensions. Those workers are as unfortunate as people who work for a company that goes bust, and should have the same rights as them. If people work for a solvent employer and the scheme is closed against their will, they have not suffered less injustice than people whose scheme is closed because the employer goes out of business.

Mr. Frank Field

The hon. Gentleman says that he hopes my amendment will be unnecessary and will not be pressed. Will he put that question to the Government, to ensure that his interpretation is the same as the Government's interpretation of what the law will be, which will make my amendment unnecessary? If the Government cannot give that assurance, he may think my amendment is necessary.

3.30 pm

Mr. Webb

Yes. To sum up on that point, my understanding is that no new solvent employer can now close an underfunded pension scheme because of what the Government legislated back to 11 June, so if we include solvent employers in the financial assistance scheme, there is no danger that new solvent employers will close their schemes, as the Government have separate provisions to prevent that from happening. That is my understanding of the implications of our amendment. It would be helpful if the Minister could confirm that when he responds.

Mr. Drew

The hon. Gentleman will know that I am about to raise the issue of Lister-Petter, whose employees he shares. The decision may not be taken by the employer. Where there is an administrator, it may be the administrator who takes the decision on the pension fund. If there is no suitor willing to come in and take over the company, including taking over the pension fund, an insolvent pension fund will have to be closed. I shall seek clarification from those on my Front Bench, but I should be interested to hear the hon. Gentleman's views on that circumstance. It could be doubly unfair to the work force, who could be losing their jobs, as well as their pensions.

Mr. Webb

That has always been the infamous double whammy that people suffer in such cases. They lose their job and, to add insult to injury, they lose their pension as well. The position of solvent employers, parent companies, sub-companies and so on needs looking at. If the Minister can assure us that the Government do not intend to put the solvent employer cases into the present financial assistance scheme but they have other plans to right that injustice, we will not pursue amendment (b) either. In other words, we believe that people who work for solvent employers have suffered a real injustice and it needs tackling. If the Government think there are good reasons why that cannot be done through this scheme but they have plans to do something about it through some other mechanism, that will offer us the reassurance that we seek.

Amendment (c) is critical and comes to the heart of the issue. It states that the level of compensation that people get should match what people will get next year through the pension protection fund. We must remember that that is not full compensation. There are many, Dr. Ros Altmann among them, who say that we are being too soft and that 90 per cent. is not enough—it is a case of injustice and theft, and the figure should be 100 per cent.

We are not going that far. We are asking, "Why should someone who loses out because their employer became insolvent on 31 March next year get perhaps substantially less than 90 per cent. of their pension, while someone who loses out on 1 April gets 90 per cent?" Why should there be that arbitrary distinction? The Minister seemed to say it was because the employer had paid into the levy—into the fund. Where is the case in justice and morality for that distinction? Those are people who have saved all their lives, who have done what they were told, and who have lost out. It is not acceptable that those workers should get less than the amount they would get under the pension protection fund.

The worry is that the figure may be not just a little less than 90 per cent. If the figure of £400 million, compared with £2 billion or something of that order, is right, we could be talking about only half pensions or one third pensions. That would be unacceptable, so we feel particularly strongly about amendment (c), which specifies the level of benefits. The workers over the road and the ASW workers who were celebrating on the television news thought they would get most of their pensions back. It would be a cruel deception. All the way through, the Government have spoken of not creating false hope. It would indeed be creating false hope if workers thought last Friday that they would get their pension pretty much covered, and if it turned out that they would get only half or thereabouts of their pension covered.

Andrew Selous

Will the hon. Gentleman give way?

Mr. Webb

I will not, as I shall try to conclude.

There is a real urgency to the issue. I am told that there are already ASW widows. Members of the ASW scheme have, sadly, died and the widows still do not know what widows' pension they will get. That needs to be sorted out soon. We need clarity. We need these matters to be resolved urgently. Because we consider the issue to be a matter of justice, I conclude with some words from Andrew Parr, who has been one of the leading figures in the Pensions Action Group. I tried to get his permission to quote him, but I was not able to speak to him today. I am sure he will forgive me for quoting him. Having seen the Government's new clause 34, he said: Our aim is not to discriminate between groups. Every affected person should have full restoration of their pension entitlements regardless of company, regardless of date of joining the scheme, regardless of the reason for the scheme wind-up, regardless of length of service and regardless of age." He continues: Nobody told us of the risk we were taking, not the Government, not the FSA, or OPAS, or OPRA, or the NAPF, or our employers. All led us to believe our pensions were safe, guaranteed and protected by law. We only want what we were promised. surely that is fair.

This is not about charity. It is about justice, and that should be the basis for payments from the fund.

Kevin Brennan

The hon. Member for Northavon (Mr. Webb) said that I had bored for Wales on the issue of occupational pensions. May I return the compliment and say that he has nerded for Northavon throughout our debates?

I begin with a comment about the people whom I have tried to represent in our discussions. My hon. Friend the Member—I call him the learned Member; I know that is technically not in order, but he is a professor—for Aberavon (Dr. Francis) yesterday gave me a badge that his late father, Dai Francis, who was a distinguished trade union leader in Wales, had in a drawer at home. The badge says, "Steel must stay in Cardiff". As the hon. Member for East Carmarthen and Dinefwr (Adam Price) will know, it dates back to the 1970s, when there was a campaign by some of the same people whom I have been representing. At that time., they were working in a nationalised industry—the steel industry—and certainly thought their pension was guaranteed. Some of them are now close to retirement age.

Those workers are tempered by the heat of battle, as steel men should be, rather than put off by it. That is why they have been so durable in fighting the battle. It has helped me in trying to take up the campaign, along with many other hon. Members, a large lumber of whom are in the Chamber this afternoon. They are too numerous to mention, but all have made an important contribution.

New clause 34 represents an astonishing victory for the campaign that those workers and workers from other companies around the country have waged on the issue. It is a testament and a compliment to the dignity, steadfastness and solidarity—if I may use some old-fashioned words—shown by the workers who have been faced with the problem. It is a good example of why it is important that people join trade unions. Many of those people were members of trade unions and their trade unions were able, for example, to collect funds, possibly to take a legal case to court, if necessary. That could not have happened if they were not members of trade unions, and it shows the importance of trade union membership.

I have worked closely with the Iron and Steel Trades Confederation and also with Amicus, but other trade unions have been involved. In addition to showing the importance of trade union membership, the campaign has also shown the importance of having a Labour Government. Instinctively, the Government have understood the issue—a difficult, complex issue that they have had to deal with. They have instinctively understood it from day one and have not shut the door on doing something that some people said was impossible at the beginning of the campaign—to get retrospective assistance for those who have been affected.

I pay tribute to the Secretary of State, to the Minister for Pensions and his predecessors, to the Prime Minister for the interest he has taken in the issue, and to the Chancellor, who has disproved one of Churchill's sayings. My right hon. Friend the Member for Birkenhead (Mr. Field) earlier quoted Churchill. Another of Churchill's sayings was that the Treasury was the inverse of the Mr. Micawber principle: instead of waiting for something to turn up, the Treasury was waiting for something to turn down. In this case the Treasury has come through and should be complimented. A compliment is due to the Chancellor for his role in bringing about the new clause before us, which permits the Government to use public funds in order to deal with the matter.

I have said all along that I did not mind where the funds came from. I said that in Committee. Unlike some colleagues, I think it is entirely proper that money from general taxation should be available for such purposes. The scheme is right for three basic reasons.

Mr. Waterson

I confirm that the hon. Gentleman said in Committee that he does not mind where the money comes from. Before he moves on, is he satisfied that his constituents, whom he has valiantly represented in discussions and debates, will be fully compensated? If not, is he satisfied by the compensation that they will receive?

Kevin Brennan

I accept that it is not possible to say that full compensation will be paid, and I have never used those words—as the hon. Gentleman, who listens

carefully, knows. I am satisfied that the measure is a major breakthrough that will provide significant sums to pay substantial compensation. If that compensation is cleverly combined with the available assets, a significant level of assistance—I should not use the word, "compensation"—should be available. If someone had offered my constituents significant assistance when we started the campaign two years ago, my constituents would have bitten their arm off. I accept that a lot of detail must be worked out, and people are understandably anxious because they want to know what they will get.

The measure is not about fobbing off people, buying off people or fooling people. Indeed, such an approach would not work because workers, other hon. Members and I would return to the issue, and the trade unions would pursue their legal case under the European insolvency directive—that possibility remains if substantial assistance is not made available. I believe that substantial assistance will be made available, although I accept that a lot of the detail must be worked out. The possible legal obligation on the Government under European Union law to protect pensions is one of the three reasons why the measure is right.

The moral obligation to act has been discussed in great detail, and it is not good enough to argue that the matter concerns hard luck. If someone pays into a defined benefit scheme, the scheme's nature means that a pension promise has been made. It is not good enough to say, "We can all walk away. Hard luck if you have worked for 40 years in a company and your pension is taken away from you at the last minute."

It is in the public interest to make the Bill a success. As the Minister says, a cloud has hung over the Bill, which is, incidentally, among the most progressive pieces of legislation to pass through this House for many years. The Bill is about security. The Labour party was invented to provide social security for working people, and that is its fundamental purpose.

The Bill is in the public interest, because some 60,000 people—we will not know the true figure until people come forward—will not go round saying, "Don't believe that the Government will help to protect your occupational pension. Don't believe that your pension is safe, because look what happened to us." If we assist those people, they will say, "We were worried that we would lose our pension, but, at the end of the day, the Government"—in this case the Labour Government—"would not permit that to happen."

We have discussed in detail the difference between occupational pensions and cases such as Equitable Life. One can sympathise with people whose expectations are disappointed, but that is very different from a pension promise backed up both by the permission of compulsion by the state and by the fact that the state, through its agencies, told people that their pensions were secure and guaranteed. When someone chooses to invest in a company, their expectations might be disappointed, but they have not lost a guaranteed pension that they thought would be based on their final salary.

Some questions of detail must be settled, and I am pleased that the Minister set out a clear timetable to resolve some of those issues. I am sure that hon. Members want to raise questions such as the exact point at which the assistance starts, and my right hon. Friend the Member for Birkenhead and my hon. Friend the Member for Ellesmere Port and Neston (Mr. Miller) are particularly concerned about that point. I am happy with the Minister's comments on that issue: he has not said that the point at which assistance starts is written in stone and, importantly, he is prepared to consult.

3.45 pm

The various definitions of insolvency raise some issues, and we should make it clear that no one should be left out because of a technicality. We must ensure that we help the people who need assistance.

Mr. Miller

I congratulate my hon. Friend on his sterling work. In supporting new clause 34, does he agree that our party's history, which he mentioned, is one of protecting people who are disadvantaged by an outside body, in this case, pension funds, which is why schemes such as the HH Robertson scheme should be included?

Kevin Brennan

My hon. Friend makes the point eloquently—he has also made it in private meetings with Ministers—and I am sure that his comments have been heard.

Other issues must be clarified. It is vital that the trade unions are involved in the consultations and the setting up and fashioning of the scheme. We must do everything that we can to maximise the value of the remaining assets in the pension schemes that have been wound up or are winding up. We must ensure that the three-year review, which is a key part of the measure, takes place, and the review must act if it finds that the scheme is inadequate and is not providing substantial help.

I do not want to discuss exact percentages today, and the Government are right not to do so. We all know what 100 per cent. of nothing equals—the phrase is too impolite to say in this House—but that is what some workers faced. We must ensure that those affected, especially those who have contributed for many years and who are close to retirement, receive a substantial pension. We all have a duty to help those affected, and I pay tribute to all hon. Members, particularly to those on the Government Front Bench, for their contributions. Most of all, I pay tribute to the workers who have campaigned on the issue.

The scheme is the right way forward. It was always going to be better for the Government to introduce their own proposals, which they have done. I welcome their proposals, and we should all support new clause 34.

Mr. Redwood

I remind the House of my interests, including the fact that I am a pension trustee, but I am not speaking on behalf of that pension trust in this debate.

Those hon. Members who, like me, were involved in past lives with the pensions industry, will know that final salary pension schemes are a great idea if they combine a generous employer with a well-funded scheme. Such schemes can offer extremely good pensions, but we also know that on too many occasions the employer either is not generous or is unable to be generous because of pressures or strains in the business. Despite the formidable array of regulatory controls, interventions and actuarial advice, on occasions the funds in schemes are woefully inadequate to cover future liabilities.

In recent years in particular, when regulation has been intensified, Governments and their regulators have been wrong to give people the impression that final salary schemes are secure and that they are the best way to fund one's pension in all cases. Final salary schemes entirely depend on the generosity of the employer and how much the employer can afford to pay, and many people have been misled. It is ironic that the pensions crisis has developed severely in recent years while the regulatory effort and cost in the system have massively increased. One can waste an awful lot of money on regulation and not tackle the underlying problem, which is the inadequacy of pension payments and of the funds with which to pay them.

Andrew Selous

Does my right hon. Friend agree that there is an unsatisfactory inconsistency in the fact that whenever a member of the public may be about to buy equities there is a warning that the value of those equities could go up and down, whereas that is not the case with pensions? When the chief operating officer of the Financial Services Authority wrote to me in March, he said that he accepted that the risks of a scheme and employer insolvency are not dealt with in every publication about pensions. Does my right hon. Friend agree that people were misled in thinking that such schemes were guaranteed?

Mr. Redwood

They were grossly misled. That is a great tragedy, as is the fact that many of their decisions were made as a result of that.

David Taylor

The right hon. Gentleman assented to his hon. Friend▿s comments on advice given to those about to invest in a pension scheme. Does he therefore assent to yet more regulation in a speech that is, one presumes, in favour of pruning it back?

Mr. Redwood

I am not assenting to more regulation, but saying that it can be a waste of money and time if it does not address the underlying questions of whether enough money was going into the funds in the first place, whether that money was well managed in such a way as to combat the very real risks in financial markets, and whether there was the right relationship between the employee, the company and the trustees in each case. Clearly, that was not so – the regulators either did not know or did not care.

It would not be possible to design a faultless system that guaranteed, through regulatory devices alone, that people could live in a world where final salary pension promises could be made and always met. We simply do not live in that sort of world. We have to explain honestly to people that there are limits to what one can offer and guarantee, and that there is a range of difficult choices in this field, as in many others, given that we lead our lives subject to risk. Just as one can buy the wrong house in the wrong area and the price can go down, so one can buy the wrong pension. It is unforgivable that regulators should have intervened in those judgments by giving bogus and wrong advice suggesting that a final salary guarantee is a real guarantee that can be met in all circumstances. Any sensible person would know that that is wrong. We have now lived through a series of circumstances in which many well-intentioned companies could not meet that guarantee, let alone those that may not have been so well intentioned and have also been hit by events in the markets.

The purpose of the Government's new clause is wholly admirable. It is a cross-part, wish—Members on both sides of the House have made these points powerfully and often—to see something done for the people who have fallen by the wayside because they had been given final salary promises that could not be met, and are going to be broken in a very material way. I am delighted that the Government are proposing to remedy that. However, as other Members have said, £20 million a year is a very small sum of money in relation to the magnitude of the crisis. My hon. Friend the Member for Havant (Mr. Willetts) pointed out that it equates to an average of £6,700 per person. It might buy an annuity of £500 a year for a person who does not want to index it, so he would have a progressively smaller pension in terms of purchasing power over the years, or £350 a year with increases in line with prices. That is roughly what current actuarial tables would show.

Mr. David Cameron (Witney) (Con)

I wonder whether I might take my right hon. Friend back to the time when he was a councillor in Witney. He may remember the company Early's of Witney, the last blanket maker in the area, which sadly closed in 2002. Although it closed its occupational pension scheme, and pensioners are not getting paid, the ultimate parent company is still operating. Do not the Government need to clarify whether the parent company, in such situations, will be affected by new clause 34?

Mr. Redwood

I am obviously disturbed to hear of the plight of my former constituents as a county councillor and my hon. Friend's constituents, who are well represented. I agree that when the Government work out the details of their scheme, they will need to give a precise view on such questions. As other hon. Members have asked whether it be fair to leave out certain categories of people because of technicalities relating to the timing of their employment and the nature of their fund compared with those of other people, given that they are all suffering from the same basic problem—a broken pensions promise.

The rather small sum of money that each person would get from the purchase of an annuity under the Government's offer is probably not much above the amount that they would get from means–tested benefits, and may in some cases be below it. It would be interesting and useful if Ministers were to clarify the net cost of the scheme to give the House an idea of how generous it really is. It is possible that quite a lot of the £400 million that the Government are proffering, some of which comes from the taxpayer, will be covered by savings on means-tested benefits that would otherwise go to those poor people who had lost their main pension and were on the basic state retirement pension.

We can all agree that more money will be needed. My hon. Friend the Member for Havant and the right hon. Member for Birkenhead (Mr. Field) have produced a good way, free to the taxpayer, of augmenting the amount that is available. I hope that Ministers will think about that. It might be a neat way out of their dilemma, as I am sure that they would join me in wishing to offer more support to the wide range of people who are suffering.

I want to explore one other suggestion that, although it is widely canvassed in the House and thought to be part of the answer, might turn out to be another promise that is broken rather than observed—that is, the idea that the appointment of a scheme manager under the new clause could produce better management of the existing assets in these inadequate pension funds, which would somehow transform the position and pay larger pensions to people who have entitlements under those funds. Having been an investment director before I came into this House, I know how difficult it is to guarantee and deliver above-average performance, and how difficult it is to make wise asset choices that will just meet the requirements of a group of people who do not have enough money kept collectively on their behalf, but would like their money to go further to buy them a better pension.

Under the new clause, the choice of the scheme manager would not be easy. Because the funds coming into the scheme are those of insolvent pension funds or pension funds in wind – up, they are very likely to be held almost entirely in the form of holdings in Government or gilt – edged securities—in other words, bonds that repay at a specific date in the future and pay a fixed rate of interest out of the consolidated fund of the country. They are as near to risk – free as one can get, short of putting one's money into a good bank and being able to withdraw it on any day one chooses at no capital loss. The actuarial advice would be that those funds have to be kept like that, given the circumstances.

If the Secretary of State wants to achieve gains over and above those that can be obtained by the current scheme managers, two things will have to happen. First, he will have to ensure that there are regulations for his scheme manager that allow him to take much greater risks with the money on behalf of these people than any investment manager and actuary combination in the private sector would dare take, because they would feel obliged to opt for very low-risk strategies for this category of investor.

Secondly, the scheme manager will have to be much better than most of the investment managers in the City of London, because he will have to get his strategy right to ensure that when markets go down, as they did in recent years, he is not invested in risky assets, and that when markets go up, if they do, he is fully invested in risky assets to try to recoup some of the money. I think that hon. Members immediately begin to see how difficult the situation is likely to be, and how unlikely. I suspect that the Secretary of State would not want the investment and risk rules that apply to his scheme manager to differ from those that apply to the professional scheme managers and investors who are out there at the moment.

However, if the Secretary of State did overcome that hurdle and say to his hon. Friends on the Back Benches, "Yes, you're right—let's have a go and let our scheme manager take some extra risks", the scheme manager would invest in equities, not bonds, because that is the obvious thing to do. They would sell Government stocks and buy equities. If there were three good years in the equity market, everybody would be happy and start spending money; if there were three bad years—perhaps they would be allowed only one–we would be back in this House debating a compensation scheme for the compensation fund because it would have lost more money out of the limited resources that had come into the scheme manager's funds from the failed private sector pensions.

Although it is welcome that the Government are producing a partial answer, we need to know the exact cost to the taxpayer. Clearly, it will not be as much as £400 million. I should like the Government to acknowledge that that sum is not nearly enough to deal with the problem. They should be generous in their definition so that it is fair to the different categories of people who have failed pensions. The Government should understand that there is no way of creating magic money out of existing assets in the failed pension funds. If there were, someone would already have done it.

It is not easy and there is much moral hazard in taking money from other companies or taxpayers to sort out the problems, difficult though they are for the people who are locked in to them. I am glad that the Government have begun to understand that they have some liability because the regulators must bear their fair share of the blame.

4 pm

Mr. Derek Wyatt (Sittingbourne and Sheppey) (Lab)

I congratulate my right hon. Friend the Secretary of State, my hon. Friend the Minister for Pensions and their colleagues. If I am honest, after leading the campaign for 22 months with ASW Sheerness, I was not certain even last Thursday that we would get the provision. I appreciate that Ministers worked late on Wednesday and Thursday evenings.

I have received different sets of e-mails. In one category, more than 100 say, "We didn't believe you'd ever do it", and in another, fewer ask, "Is that all?" It has been difficult for the Secretary of State because he knew the compelling arguments but could not say anything because of the moral hazard and could not give us any encouragement. I stress that we are undeniably thrilled even though more work remains to be done.

I pay special tribute to ASW Sheerness workers who have led the campaign, especially Phil Healey, Keith Plowman and Andrew Parr. Andrew Parr set up a website with the rather inappropriate address of pensionstheft.org. It is probably the first internet campaign in British politics that has succeeded in changing a Government's mind. We have a database of thousands of people throughout the country and we have been able to provide a daily update of every meeting with every Minister, adviser or consultant. The campaign has been conducted live on the net and there have been hundreds and hundreds of comments, as there were last weekend after the statement on Friday. Again, I commend Andrew Parr who has done that on his own. It was a considerable effort and I hope that other campaigns will learn from it. It has been profoundly worth while.

I thank the hon. Members for Havant (Mr. Willetts) and for Northavon (Mr. Webb) for their cross – party support. I hope that the Government and the Opposition understand how distressing it was when the Leader of the Opposition rose last Wednesday to claim some sort of control or authority over the issue when we had sought and got cross – party support. My hon. Friend the Member for East Carmarthen and Dinefwr (Adam Price) has also been very good and worked with us. Every hon. Member who had a case – 120 Members have such cases—believed that there was a compelling morality about the matter. It is pleasing that the Government have accepted that. As a dear old friend said to me on the phone, "Isn't it great to be back in an old Labour Government?" There was a smile on my face when she said it.

David Taylor

My hon. Friend is all right at the moment–there are no Whips around.

Mr. Wyatt

Well, they say that humour is in.

I should like to tease out one or two issues. First, we are delighted that we have got the compensation. Even those who are upset that it only £400 million acknowledge that it represents a scene shift. I will not mention Teutonic plates—[HON. MEMBERS: "Teutonic?"] I meant tectonic plates. Such a scene shift is important.

Secondly, hon. Members from all parties have questioned whether £400 million is enough. My hon. Friend the Member for Cardiff, West (Kevin Brennan) said that there were also assets. Let us assume that, on 30 June, the Minister will have more knowledge and a better understanding of all the schemes and can publish them and ascertain how many need help. If the £400 million means only £2 a day for – 60,000 people—I appreciate that that is a crude calculation—and the addition of the assets means £5 a day, there would be genuine disappointment. We must try to resolve how else we can shift money into the fund.

Mr. Webb

Does the hon. Gentleman accept that the calculations that Ros Altmann and others made take account of the assets and that all her estimates of the cost of compensation have been over and above the total figure? We must not get carried away into believing that the assets will ride to the rescue and that the £400 million therefore deals with the problem.

Mr. Wyatt

I have worked with Ros in the past 22 months and some of her figures have come and gone a bit. I am happy to wait for the Government to publish their figures so that we can crawl all over them, but I take the hon. Gentleman's point.

Mr. Frank Field

Presumably, the Government will publish the figures soon. One worry is that we are not considering free assets because many of them have been turned into annuities. The annuities are appalling compared with people's expectations. There may not be huge amounts of assets, in the normal sense of the term, for pension funds.

Mr. Wyatt

My right hon. Friend knows far more about occupational pensions than me. Twenty-two months ago, I could hardly spell the words "occupational pensions", let alone understand them.

Mr. Tynan

That was in Teutonic times.

Mr. Wyatt

Touché.

It is serendipity, but I had Question 6 at Prime Minister's questions today. I would have congratulated the Prime Minister but asked him whether he would grant parliamentary time for a Bill on unclaimed assets if the £400 million was not enough. We will come back to that dilemma. I ask the Minister what we are going to do if the £400 million is not enough. A reasonable solution has not yet been found.

Thirdly, when will the provision come into effect? The answer is important. When I visited a widow, Mrs. Wade, who lives in Murston near Sittingbourne, she burst into tears. It was terribly distressing. I visited a man, whose name I will not mention, in Halfway in Sheerness. He has not worked since the day he was made redundant and is now clinically depressed. After the statements on Friday, people are nervous about what they really mean.

I hope that the Minister will take my remarks in the right way, but we do not have a fantastic track record on acting after saying that we will deliver something. The Child Support Agency is an example of that. When the Minister says that we will be accepting forms by 5 April 2005, I hope that the machinery will start and that he can reassure us that we have enough support staff to deal with 60,000 cases, which are complicated and require a lot of paperwork.

David Taylor

Does my hon. Friend share my reservations about such activities being put out to the private sector, which includes companies such as Capita? Does he share my hope that the arrangements, which are so necessary and will be so welcome, are kept in-house and not given to the Capitals of the world?

Mr. Wyatt

Capita is a dirty word in my constituency where it runs housing benefit, which is approximately nine months behind. I simply stress that it is important to provide a robust system that will pay the money quickly. Again, I congratulate Front-Bench Members on their actions.

Adam Price (East Carmarthen and Dinefwr) (PC)

There has been much talk in the Chamber this afternoon of saints and heroes. The hon. Member for Sittingbourne and Sheppey (Mr. Wyatt) is a worthy candidate for canonisation for his sterling work on behalf of his constituents. Notwithstanding the earlier dramatic events, it is a good day for Parliament and politics. Politics works when Governments listen, however late in the day; there are legitimate criticisms on the record about that, but it is a good day for the reputation of politics. The Government have responded to what is widely acknowledged to be an important case of injustice, which has caused so much distress to so many people.

Mr. Andy Reed (Loughborough) (Lab/Co-op)

I praise the hon. Gentleman's role in this campaign. Do not these events demonstrate exactly what is necessary in our democracy—namely that people should come and see their Members of Parliament? All of us who have supported this measure have reacted because people have come to us with their personal stories, which have had an impact on us. Back Benchers across the House have acted on that and worked with the Government. This is a great demonstration of how we can work together to improve the lives of our constituents.

Adam Price

I agree. I do not want to turn this debate into a mutual admiration society, but the hon. Gentleman makes an important point. Back Benchers, especially on the Government side, have played their role admirably. I think that we would all accept, however, that the real heroes are the workers at ASW and all the other companies involved, who have run one of the most effective lobbying campaigns in the past 20 years. They have changed Government policy not once but twice.

The first change was on the principle of a pension protection fund, which the Government had considered three or four times in the last five years and rejected. That has been an important change of mind, and we welcome it. The second change has been on the specific issue of compensation for ASW and other companies. This has been a fantastic campaign, with its imaginative use of technology and its sheer determination. Who would not lose heart if they lost their job and their pension as well? Those workers have not lost heart, however. They have led this fight from the front, and they are heartily to be congratulated on what they have achieved.

I also welcome the further announcements that have been made today. To be fair, the Government have set out a very clear timetable for how they are going to move this issue on. They have confirmed that there will be another opportunity for a vote in Parliament on these measures, on an affirmative resolution. Obviously, we have some doubts about the proposals, and this vote will give us a further opportunity to overturn the Government's majority if they do not come up with the goods, as is right and proper. They have also confirmed that there will be not only an initial review after three years but triennial reviews on an ongoing basis. That is valuable new information. I particularly warmly welcome the fact that the trade unions will be involved in devising the details of the scheme. That gives Members on both sides of the House a degree of comfort as we await the publication of the details.

I believe that the Government had a responsibility in this matter. Reference has been made to the socialisation or nationalisation of risk, but I do not think that that is what has happened here. The Government were responsible because of the European directive that has been mentioned. I met officials of the Iron and Steel Trades Confederation in January last year, to point out to them that legal action had been attempted under that directive at the time of the Maxwell pensions scandal. The directive remained in force, but there had been no action by any Government on this matter—neither the previous Conservative Government nor this one. The directive was ratified in 1980 and member states had three years to transpose it into their own legislation. That never happened. The relevant article in the directive, which I urge Members to read, is very clear and concise in stating that the necessary measures should be put in place to safeguard supplementary company pensions. It could not be clearer.

As we know, we are almost unique in the world in not having some kind of safety net for occupational pensions. The Government have now plugged that gap, but it should have been done 20 years ago. In that sense, I believe that the Government had a responsibility. If it turns out that what is on the table is not going to be adequate, the unions should leave open the option to continue their legal action, because the Government clearly had a responsibility in this regard.

4.15 pm

In the argument about whether there should be a cut-off point—a starting point, effectively—the

Government have suggested that April 1997 should be the initial floor for applications. I do not think that that is acceptable, given what I have just said about the directive. Most people would accept that it was the case of Allied Steel and Wire that put this issue on the agenda initially, and I have checked the regulations of the ASW pension fund. The Government are arguing that April 1997 should be chosen because that is the date on which the new rules imposing a requirement on trustees to follow the priority order set down in the Pensions Act 1995 and removing discretion came into force. In the case of ASW, however, a priority order was already in place. The kind of priority order set out in the 1995 Act had already been in existence there for many decades. In that case, therefore, the Act was not relevant.

The problem was the lack of a safety net or insurance system for occupational pension schemes. I know of cases going back to the early 1990s of people who have suffered in exactly this way, and the Government are on very shaky ground, morally as well as legally, in not providing the same level of assistance to employees in pension schemes of companies that became insolvent in 1994 or 1995. I know of one case of a botched privatisation under the previous Tory Government. Following the privatisation, the company became insolvent and the workers lost their pension assets. I also know that the Public and Commercial Services Union—a public sector union—is keen for its members to be afforded the same protection as proposed in the new clause. I therefore urge the Government to look closely at the issue of the starting point again. As I have said, their argument is not borne out by what was in the ASW regulations.

Hon. Members have raised concerns about the amount of money in the fund. Indeed, the Leader of the House hinted inThe Western Mail this morning at the possibility of a top-up if the money was found to be inadequate. He said: If we find, in the process of addressing claims, that extra changes are needed, either on the resource or administration front, we will look at that." Will the Minister tell us whether the Leader of the House had been licensed to go outside Government policy, as he often is, or whether he was reflecting that policy? Are the Government prepared to top up the fund, from whatever source, if they find that it is inadequate? That is clearly what the ASW workers are looking for. They and all the other workers involved have had to endure terribly insecurity and distress through not knowing what their future position would be.

The Government have set out the timetable and I urge them to come up with some hard data as soon as possible, so that we can provide the level of security that those workers deserve. I know that the Minister for Pensions referred in an interview on Radio Wales to workers being guaranteed "the greater part" of their lost entitlement. Now, I am not an expert on the English language—it is my second language and I did not have a classical education—but I think that "the greater part" would suggest more than 50 per cent. Bearing in mind the comments of the hon. Member for Cardiff, West (Kevin Brennan), I think that we would all expect far more than that. Can the Minister confirm that, at the very least, we shall not see anyone get less than 50 per cent., for goodness' sake?

We in Plaid Cymru and the Scottish National party support the Liberal Democrat amendment. As a bare minimum, we should ensure that people get 90 per cent. of the pension that they were promised. There is a moral and legal case that they should get the whole amount that they expected. Certainly, now that the principle has been conceded, there is no reason why we should not provide the same level of compensation for those workers—who have changed Government policy twice–as we will do in future.

Sandra Osborne

I am aware that other Members wish to speak, so I shall keep my contribution short. I am absolutely delighted to support the new clause, which introduces yet another excellent measure by the Labour Government.

There has been quite a lot of humour in today's debate, some of which has been uncharacteristic. In the previous debate, there was quite a lot of emotion. I spoke emotionally, and I make no apology for doing so. I may have laid it on a bit thick, however, as one of my colleagues said to me today, "Don't worry about today's debate, Sandra. All you need do is burst into tears and you'll get anything you want." That remark may have been slightly sexist, but perhaps I did lay it on a bit thick.

Yet again, I want to highlight the case of the United Engineering Forgings workers. Before I do so, I want to pay tribute to their campaign, which they have carried out for almost three years. I first brought their case to the attention of the House in an Adjournment debate in Westminster Hall almost three years ago. Since that time, they have travelled the length and breadth of the country almost weekly, attending debates here, and holding marches, rallies and even an overnight vigil in Parliament square in the middle of winter—I thank Members who spoke to them at that time. They have picketed the headquarters of Prudential, met the chief executive, and taken part in television and radio interviews. Of course, they have had several meetings with Ministers, for which I am very grateful. Willie Riggins may not yet qualify as a national figure, but he is a familiar figure to my right hon. and hon. Friends, as they have seen him in so many places and at so many different times. It has been my pleasure, as well as my duty, to play a small part in that campaign.

After a time, the UEF workers came together with other workers, including those of Allied Steel and Wire, who had lost their pensions. It is a textbook case of how collective action can work. From the rank and file to trade union leaders, to Back-Bench Labour and other MPs and Ministers, everyone could immediately see the injustice of the situation. The question was: what could be done about it? I know that the Government have taken some time to find out what could be done about it—it is a very complicated issue—but I am glad that they have done so. The only problem is that, at the moment, the Government amendment does not fully answer the questions as to exactly what will be done.

UEF went into administration in June 2001, with a shortfall in its pension fund of £12 million. There were six UEF sites throughout the UK, and more than 1,000 workers. Some of the sites were sold off, but the Ayr site was taken over by a Swedish company, with no final salary scheme. The bottom line is that the UEF pension scheme is being wound up, and all will substantially lose their pensions. No matter what the circumstances are—whether a company goes into administration, receivership or insolvency—employees will either lose their pensions or not, and all cases should be dealt with equally on that basis.

The Secretary of State has promised substantial help—those were his words—but we are all now left wondering what he means by "substantial". The pension protection fund will provide 90 per cent. compensation, and that will be clear to current pension fund members as soon as the Bill is passed. But those who have already lost out were led to believe that their pensions were 100 per cent. safe. Although I very much welcome the Government assistance, it is still incredible that that can happen without anyone accepting actual liability. Everyone who has been affected still cannot believe that that can happen and that there is nothing illegal about it.

As has been stated many times, occupational pensions are part of the remuneration package agreed by employers and their employees. The majority shareholder of UEF was PPMV—an investment arm of Prudential. I eventually received an apology from the Prudential's group chief executive, Mr. Jonathan Bloomer, on the way in which the UEF situation was handled, while obviously not accepting liability.

As stated earlier, we met Mr. Bloomer twice. He offered us tea and sympathy but refused to redress the shortfall in the pension fund. That was scant consolation to my constituents who have lost their pensions, especially as we read continually about the big fat bonuses–and packages if they leave their employment–that Mr. Bloomer and others of his ilk receive. Perhaps now, Mr. Bloomer and others will accept their responsibility in this area not only to the workers but to restore confidence in pensions. They have resisted previously, possibly on the grounds of liability, but making a contribution to this fund would not make them liable, and I call on them to do so.

The UEF case is only too familiar to Members of the House, as I have outlined it previously, but I want an assurance from Ministers that the UEF workers will be accepted as part of the equation for the assistance being made available, and that both they and I will have the opportunity of input to the discussions that will take place shortly.

I also want to take the opportunity to speak for those who are not members of trade unions because their company did not have a recognised trade union: for example, workers of the Dexion group. Many of those were at managerial level and worked in companies that have never recognised trade unions. I suspect that they very much regret that now. If there is one lesson from this, it is that every worker should join a trade union.

One of the worries about the Government's amendment, because it is an enabling amendment, is that it tends to raise more questions than it answers. We urgently need those answers. I am happy that the Minister has outlined a set process that the Government will follow to bring forward those answers, with a time scale. I hope that the Secretary of State has not done inadvertently what he always said that he would not do—to raise false hopes among the workers. For those of us who have campaigned on this issue, last Friday's announcement was like manna from heaven. Of course it raised expectations—it was bound to do so—and it is perfectly reasonable that people want to know the scope of the assistance available. We all understand how complicated the situation is, but we cannot leave people in limbo with no indication of how it will work. I hope that the Minister's road map to resolve the situation is much more successful and has a quicker effect than the other road map about which we heard on a point of order earlier.

The Secretary of State has said time and again that a pension promised should be a pension delivered. We have seen a great step forward today in delivering that promise in a situation of great injustice. I very much welcome that, and I congratulate the Secretary of State on it. I said in the previous debate that if anyone could do something about this matter, it was the Secretary of State, and I thank him very much.

Sue Doughty (Guildford) (LD)

I want to keep my remarks short. First, I apologise for not having taken part in these debates previously, because I did not have a constituency need. More recently, however, we have had a major problem.

Hon. Members will be familiar with Dennis buses, which we used to see on the roads as a key part of the London transport strategy, and which are now marketed as part of TransBus. That company collapsed, as part of the Mayflower collapse, in April this year. Even now, many of my constituents in the Dennis Group pension and assurance scheme still do not know the extent of the damage done to their pension. Loyal employees who enabled the company to do great things were forced, as part of their conditions of employment, to join a scheme that has now collapsed around them through no action of theirs.

4.30 pm

I received a letter from a woman constituent – as all Members know, women have had a difficult time with pensions over the years–who had to plead to join a scheme for which, as a part-time worker, she had initially been ineligible. Having joined it, she had to find a lump sum with which to buy the years of pension that were missing. Now she has been left high and dry. Another tragic case involves someone with years of service who joined a share save scheme and was also with Equitable Life. It is just not fair.

I am grateful to the Government for listening to Members' concerns and taking them on board, but I am still worried about the size of the fund. I shall not repeat all that has been said today, notably by my hon. Friend the Member for Northavon (Mr. Webb), but I am concerned about the Dennis Group pension assurance scheme. There are 130 contributing members, 305 deferred members and 150 pensioners. The trustee has calculated that the buy-out cost for just that number would be £24 million. The same trustee is handling another fund whose buy-out cost would be £80 million. All these sums will add up.

I look forward to the work that the Government are doing to put flesh on the bones of their proposals, and make this a scheme that will bring about justice.

Employees such as my constituents who have given a lifetime's service to their company and made it a great business do not deserve to be treated like this.

I wrote to the Minister, who replied just before last week's announcement by the Government. I was initially depressed, because the wrote a very cautious letter about meeting people, and I thought that it was a Government cop-out. At the end, he wrote: It would be very cruel to raise expectations for these people who have suffered such a dramatic blow to their security in retirement if the Government cannot then provide assistance. What I want is for the Government to provide full assistance, and to make this into a full fund so that we can give real help to people who have given a lifetime of service. I think particularly of the women who had to fight so hard for a decent pension scheme, only to see it fall away from them

Mr. Miller

I want to put my speech in context—the context of the fantastic work being done by a Labour Government.

In 1995, the right hon. Member for Hitchin and Harpenden (Mr. Lilley) said: We believe that a levy schemes is more appropriate since the benefits of well-regulated schemes accrue only to members and employers. Many taxpayers are not members of schemes, so why should they pay?"—[Official Report, 24 April 1995; Vol. 258, c. 527.] The Tories were fundamentally opposed to allowing the public to pick up the liabilities from schemes.

Last week, during Prime Minister's Question Time, the Leader of the Opposition said:

this Government have introduced legislation—to deal with a problem that has arisen under this Government."—[Official Report, 12 May 2004; Vol. 421, c. 352.] That is entirely wrong, as we know from today's debate. I am on record as congratulating the hon. Member for Solihull (Mr. Taylor), who started the serious fraud investigation into the HH Robertson case. My right hon. Friend the Member for Birkenhead (Mr. Field) mentioned a case in Burnley. Early-day motion 308 in 1992 proves that the Leader of the Opposition was being opportunistic. That is a polite way of putting it; it may have been worse.

I have had a close interest in the HH Robertson case for a long time. There, are now more than 1,000 entries for it inHansard. I thought at one point that my hon. Friend the Minister of State was airbrushing it from history. I hope that he will not do so, for reasons that I shall try to explain. The alleged "white knight" who took over the company and then asset-stripped it left the pension fund £5 million short. After a two-year fraud squad investigation, the Serious Fraud Office could not bring criminal proceedings because—as we all know— intent is so hard to prove in such cases. In the meantime, the occupational pension fund became insolvent.

Soon after the change of Government, successive pensions Ministers—and other Ministers—engaged in constructive dealings on the case, as did the hon. Member for Solihull, but we were all stuck with the law as it stood at the time. In 1998 the hon. Member for Pontypridd (Dr. Howells), then Under-Secretary of State for Competition and Consumer Affairs, wrote to me: That organisation —the Occupational Pensions Regulatory Authority— has however been unable to deal with the issues at HH Robertson simply because of the timing and I do not see grounds for a further consideration of the law at the moment. Similarly, the then Minister of State for Social Security, the right hon. Member for Southampton, Itchen (Mr. Denham), wrote: I am aware that this response is not what you would like to hear. I must reiterate, however, that the Government is not the guarantor of private pension funds and does not see its role as one of intervening in the debt arrangements of private companies. That position was accepted by successive Governments because we, as a House, had failed in our responsibility when passing the Pensions Act 1995. We thought that we were creating an environment in which pension schemes would be safer for our constituents in future. It is on the basis of our failure that we should now look again at the Royal Assent that the Act received.

Mr. Waterson

The hon. Gentleman rightly mentions the 1995 Act, which established a minimum funding requirement. For the sake of completeness, however, he ought to remind the House that this Government have twice diluted the MFR since taking office.

Mr. Miller

If the hon. Gentleman accepts with me that we failed in the 1995 Act, I may accept one or two things from him.

The HH Robertson scheme was wound up in the spring of 1997, before what is perceived as the magic date of 6 April. There were suspicions that it was being brought forward to avoid the consequences of the 6th, and I can produce evidence for that

I hope that Ministers will note what has been said today, and will not have a fixed date in their minds. The date needs to be flexible so that the results of evidence and research can be taken into account. I hope that my hon. Friend the Minister of State will bear it in mind that the breadth and depth of the scheme, how far it goes back, whom it covers, and the level of compensation remain matters for negotiation and discussion with all the stakeholders.

Mr. Nigel Dodds (Belfast, North) (DUP)

My concern arises from the plight of my constituents who worked at the IFI factory in north Belfast, formerly Richardson's, and that of workers at TKECC in the constituency of my hon. Friend the Member for Strangford (Mrs. Robinson), who has led a doughty battle on their behalf. Those workers were devastated to and that their hard-won pension savings, building up a nest for their retirement, had been snatched away from them through no fault of their own.

I welcome the fact that new clause 34 has been introduced today by the Government. An important step has been taken, and I pay tribute to all who have played a major role in bringing this day about, including the hon. Members for Cardiff, West (Kevin Brennan) and for Sittingbourne and Sheppey (Mr. Wyatt), and others. I raised the matter in relation to my constituents in the Northern Ireland Grand Committee on 29 April, but I will not follow the example of some others and therefore claim credit for the Government's announcement today.

I welcome the fact that the announcement has been made. The majority of the 200-plus employees at Richardson's IFI in Belfast gave 20 or even 30 years of service, and a significant number gave even more. However, within five years of reaching their retirement, they were told that they had no jobs and, worse still, that their pensions were being put in serious jeopardy. There were similar considerations in the case of the TKECC plant.

The hon. Member for Ayr (Sandra Osborne) mentioned the emotions that were evident on Second Reading. I was present during that debate although, unfortunately, I was not called to speak, and I think that emotional is the right description of it. We are dealing with people, many of whom have worked all their lives, who are genuinely devastated and destroyed, with their families, by the terrible plight that they are in. If emotions were not raw, and Members were not standing to express and display those emotions on their constituents' behalf, we would be failing in our duty to them.

As the hon. Member for East Carmarthen and Dinefwr (Adam Price) said, politics has worked. Parliament and the Government have been shown to have responded on this issue. That is absolutely right, although there are questions over the extent of the compensation or assistance. There are serious questions to be asked in that regard. I join other hon. Members in urging the Government to go as far as they possibly can in giving full compensation to this group of workers. It is absolutely wrong to have one set of policies—one set of assistance or compensation criteria—for one set of workers, and a different set for the workers whom we are considering today. The sum that has been talked about, £400 million over 20 years, does not in my view come anywhere near to meeting the need. One of my constituents faxed me today to say that he reckoned that the figure was out by three times in value and two and a half times in length. He, too, has been working on the back of an envelope today.

There is serious work to be done on the detail, but this is a major step in the right direction in terms of the principle that has been adopted. I urge the Government to take on board the amendment tabled by the hon. Member for Northavon (Mr. Webb) on companies that are solvent and have wound up pension funds. That applies to the company, TKECC, that I mentioned. It is absolutely wrong that workers in those companies, through not fault of their own, should not receive compensation or assistance when others do. I believe that they would not understand in any way why they should be excluded.

I welcome the fact that the legislation, and the figures and amounts, will be reviewed every three years. That is extremely important, and will allow us to consider the matter in due course. Yesterday, when debating another part of the Bill, we discussed the fact that it does not, on the face of it, apply to Northern Ireland immediately. The Minister gave an undertaking that an Order in Council would be brought forward to ensure that the Bill would apply to Northern Ireland at the same time as it applies to the rest of the country. I welcome that. There should be no question of citizens in Northern Ireland receiving any less compensation than others elsewhere in the kingdom, and they should receive it at the same time.

Mr. Adrian Bailey (West Bromwich, West) (Lab/Co-op)

I shall keep my remarks brief. I have suffered the experience, which I know many hon. Members have had, of receiving representations from honest, hard-working constituents who have been part of companies that, for various reasons, have not been able to meet their pensions obligations. Sigmacast, formerly known as Triplex, in my constituency—a long-standing foundry —was subjected to a management buy-out last September. The pensions fund was found to be £18 million short, and the successor company was not prepared to sponsor a successor pension fund. The result is that some 150 workers, who would have enjoyed deferred benefits, have been told that they will get nothing at all.

4.45 pm

The news of the Government new clause, presented last week, was wonderful news for those workers. I share that feeling of joy, but I also feel a certain circumspection and concern. We do not know how much there will be and we do not know whether that particular case will fit with Government guidelines. I do not expect the Minister to make a determination on this particular case at this moment in the debate, but I should like reassurance that the representations of the unions. the employees and the members will be taken into full consideration and that we will have a sympathetic response. I do not need to tell the Minister that the worst possible outcome is to raise people's expectations and then to dash them. We would expect the Government response to be consistent with the declared objectives of the proposal.

I have couple of quick, general points. First, in their consideration of funding, I hope that the Government will take into account the fact that if we do not provide adequate pension compensation —no, I shall not use the word "compensation", but say "assistance" instead—for those 60,000 who have lost their pensions, there will be a double financial whammy. On the one hand, the tax receipts that would have come from those pensions will be lost, and on the other, there will be potential benefit obligations in cases of hardship.

Secondly, I welcome the Government's commitment to working with other stakeholders to add to the fund. Regardless of the implementation of the pension protection fund, there is a potential loss to the pensions and savings industry and to the Exchequer from people who will have seen or heard the publicity about those 60,000 families and therefore decided not to invest in company pensions—irrespective of promises made, or of the implications of the pension protection fund. It is therefore essential that the Government, the pensions and savings industry and companies all work together to ensure that the fund is added to, so that there is an adequate level of assistance for those who have lost their pensions in the past.

Several hon. Membersrose—

Madam Deputy Speaker

I call Mr. Wicks.

Mr. Tynan

On a point of order, Madam Deputy Speaker. I understand that we are on Report, and that the situation is that if a speaker is on their feet, they are entitled to be called during the debate.

Madam Deputy Speaker

I am afraid that that is incorrect. I am sorry to have to disappoint the hon. Gentleman. Mr. Malcolm Wicks.

Malcolm Wicks

We have had a good debate, and no doubt we can return to some of its themes on Third Reading. Obviously, not everyone has been able to make their contribution and I know that many would have liked to do so. For example, I see my hon. Friend the Member for Birmingham, Northfield (Richard Burden), who brought a delegation of Kalamazoo workers to see me, which very much informed our speeches. We have just had a useful contribution from my hon. Friend the Member for West Bromwich, West (Mr. Bailey). I do not think that I can even refer to every speaker in the time available, and certainly not to every point raised, although the debate has been good on both sides.

The shadow Secretary of State for Work and Pensions, who I know cannot be here now—he sent me a note to that effect—rather reminded me, given some of the debate, of the old adage that failure is an orphan but success has many parents. I should not want to prejudge the PhD thesis that will one day be written about this era of policy development, with or without the official papers, but as long as the PhD student is not being supervised at Bath university by a well-known professor, I shall look forward in my own old age—when I am receiving the £100 – plus winter fuel allowance—to reading that thesis. However, the idea that the parent of this provision could possibly be the Leader of the Opposition is an extraordinary one. If anyone dare advance that claim to parentage, I will demand a DNA test immediately.

I should emphasise that right from the start of this process we have adopted the difficult but honest position of saying that we could offer no false hope; indeed, my right hon. Friend the Secretary of State has been straight with people all along. This is not a U-turn, as some have said. We have had to be cautious from the start. We have had to look at the evidence and to listen to ideas, and I am delighted to be able to introduce this assistance package. Purely for accuracy's sake, I should point out that if anyone can claim credit for this package, above the many other voices that we have heard, it is the Secretary of State From the start, he has been absolutely determined—albeit cautiously, so that we do not raise false hopes —that we should do something if at all possible, and pay tribute to him today.

The shadow Secretary of State asked various questions. Some of them concerned the detail, which we cannot provide at this stage. We will have discussions with stakeholders, including the trade unions, and it is important that we do so. We have talked about the scale of assistance constituting a significant or substantial proportion of pension rights, and we cannot go further at this time.

Although the shadow Secretary of State did raise some serious issues, his introduction drew rather more on the tittle-tattle of the Sunday newspapers than this important occasion deserved. He moved somewhat off course when he referred to alleged comments by me on the pension protection fund and pension rights. Those who read our proceedings in Committee will discover that we made it absolutely clear what those rights are. We had to introduce qualifications into the Bill, because in extremis one has to make provisions. There is a serious possibility that the shadow Secretary of State summarised my approach to this issue in a manner that was not very useful.

It was unfortunate that the shadow Secretary of State made somewhat patronising remarks about ASW workers celebrating the announcement of this assistance scheme. I. too, saw those scenes on television, which were touching and moving. At long last, their campaign, alongside that of others, has brought the results that our Department has doggedly worked towards.

Miss Anne Begg (Aberdeen, South)(Lab)

Workers my constituency who lost out because of the collapse of the Richards pension fund were also pictured celebrating, on the front page of my local evening newspaper. This is a major breakthrough and the Government deserve to be congratulated on it.

Malcolm Wicks

Indeed.

Mr. Dennis Turner (Wolverhampton, South-East) (Lab/Co-op)

Will my hon. Friend give way?

Malcolm Wicks

Yes, but it might be the last time.

Mr. Turner

I should like to add the congratulations of workers at GKN Thompson Chassis, in Bilston, which is in the black country. They welcome this measure as we welcome the flowers in May, and they thank the Secretary of State for his intervention and for the initiative he has taken.

Malcolm Wicks

I always welcome good news from Wolverhampton. We need to look at the detail and we shall of course do so, but such workers were celebrating an important advance, excellent parliamentary representation on their behalf, and a Labour Government—be it old or new—who are delivering.

My right hon. Friend the Member for Birkenhead (Mr. Field) started off by praising Ministers. I always reach for my flak jacket when he does that, because with all due respect, I see what is coming. However, he asked some important questions, and rightly so, about which people might be covered by the provision, and about the time scale and dates. We have listened very carefully to his comments, which are based on experience, as well as to those of other colleagues. He will note that the new clause is a deliberately broad enabling provision that that omits any mention of particular dates. We will want to draw on clear principles of fairness when looking at the practicalities. I have explained the process through which our proposals are drawn up. and I repeat that we shall consult my right hon. Friend and others about these important details.

Mr. Frank Field

What the Minister has just said could affect all the amendments to the new clause. The labour resource centre received a Government briefing that gave specific dates on which the provision would and would not apply. Was that briefing merely by way of illustration, or did it reflect the Government's view?

Malcolm Wicks

It indicated our thinking on this issue. I said what I just said very deliberately, and as I have also pointed out, the provision will need to bear some relation to the Pensions Act 1995. I hope that that has reassured my right hon. Friend, and that he will consider withdrawing his amendments.

At one stage, the hon. Member for Northavon (Mr. Webb) almost seemed to suggest that this assistance constitutes charity or sympathy. There is nothing wrong with sympathy, but it butters no scones: it needs to be followed by action, and it is being followed. Alongside considerable existing scheme assets and any money that we can hopefully draw in from industry, this proper assistance scheme will provide a significant proportion of pension rights to individuals in future.

My hon. Friend the Member for Cardiff, West asked a technical but very important question about definitions of insolvency. We expect that insolvency will be defined as it is intended to be defined in the pension protection fund. This definition will include schemes that are sponsored by employers in administration and in receivership, as well as those in liquidation. We need to consider in detail the implications of the definition that we intend to use, but we are not about using technicalities or legalese to define people out of a proper assistance programme.

I was in danger earlier of awarding too many honours in my descriptions of certain hon. Members, but I am serious when I say that my hon. Friend the Member for Sittingbourne and Sheppey (Mr. Wyatt) has been a persistent, almost obstinate champion of the workers to whom he is so committed. I pay tribute to him in that regard. One photo opportunity that he helped to organise involved a group of ASW workers stripping off on the beach—mercifully, behind a banner. There is no truth in the rumour that one reason why we hastily found£400 million was to prevent my hon. Friend from taking off his clothes—be it on the beach or elsewhere.

There is a great deal of unity in the House, which has welcomed the assistance package, so I hope that those who have tabled the various amendments will consider withdrawing them. This was an injustice that needed to be righted and an unfairness that we needed to overthrow, and that is the purpose of this assistance package. Yes, we need to work on the detail, and I have explained our strategy and the milestones that we have adopted. A scheme will be in place by the spring of next year, and as soon as is practicable afterwards, it will deliver the pensions that belong to the workers, and which should be given to them.

Mr. Webb

On a point of order, Madam Deputy Speaker. Would you clarify what would happen if the right hon. Member for Birkenhead (Mr. Field) did not pursue his amendment (d)? Could the House still divide on amendments (b) and (c), which have attracted support throughout the House?

Madam Deputy Speaker

I am certainly mindful to accept a vote on amendment (c) but not necessarily on amendment (b).

Mr. Frank Field

The Minister can put his flak jacket away for the moment. It is quite clear that the Bill will go to the other place. Hon. Members who have tabled amendments are anxious that they are fully dealt with. I shall therefore not press my amendment.

It being Five o'clock, MADAM DEPUTY SPEAKER proceeded pursuant to Order [18 May] to put forthwith the Questions necessary for the disposal of business to be concluded at that hour.

Clause read a second time

Amendement proposed to the proposed new clause:(c), in the line 73, at end add — '()Assistance from the financial assistance scheme shall be at least sufficient to provide total benefits to qualifying members as they would have received had their scheme fallen within the scope of the Pension Protection Fund.'. —[Mr.Webb]

Question put That the amendement be made:—

The House divided: Ayes 203,Noes 339.

Division No. 181]	[5:01 pm
AYES
Ainsworth, Peter(E Surrey)	Fabricant, Michael
Allan, Richard	Fallon, Michael
Amess, David	Field, rh Frank(Birkenhead)
Ancram, rh Michael	Field, Mark(Cities of London & Westminster)
Arbuthnot, rh James
Atkinson, David(Bour'mth E)	Flight Howard
Atkinson, Peter(Hexham)	Flook, Adrian
Bacon, Richard	Forth, rh Eric
Baker, Norman	Foster, Don(Bath)
Baldry, Tony	Francois, Mark
Barker, Gregory	Gale, Roger(N Thanet)
Baron, John(Billericay)	Gamier, Edward
Barrett, John	George, Andrew(St. Ives)
Beith, rh A. J.	Gibb, Nick(Bognor Regis)
Bellingham, Henry	Gidley, Sandra
Bercow, John	Gillan, Mrs Cheryl
Beresford, Sir Paul	Goodman, Paul
Boswell, Tim	Gray, James(N Wilts)
Brady, Graham	Green, Damian(Ashford)
Brake, Tom (Carshalton)	Green, Matthew(Ludlow)
Brazier, Julian	Greenway, John
Breed, Colin	Gummer, rh John
Brooke, Mrs Annette L.	Hague, rh William
Browning, Mrs Angela	Hammond, Philip
Bruce, Malcolm	Hancock, Mike
Burns, Simon	Harvey, Nick
Burnside, David	Hawkins, Nick
Burstow, Paul	Heald, Oliver
Burt, Alistair	Heathcoat-Amory, rh David
Butterfill, Sir John	Hendry, Charles
Cable, Dr. Vincent	Hermon, Lady
Cameron, David	Hoban, Mark(Fareham)
Campbell, Gregory(E Lond'y)	Hogg, rh Douglas
Campbell, rh Sir Menzies(NE Fife)	Holmes, Paul
	Horam, John(Orpington)
Carmichael, Alistair	Howard, rh Michael
Cash, William	Howarth, Gerald(Aldershot)
Chapman, Sir Sydney(Chipping Barnet)	Jack, rh Michael
	Jackson, Robert(Wantage)
Chidgey, David	Jenkin, Bernard
Clappison, James	Johnson, Boris(Henley)
Clarke, rh Kenneth(Rushcliffe)	Keetch, Paul
Clifton-Brown, Geoffrey	Kennedy, rh Charles(Ross Skye & Inverness)
Collins, Tim
Conway, Derek	Key, Robert(Salisbury)
Cormack, Sir Patrick	Kirkbride, Miss Julie
Cotter, Brian	Kirkwood, Sir Archy
Curry, rh David	Knight, rh Greg(E Yorkshire)
Davey, Edward(Kingston)	Laing, Mrs Eleanor
Davies, Quentin(Grantham & Stamford)	Lait, Mrs Jacqui
	Lamb, Norman
Davis, rh David(Haltemprice & Howden)	Laws, David (Yeovil)
	Leigh, Edward
Djanogly, Jonathan	Letwin, rh Oliver
Dodds, Nigel	Lewis, Dr. Julian(New Forest E)
Donaldson, Jeffrey M.	Liddell-Grainger, Ian
Dorrell, rh Stephen	Lilley, rh Peter
Duncan, Alan(Rutland)	Llwyd, Elfyn
Duncan Smith, rh lain	Loughton, Tim
Evans, Nigel	Luff, Peter(M-Worcs)
Ewing, Annabelle	McIntosh, Miss Anne

Mackay, rh Andrew	Soames, Nicholas
Maclean, rh David	Spelman, Mrs Caroline
McLoughlin, Patrick	Spicer, Sir Michael
Maples, John	Spink, Bob(Castle Point)
Marsden, Paul(Shrewsbury & Atcham)	Spring, Richard
	Stanley, rh Sir John
Maude, rh Francis	Steen, Anthony
Mawhinney, rh Sir Brian	Streeter, Gary
Mitchell, Andrew(Sutton Coldfield)	Stunell, Andrew
	Swayne, Desmond
Moore, Michael	Swire, Hugo(E Devon)
Moss, Malcolm	Syms, Robert
Murrison, Dr. Andrew	Tapsell, Sir Peter
Oaten, Mark(Winchester)	Taylor, Ian(Esher)
O'Brien, Stephen(Eddisbury)	Taylor, John(Solihull)
Öpik, Lembit	Taylor, Matthew(Truro)
Osborne, George(Tatton)	Taylor, Dr. Richard(Wyre F)
Ottaway, Richard	Teather, Sarah
Page, Richard	Thomas, Simon(Ceredigion)
Paice, James	Thurso, John
Paisley, Rev. Ian	Tonge, Dr. Jenny
Paterson Owen	Tredinnick, David
Portillo, rh Michael	Trend, Michael
Price, Adam(E Carmarthen& Dinefwr)	Trimble, rh David
	Tyrie, Andrew
Pugh, Dr. John	Viggers, Peter
Redwood, rh John	Walter, Robert
Reid, Alan(Argyll & Bute)	Waterson, Nigel
Rendel David	Watkinson, Angela
	Webb, Steve(Northavon)
Robathan Andrew,	Weir, Michael
Robertson, Angus(Moray)	Whittingdale, John
Robertson, Hugh(Faversham & M-Kent)	Widdecombe, rh Miss Ann
	Wiggin, Bill
Robertson, Laurence(Tewk'b'ry)	Wilkinson, John
Robinson, Mrs Iris(Strangford)	Williams, Hywel (Caernarfon)
Robinson, Peter(Belfast E)	Williams, Roger(Brecon)
Roe, Mrs Marion	Willis, Phil
Rosindell, Andrew	Wilshire, David
Ruffley, David	Winterton, Ann(Congleton)
Russell, Bob(Colchester)	Winterton, Sir Nicholas(Macclesfield)
Sanders, Adrian
Sayeed, Jonathan	Wishart, Pete
Selous, Andrew	Yeo, Tim(S Suffolk)
Shephard, rh Mrs Gillian	Young, rh Sir George
Simmonds, Mark
Simpson, Keith(M-Norfolk)	Tellers for the Ayes:
Smith, Sir Robert(W Ab'dnsamp;Kincardine)	Mr. David Heath and
	Sue Doughty

NOES
Abbott, Ms Diane	Blackman, Liz
Adams, Irene(Paisley N)	Blizzard, Bob
Ainger, Nick	Boateng, rh Paul
Ainsworth, Bob(Cov'try NE)	Borrow, David
Anderson, rh Donald(Swansea E)	Bradley, rh Keith (Withington)
Anderson, Janet(Rossendale&Darwen)	Bradley, Peter(The Wrekin)
	Bradshaw, Ben
Armstrong, rh Ms Hilary	Brennan, Kevin
Atkins, Charlotte	Brown, rh Nicholas(Newcastle E Wallsend)
Austin, John
Bailey, Adrian	Browne, Desmond
Baird, Vera	Bryant, Chris
Banks, Tony	Buck, Ms Karen
Barron, rh Kevin	Burden, Richard
Battle, John	Burgon, Colin
Bayley, Hugh	Burnham, Andy
Beard, Nigel	Byers, rh Stephen
Beckett, rh Margaret	Cairns, David
Begg, Miss Anne	Campbell, Alan(Tynemouth)
Bell, Sir Stuart	Campbell, Mrs Anne(C'bridge)
Benn, rh Hilary	Campbell, Ronnie(Blyth V)
Bennett, Andrew	Caplin, Ivor
Benton, Joe(Bootle)	Casale, Roger
Berry, Roger	Caton, Martin
Best, Harold	Cawsey, Ian(Brigg)

Challen, Colin	Harris, Tom(Glasgow Cathcart)
Chapman, Ben(Wirral S)	Healey, John
Chaytor, David	Henderson, Doug(Newcastle N)
Clapham, Michael	Henderson, lvan(Harwich)
Clark, Mrs Helen(Peterborough)	Hendrick Mark
Clark, Dr. Lynda(Edinburgh Pentlands)	Hepburn Stephen
	Heppell, John
Clark, Paul(Gillingham)	Hesford, Stephen
Clarke, rh Tom(Coatbridge& Chryston)	Hewitt, rh Ms Patricia
	Hill, Keith(Streatham)
Clelland, David	Hinchliffe, David
Clwyd, Ann(Cynon V)	Hoey, Kate(Vauxhall)
Coaker, Vernon	Hoon, rh Geoffrey
Coffey, Ms Ann	Hope, Phil(Corby)
Colman, Tony	Hopkins, Kelvin
Connarty, Michael	Howarth, rh Alan(Newport E)
Cook, Frank(Stockton N)	Howarth, George(Knowsley N & Sefton E)
Cooper, Yvette
Corbyn, Jeremy	Howells Dr. Kim
Corston, rh Jean	Hoyle, Lindsay
Cousins, Jim	Hughes, Kevin(Doncaster N)
Cranston, Ross	Humble, Mrs Joan
Cryer, Ann(Keighley)	Hurst, Alan(Braintree)
Cryer, John(Hornchurch)	Hutton, rh John
Cummings, John	Iddon, Dr. Brian
Cunningham, Jim(Coventry S)	Illsley, Eric
Cunningham, Tony(Workington)	Ingram, rh Adam
Curtis-Thomas, Mrs Claire	Irranca-Davies, Huw
Davey, Valerie(Bristol W)	Jackson Glenda(Hampstead & Highgate)
David, Wayne
Davidson, Ian	Jackson, Helen(Hillsborough)
Davies, Geraint(Croydon C)	Jamieson, David
Dawson, Hilton	Jenkins, Brian
Dean, Mrs Janet	Johnson, Alan(Hull W)
Denham, rh John	Johnson, Miss Melanie(Welwyn Hatfield)
Dhanda, Parmjit
Dismore, Andrew	Jones, Helen(Warrington N)
Dobbin, Jim(Heywood)	Jones, Jon Owen(Cardiff C)
Dobson, rh Frank	Jones, Lynne(Selly Oak)
Donohoe, Brian H.	Jones, Martyn(Clwyd S)
Dowd, Jim(Lewisham W)	Jowell, rh Tessa
Drew, David(Stroud)	Joyce, Eric(Falkirk W)
Drown, Ms Julia	Kaufman, rh Gerald
Dunwoody, Mrs Gwyneth	Keen, Alan(Feltham)
Eagle, Maria(L'pool Garston)	Keen, Ann(Brentford)
Edwards, Huw	Kelly, Ruth(Bolton W)
Efford, Clive	Kennedy, Jane(Wavertree)
Ellman, Mrs Louise	Kidney, David
Ennis, Jeff(Barnsley E)	Kilfoyle Peter
Etherington, Bill	King, Andy(Rugby)
Farrelly, Paul	King, Ms Oona(Bethnal Green & Bow)
Fisher, Mark
Fitzpatrick, Jim	Knight, Jim(S Dorset)
Flint, Caroline	Kumar, Dr. Ashok
Flynn, Paul(Newport W)	Ladyman, Dr. Stephen
Foster, rh Derek	Lammy David
Foster, Michael(Worcester)	Lawrence, Mrs Jackie
Foster, Michael Jabez(Hastings & Rye)	Laxton Bob(Derby N)
	Lazarowicz, Mark
Francis, Dr. Hywel	Lepper, David
George, rh Bruce(Walsall S)	Levitt, Tom(High Peak)
Gerrard, Neil	Lewis, Ivan(Bury S)
Gibson, Dr. Ian	Linton, Martin
Gilroy, Linda	Lloyd, Tony(Manchester C)
Godsiff, Roger	Love, Andrew
Goggins, Paul	Lucas, lan(Wrexham)
Griffiths, Jane(Reading E)	Luke, lain(Dundee E)
Griffiths, Nigel(Edinburgh S)	Lyons, John(Strathkelvin)
Grogan, John	McAvoy, rh Thomas
Hain, rh Peter	McCabe, Stephen
Hall, Mike(Weaver Vale)	McCafferty, Chris
Hall, Patrick(Bedford)	McDonagh, Siobhain
Hamilton, David(Midlothian)	McDonnell, John
Hamilton, Fabian(Leeds NE)	MacDougall, John
Hanson, David	McFall John
Harman, rh Ms Harriet	McGuire, Mrs Anne

Mclsaac, Shona	Roche, Mrs Barbara
McKechin, Ann	Rooney, Terry
McKenna, Rosemary	Ross, Ernie(Dundee W)
Mackinlay, Andrew	Roy, Frank(Motherwell)
McNamara, Kevin	Ruane, Chris
McNulty, Tony	Ruddock, Joan
MacShane, Denis	Russell, Ms Christine(City of Chester)
Mactaggart, Fiona
McWalter, Tony	Ryan, Joan(Enfield N)
McWilliam, John	Sarwar, Mohammad
Mahon, Mrs Alice	Savidge, Malcolm
Mallaber, Judy	Sawford, Phil
Mann, John(Bassetlaw)	Sedgemore, Brian
Marris, Rob(Wolverh'ton SW)	Shaw, Jonathan
Marsden, Gordon(Blackpool S)	Sheerman, Barry
Marshall, David(Glasgow Shettleston)	Sheridan, Jim
	Short, rh Clare
Marshall, Jim(Leicester S)	Simon, Siôon(B 'ham Erdington)
Marshall-Andrews, Robert	Simpson, Alan(Nottingham S)
Martlew, Eric	Singh, Marsha
Meacher, rh Michael	Skinner, Dennis
Meale, Alan(Mansfield)	Smith, rh Andrew(Oxford E)
Michael, rh Alun	Smith, Angela(Basildon)
Milburn, rh Alan	Smith, rh Chris(Islington S & Finsbury)
Miliband, David
Miller, Andrew	Smith, Geraldine(Morecambe & Lunesdale)
Mitchell, Austin(Gt Grimsby)
Moffatt, Laura	Smith, Jacqui(Redditch)
Moonie, Dr. Lewis	Smith, John(Glamorgan)
Moran, Margaret	Smith, Llew(Blaenau Gwent)
Morgan, Julie	Soley, Clive
Morley, Elliot	Southworth, Helen
Mountford, Kali	Spellar, rh John
Mudie, George	Starkey, Dr. Phyllis
Munn, Ms Meg	Steinberg, Gerry
Murphy, Denis(Wansbeck)	Stewart, David(Inverness E & Lochaber)
Murphy, Jim(Eastwood)
Murphy, rh Paul(Torfaen)	Stewart, Ian(Eccles)
Naysmith, Dr. Doug	Stinchcombe, Paul
Norris, Dan(Wansdyke)	Stoate, Dr. Howard
O'Brien, Bill(Normanton)	Strang, rh Dr. Gavin
O'Hara, Edward	Stuart, Ms Gisela
Olner, Bill	Sutcliffe, Gerry
O'Neill, Martin	Tami, Mark(Alyn)
Organ, Diana	Taylor, rh Ann(Dewsbury)
Osborne, Sandra(Ayr)	Taylor, Dari(Stockton S)
Owen, Albert	Taylor, David(NW Leics)
Palmer, Dr. Nick	Thomas, Gareth(Clwyd W)
Perham, Linda	Thomas, Gareth(Harrow W)
Picking, Anne	Tipping, Paddy
Pickthall, Colin	Todd, Mark(S Derbyshire)
Pike, Peter(Burnley)	Trickett, Jon
Plaskitt, James	Truswell, Paul
Pollard, Kerry	Turner, Dennis(Wolverh'ton SE)
Pond, Chris(Gravesham)	Turner, Dr. Desmond(Brighton Kemptown)
Pope, Greg(Hyndburn)
Pound, Stephen	Turner, Neil(Wigan)
Prentice, Ms Bridget(Lewisham E)	Twigg, Derek(Halton)
	Twigg, Stephen(Enfield)
Prentice, Gordon(Pendle)	Tynan, Bill(Hamilton S)
Prescott, rh John	Vaz, Keith(Leicester E)
Primarolo, rh Dawn	Vis, Dr. Rudi
Prosser, Gwyn	Walley, Ms Joan
Purchase, Ken	Ward, Claire
Quin, rh Joyce	Wareing, Robert N.
Quinn, Lawrie	Watson, Tom(W Bromwich E)
Rammell, Bill	Watts, David
Rapson, Syd(Portsmouth N)	White, Brian
Raynsford, rh Nick	Whitehead, Dr. Alan
Reed, Andy(Loughborough)	Wicks, Malcolm
Reid, rh Dr. John(Hamilton N & Bellshill)	Williams, rh Alan(Swansea W)
	Wills, Michael
Robertson, John(Glasgow Anniesland)	Winnick, David
	Woodward, Shaun
Robinson, Geoffrey(Coventry NW)	Woolas, Phil
	Worthington, Tony

Wright, Anthony D.(Gt Yarmouth)	Wyatt, Derek
	Tellers for the Noes:
Wright, David(Telford)	Mr. Fraser Kemp and
Wright, Tony(Cannock)	Gillian Merron

Question accordingly negatived.

Clause added to the Bill.